SEBI moves SC against Sahara chief Subrata Roy for contempt of court

Market regulator Securities and Exchange Board of India (SEBI) today sought punishment for Sahara chief Subrata Roy along with directors of his two firms for not complying with the Supreme Court's order to refund Rs24,000 crore collected from investors.

While the Supreme Court had permitted SEBI to proceed with attaching assets of the two firms in case of non-payment of the amount, the market regulator opted to move SC with the contempt plea instead.

SEBI contented that Roy who had submitted that he cannot be penalised for non-refund of the money by Sahara India Real Estate Corp Ltd (SIREC) and Sahara India Housing Investment Corp Ltd (SHIC), held 70 per cent stake in the companies and is liable for contempt of court.

"By virtue of being promoter of the companies, he holds the same position as that of directors of the companies and he is also liable for contempt. He is liable for punishment along with other directors of the companies," senior advocate Arvind Dattar told a bench of justices K S Radhakrishnan and J S Khehar.

Dattar sought punishment for Roy and others under section 12 of Contempt of Court Act, which provides maximum punishment of six months jail.

"Keeping in mind the magnitude of fund collected by the companies, it is a fit case for imposing maximum punishment on Roy and his companies," he said.

"There cannot be a clearer case of contempt. Non-payment of funds amounts to contempt," he said, adding that the companies have violated three orders of the apex court.

During the argument, the bench wanted to know whether the amount could be recovered from other companies of the group.

SEBI contended that action can be taken against other companies as the money collected were invested in other companies of the group, which is being headed by the same promoter.

The SC had, on 31 August last year, directed the Sahara group to refund the amount by November-end. It had directed the group to deposit Rs5,120 crore immediately and Rs10,000 crore in the first week of January and remaining amount in the first week of February.

The group, which handed over a draft of Rs5,120 crore on 5 December, has failed to pay the rest of the amount, SEBI told the court.

The 31 August 2012 order had also said that SEBI could attach properties and freeze bank accounts of the companies if they fail to refund the amount.

SEBI, meanwhile, said the Sahara group had also published advertisement in newspapers on 3 September last year giving its view on the apex court's judgement, which also amounted to contempt.

After going through the content of the advertisement, the bench, however, said that nothing in it amounted to contempt and the point raised in it pertained to SEBI.

"This is not contempt. Expression used in the advertisement is for you," the bench told SEBI.