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On 19-06-2015, Supreme Court of India has delivered its order on the contempt petition and bail application of Sahara Chief Subrata Roy along with two other directors namely, Mr. Ravi Shankar Dubey and Mr. Ashok Roy Choudhary.

It is to be kept in mind that on 26-03-2014, SC had passed order of bail subject to the condition of deposit of Rs. 10,000 crores. 5000 crores in cash and 5000 crores in the form of bank guarantee in favour of SEBI. Till date 15 months have passed but Sahara has failed to comply with those conditions.

The key/main points emerging out of the Judgment are as under:

  • Till date there is no full compliance of the condition for grant of interim bail.
  • Either that the efforts made by Sahara for sale of properties were not adequate or it was their ill-luck or it is the market conditions to be blamed.
  • Sahara allowed to enter into agreement for the property at Gorakpur at Rs. 64 crores
  • Sahara for the time being not allowed to pay its statutory liabilities including wages and salaries .
  • There is no satisfactory proof that the moneys payable to th  investors had been refunded to them.
  • The court was virtually compelled to issue order for judicial custody going by the stubborn attitude of the contemnors.
  • It is the unprecedented situation which has led to passing of unprecedented, but justifiable, orders.
  • The Court is not powerless as it can always direct selling the properties of the Sahara Companies to ensure recovery.
  • Court accepts the bank guarantee format furnished.
  • Contemnors to deposit passports in the Court within 15 days. Not to leave the country without prior permission.

Some extracts from the judgment are as under:

The record shows that at various stages the contemnors gave the proposals for compliance with the directions which were explored from time to time, but eventually all these proposals were found to be unsatisfactory, yielding no tangible results. This was perceived as stubborn attitude of the contemnors with sole intent to drag on the matter endlessly without complying with the orders. This attitude of the contemnors forced this Court to issue non-bailable warrants against Mr. Subrata Roy Sahara for his production and directing personal presence of the other three Directors in the Court on the date fixed. On 04.03.2014, when the matter was listed, and during the hearing as it transpired that no acceptable proposal was forthcoming to comply with the directions, the Court was left with no option except to commit the three out of four contemnors to judicial custody. We would like to mention that by that time after including the interest which had accumulated, a sum of 33,000 crores had to be deposited.

We would like to point out that the embargo which was lifted in respect of certain properties, the value thereof as per the books of accounts is in several thousand crores and had the Sahara group succeeded in selling even few of these properties, bail conditions would have been met long ago. Thus, insofar as this Court is concerned it gave all necessary stimulus to  enable the applicants to sell the assets, that too at reasonable market price. If, the contemnors have still not been able to achieve the required target, it is either because of the reason that the efforts made by the contemnors as well as other officers of Sahara group in raising money from the sale/encumbrance of these properties were not adequate or it was their ill-luck or it is the market conditions which have to be blamed

The Sahara group companies want to meet their statutory and other liabilities from the surplus that would be available after complying with order dated 26.03.2014. As soon as there is a compliance with the said order, this Court shall consider at that stage the availability of the surplus funds along with other factors and then pass appropriate  orders on these applications. It is necessary to mention that even after order dated 26.03.2014 is complied with, there is a huge deficit in the form of balance amount that would still be required to be deposited.

The aforesaid discussion clinchingly shows, without any cavil of  doubt, that the contemnors/applicants have failed to give satisfactory proof of redemption of 17,400 crores by SIRECL and  5,442 crores for SHICL.

We are conscious of the fact that three persons are under confinement for the last fifteen months. The circumstances under which orders dated 04.03.2014 were passed taking these persons into custody and sending them to jail are well known. This court was virtually compelled to do so, going by the stubborn attitude of the contemnors in taking the orders dated 31.08.2012 and 05.12.2012 for granted, as if those orders were only on papers and were not meant to be complied with. So many opportunities were given, showing all that leniency which could be extended, to  enable the contemnors to comply with those directions. It is only when the Court felt that unless some drastic action is taken there will be no desired effect, that this extreme step was taken. However, this step was taken in good faith to uphold the rule of law and to ensure that dignity of this Court is maintained and there is faithful compliance with its directions. The contemnors, instead of taking steps to follow and fulfil the directions, started making hue and cry. Still, in the application filed immediately thereafter for release, this Court showed desired compassion and empathy by passing orders dated 26.03.2014, thereby paving a way for grant of interim bail.

May be the applicants now see the light at the end of the tunnel as it is projected that the Sahara companies has finally found the buyers for certain assets and/or financers who are ready to provide the requisite finance against some of the Sahara Companies properties and that would bridge the gap insofar as conditions of interim bail are concerned. However, as mentioned above, the matter does not rest with the deposit of 5,000 crores and 5,000 crores by way of bank guarantee. Total liability has swelled to more than 36,000 crores. The aforesaid deposit of 10,000 crores is only a condition of interim bail. It is the bounden duty of this Court to ensure that balance amount is also deposited by the applicants.

It is, thus, an unprecedented situation of personal liberty of the three applicants on the one hand vis a vis majesty of law and ensuring larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the Court to take such an extreme step. It is this legal realism which has compelled the Court to adopt an approach which sounds more pragmatic. It is "doing what comes naturally" approach to the problem at hand, which required such a drastic step, going by the experience of this case, giving rise to 'Reflection' that provided 'Understanding'. This case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience. We may borrow the jurisprudential theory propounded by Ronald Dworkin, albeit in somewhat different context, viz. the "conventional jurisprudential wisdom" which holds that in certain cases of a particularly complex or novel character the law does not provide a definite answer. In denying that judges in hard cases have a discretion to determine what the law is, Dworkin has instead argued for the judicial use of public standards or principles in a way that is capable of providing the right legal answer. The process of reaching a right answer in hard cases obviously differs from the process of reaching the legal answer in easy cases. After all, the avowed objective of rule of law is also to ensure that the orders of this Court are respected and obeyed. Therefore, its a classic case where the approach adopted is influenced by the necessity of "making the law work". Therefore, the orders passed may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in this Court to do complete justice in the matter and to ensure that the applicants render full compliance of its orders. It's the unprecedented  situation which has led to passing of unprecedented, but justifiable, orders.

This Court is not powerless as it can always direct selling the  properties of the Sahara Companies to ensure recovery of the aforesaid amount as the value of those properties is stated to be much higher. However, it is not done so far pursuant to the wishes of the applicants who have pleaded against the sale of these properties by the Court with repeated assurances that these companies would be taking necessary steps for generating the desired finances and the Court has accepted their request and given them opportunities and chances to do so.

We are of the view that since most of the properties owned by Sahara group remain frozen by the order of this Court, the contemnors require time to enable them to deposit the balance outstanding. In case the bank guarantee is made encashable on default, the trigger point for encashment would be the default by the contemnors in depositing the balance amount in terms of the directions that we propose to issue. It is in that spirit  that we accept the bank guarantee format furnished by the contemnors.

Keeping in view the fact that a large amount remains to be deposited by the contemnors, we direct the contemnors to deposit their passports in this Court within 15 days from the date of this order or before their release, whichever is earlier. They shall not leave the country without prior permission of this Court. Insofar as their movements within the country are concerned, they shall keep police station Tilak Marg, New Delhi informed and updated about their whereabouts every fortnight.

Download Full Judgment Click Here >>

No Relief to Subrata Roy and other jailed SAHARA Directors - It's the unprecedented situation which has led to passing of unprecedented, but justifiable, orders-SC | 20-06-2015 |

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