New Delhi: Weeks before being sent to jail by the Supreme Court, the embattled Sahara Group chief Subrata Roy wanted to go abroad for “business discussions” with former US President Bill Clinton and former UK Prime Minister Tony Blair, markets regulator Sebi’s lawyer, Arvind Datar, has said.
Describing the long-drawn legal battle between the Securities and Exchange Board of India (Sebi) and Sahara as a “fascinating case”, Mr Datar also said, “As the line goes ‘picture abhi baaki hai’, we don’t know when and where it will take (us).”
Mr Roy was sent to Delhi’s high-security Tihar Jail on March 4, 2014 and has been lodged there since then as a legal tussle continues over collection of money by two Sahara firms from an estimated three crore investors.
Delivering a lecture on the ‘Sahara vs Sebi’ case here on Friday evening, the eminent lawyer said the Supreme Court had asked Mr Roy not to leave the country when the issue related to a Mumbai property came up during one of the hearings.
“Before the Supreme Court asked him (Roy) to appear, he filed an application to say that he wanted to leave India… He said he wanted to leave India to meet Bill Clinton and Tony Blair for business discussion. It is on record,” Mr Datar said.
The Supreme Court later asked Mr Roy to appear before it and thereafter, he filed an affidavit, saying his mother was very serious and he can’t leave Lucknow, Mr Datar said.
“I said I will be the last person to come in such a way but if he can go and meet Bill Clinton, then he can come and meet the Supreme Court,” Mr Datar said in his lecture organised by Vidhi Centre for Legal Policy here.
Noting that Mr Roy did not turn up despite the court order, Mr Datar said, “The most foolish thing you can do is violate an order of the Supreme Court.”
For an interim bail, the court put conditions of depositing Rs 5,000 crore in cash and a bank guarantee of equal amount.
“As I speak, out of the Rs 5,000 crore in cash, they are running short by Rs 500-600 crore. They have collected most of the money. Now, the only thing is they have to collect the remaining amount and then get the bank guarantee.”
“We said it has to be guaranteed by a bank in India as they got a guarantee from a bank in Panama coincidentally… that time there was no Panama problem,” he said in an apparent reference to the recent Panama Papers leak of documents showing alleged offshore accounts of hundreds of Indians.
According to Mr Datar, the amount to be paid to investors was around Rs 24,000 crore and along with interest it became Rs 34,000-35,000 crore.
So far, Sebi has refunded only around Rs 55 crore. Sahara claims to have refunded over 95 per cent investors directly.
Regarding progress on Sebi’s refund process, Mr Datar said there were 3 crore total depositors, but refund claims have been made by only 5,000 depositors.
“The total amount refunded by Sebi is Rs 55 crore, as I speak,” he added.
To raise the bail money for Mr Roy’s release, the Supreme Court has now asked Sebi to initiate the process of selling 87 “unencumbered” properties of the Sahara group, whose title deeds are with the regulator.
Mr Datar, however, said this would be a “herculean task” as he cited example of the recent no show by bidders at an auction for Vijay Mallya’s Kingfisher House building.
“What I am worried is that there are several properties worth approximately Rs 40,000 crore. Now, we have to go for title scrutiny, we have to get all that done and that is a herculean task,” he said.
Responding to a query on whether there is a timeline for assets sale, Mr Datar said he really does not know.
“For example, Mallya’s Kingfisher building has not been sold… I have suggested that let’s not go into valuations, what is the circle rate and if I am getting a value of 90 per cent, I have the liberty subject to the judge’s approval to sell the property. I have no timeline,” he said.
Banks recently put to auction the Kingfisher House, the erstwhile headquarters of the long-grounded Kingfisher Airlines, as part of their efforts to recover dues totaling over Rs 9,000 crore from Mr Mallya and his group firms. But no bid came through and the banks are still working on a fresh process to sell the property, whose base price was pegged at Rs 150 crore.
Mr Mallya incidentally left India days before the lenders approached the Supreme Court in their bid to recover their loans.
“As I speak today, Subrata Roy Sahara completes 766 days in jail, I made a back-of-the-envelope calculation. How long will he be there? Till he pays Rs 10,000 crore, he has to be there,” he said.
“Once he pays Rs 10,000 crore, he can come out of jail and then we have the further arduous task of recovering the balance Rs 25,000 crore.”
Mr Datar also said the number 4 has some “mystical connect” with this case.
“4th is a very important date because 4th was the date when Roshan Lal (first complainant) wrote the letter, Sahara went to jail on 4th, I appeared for Sebi for the first time on 4th, the main affidavit of Sahara was given on 4th… Coming to the Supreme Court, it came on January 4,” he said.
“What started with Roshan Lal on January 4, 2010, I don’t know when it is going to end, maybe it will end on 4th of some month,” Mr Datar quipped.
Giving details of the Sebi-Sahara case, he said it all started with one Roshan Lal whom he has never seen and who wrote a letter in Hindi to Sebi about two Sahara companies having raised large amounts of money.
“Little did Roshan Lal know that the one-and-a-half page letter could set in motion a litigation that seems to be almost endless and little did he know that exactly four years and three months to the day after the letter that Sahara (Subrata Roy) will be sent to Tihar jail.”
“It is a fascinating case. It teaches us a lot of lessons about what to do and what not to do and how beyond a point you can’t take on the regulators and the Supreme Court,” he said.
Mr Datar also said that Sebi “routinely” wrote to Sahara seeking information after Mr Lal’s letter.
“In retrospection, if the information had been given, nothing major might have come out of it. But Sahara said we are not obliged to reply to you,” he added.
Mr Datar also talked about how he came into the picture “very fortuitously or coincidentally”.
“It almost happened that Sahara almost blocked all seniors (lawyers) at the Supreme Court and they (Sebi) had no one else except poor me from Chennai,” he said.
Talking about Mr Roy’s appearance in court, Mr Datar said, “The man was very flamboyant and came with a swagger. He started arguing and started explaining to the Supreme Court what is Sahara, how they help poor people, how they know the banking system and this is the only relief they have got and they have been doing it for many years.”
“He told the judges that… Lordship if you see our business, you will love me,” Mr Datar said, adding that the judge replied saying “you pay the money and then I will love you.”
“Then, I started arguing and he kept on interrupting,” the senior lawyer said talking about the day when Mr Roy jailed.
The judge told Mr Roy to sit down and asked his counsel about the repayment timeframe after which the Sahara chief again “started humming and whining”, Mr Datar said.
“…I don’t know what happened. The court called the court marshal and sent him to jail. It just happened, it was so abrupt. He was asked to come to court and I thought they may ask him to do something…”
Giving explanation about the Rs 10,000 crore being fixed as bail amount, Mr Datar said, “Why did they come to Rs 10,000 crore? Why not Rs 8,000 crore or Rs 22,000 crore? The amount to be paid (to investors) is approximately Rs 24,000 crore and around Rs 34,000 crore to 35,000 crore with interest. The Supreme Court said one-third of that amount that is Rs 10,000 crore.”
“Then to reduce the harshness, they say Rs 5,000 crore in cash and Rs 5,000 crore by way of bank guarantee.”