SEBI-Sahara: “Legal realism” and “sense of justice” compelled Court to jail Roy

The Supreme Court today set out the conditions which have to be adhered to by the two Sahara companies to refund the money in its ongoing dispute with the Securities and Exchange Board of India (SEBI)..In what could be a relief to Sahara and its three jailed Directors, the Court has approved the format of bank guarantee which Sahara proposes to furnish to bail out Roy and the other Directors..The judgment was pronounced by Justices TS Thakur, Anil R Dave and AK Sikri at 10.30 AM today..The case dates back to mid- 2012 when the Supreme Court had asked two Sahara companies to deposit the money, purported to have been taken from investors, with the Securities and Exchange Board of India. Subsequently, SEBI had filed a contempt petition in the Supreme Court against the two companies for their non-compliance with the Supreme Court’s judgment..Roy and two directors were then lodged in judicial custody in Tihar jail following the Supreme Court’s order of March 4, 2014 when the hearing in the contempt petition was progressing. The Supreme Court had subsequently rejected repeated attempts by Roy’s lawyers to get him out of jail including a Habeas Corpus petition argued by Senior lawyers including Ram Jethmalani and Rajeev Dhawan in which the Court had criticised the intimidation tactics employed by the Senior Advocates. It had also held that Roy would be released only if a bail amount of Rs. 10, 000 crore is furnished, Rs. 5,000 crore in cash and Rs. 5000 crore by way of bank guarantee..Today’s judgment pertains to various prayers made by the contemnors with regard to compliance with the orders of the Court, sale of Sahara properties and the format of bank guarantee..The Court accepted the format of the bank guarantee. It also set out the conditions for depositing Rs. 36, 000 crore with SEBI. Accordingly, the money has to be deposited within 18 months from the date of release of Roy and other Directors. The amount has to be paid in 9 instalments of which first 8 would be of Rs. 3,000 crore each payable every two months. If there is a default in payment of any two instalments, the bank guarantee will be encashed. The bank guarantee will also be encashable in the event of failure of the contemnors to deposit the full amount outstanding within a period of 18 months commencing from the date of their release. If the contemnors fail to deposit any three instalments, they will have to surrender back to custody..Interestingly, the Court also stated in its judgment that the three Directors have been lodged in judicial custody in Tihar jail for securing justice hinting that there might be no legal or statutory backing for such an unprecedented act..“This Court feels concerned with the fact that three persons are deprived of their liberty for the last fifteen months and this situation is quite onerous to them. On the other hand, public interest as well as public good demands that the two Sahara Companies, which had collected whopping amount of more than ₹22,000 crores from the public in an illegal and unauthorised manner, are made accountable …….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, 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.”.Sahara and Roy have engaged a host of Senior Advocates in the case. Senior Advocates Kapil Sibal, Rajeev Dhavan and S Ganesh are currently representing them..SEBI has been represented all along by Senior Advocate Arvind Datar along with advocate Pratap Venugopal from KJ John & Co. Senior Advocate Shekhar Naphade is serving as amicus curiae in the case..Read the full judgment below.