Subrata Roy arrested, to be in custody till March 4

Could be lodged in a guest house outside Lucknow; group holds on to refund theory

The law seemed to have finally caught up with the “eldest son” of “the world’s largest family”, as Sahara group chief Subrata Roy was arrested from his palatial house in Lucknow’s Sahara Shaher on Friday.

Lucknow Chief Judicial Magistrate Anand Kumar sent the 65-year-old parabanking tycoon to police custody and directed officials to produce him before the Supreme Court on March 4. Officials said it would be the Lucknow Police’s discretion to decide where Roy would be lodged but sources suggested he could be kept in a guest house outside the city.

Earlier in the day, there was a frantic but abortive attempt by Roy’s counsel, Ram Jethmalani, to get the non-bailable warrant issued against Roy recalled by the Supreme Court. He approached the Bench headed by judge K S Radhakrishnan and pleaded the Court’s earlier order to arrest Roy be cancelled, since he had already surrendered in Lucknow.

The judge, who was part of a different Bench on Friday, said the original Bench that passed the order could not be constituted immediately and the roster could not be changed. So, whatever applications Roy wanted to place before the Bench would normally come up only on Tuesday, the original date of hearing.

Roy, who has called himself an “emotional” man in the past, seemed peeved by media reports quoting police officials as saying that he was not found by his mother’s side as claimed by his lawyers before the Supreme Court.

Explaining his absence by his mother’s side, Roy said in a press statement: “Last evening, I had gone out of Sahara Shaher, Lucknow, to consult with a panel of doctors with certain medical reports of my mother and then I had gone to a lawyers’ house also. I was informed by my family members that police had come and they said something to media and then whole media in the country started saying that I am absconding? I am not that human being, who will abscond. Infact, being a law-abiding citizen, I shall hate myself to do any such thing ever in my life...” [SIC].

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The group’s communications continued to blow hot, blow cold on the Supreme Court, while its sharp criticism were reserved for the Securities and Exchange Board of India (Sebi) and the media. On the one hand, Roy appealed to the Supreme Court “with folded hands” for emotional and humanitarian consideration, while on the other he continued to argue through press notes and releases that his group companies had already repaid its investors as directed by the apex court.

Two Sahara group companies, Sahara India Real Estate Corporation (SIRECL) and Sahara Housing Invest Corporation (SHICL) are contesting contempt proceedings initiated by the Securities and Exchange Board of India (Sebi), in connection with an August 2012 order of the Supreme Court. The Court had directed the companies to repay Sebi the Rs 24,029 crore it had collected in breach of law. The capital markets regulator was to, in turn, refund the money to individual depositors concerned. However, according to Sebi, Sahara paid only Rs 5,120 crore. The Sahara firms, on the other hand, have been claiming that the remaining amount was refunded directly to investors.

On February 20, while directing personal appearance of Roy, the apex court had refused to entertain the arguments of premature refunds and pointed out that the refund argument had been rejected on two earlier occasions by the Court. Sahara continued to insist: “It has been wrongly communicated in some reports in the media that Sahara had to pay Rs 20,000 crore and Sahara could not prove its claim that it had repaid. The fact is, the company has repaid all the liabilities of OFCD (optionally fully-convertible debentures) except around Rs 2,000 crore.”

Even this Rs 2,000 crore, Sahara claimed, was covered by the Rs 5,120 crore deposited with Sebi. The statement added “in last 17 months, Sebi has not done even one per cent verification. It is a great strategy of Sebi and that is why the sword is continuously hanging on us.”

Roy, who was taken through the rear gate to the magistrate, had said in his morning statement: “I feel ashamed and sad for some negative-minded, emotionally confined media people (like a few journalists vomited venom against Sahara today, who were sometime back thrown out of Sahara) and who are probably not remained as human being. They are bullying and indulging in character assassination of a son who is trying to perform his emotional duty towards his ailing mother [SIC].” In an assertion that sounded like a warning, the statement added: “God forbids if any untoward thing happens with my mother, in my absence, I shall never forget in my life those people [SIC].”

The group, in the midst of a sudden vacuum at the top, presented Roy’s younger son, Seemanto Roy, at a press conference in Delhi to reassure “1.2 million kartavyayogis and 80 million investors”. Seemanto, who was reading out a statement drafted in an emotional language, typical of the group, concluded by saying: “Sri Subrata Roy Sahara to me is not only a doting father but also a patriotic son of the soil who has contributed immensely to the country.” Recalling his father’s contribution to support martyrs of the Kargil war and the victims of the 26/11 terror attack and natural calamities, said: “Today it pains me to see his reputation and image maligned in this manner. I humbly seek your support and cooperation.”