R Jagannathan
Firstpost.comThe Sahara Group, which has been successfully evading (for nearly 18 months now) a Supreme Court order to refund around Rs 24,000 crore that was illegally collected by two group companies, is busy trying to bully the media now.
In a case filed against Tamal Bandyopadhyay , author of a still-to-be-released book on the Sahara Group (Sahara: The Untold Story, published by Jaico), the Calcutta High Court granted an ex-parte stay last month on the release of the book. Worse, the group has also filed an unheard of Rs 200 crore defamation suit against the journalist – and to date there has been no relief. (You can read an excerpt from the book here ).
>Muzzling authors and journalists is the oldest trick in the book for corporate groups and it is indeed surprising that a high court can grant an ex parte stay when the highest court in the land has made a series of negative comments on the Group that go well beyond what any journalist may want to say about Subrata Roy's Sahara Group.
In an unrelated case involving Jignesh Shah of the MCX group , economist Ajay Shah was sued in three different courts for defamation – allegedly for claiming that the former was gaming the regulatory system. But the author is obviously having the last laugh as the group is in all kinds of hot water over defaults at its National Spot Exchange Ltd (NSEL), a commodity exchange founded by Jignesh Shah. When last heard of, the Mumbai police had filed a 9,000 word charge-sheet against NSEL and Jignesh Shah himself has been grilled several times on the matter.
The Sahara Group, too, has been accused on indulging in regulatory arbitrage, and trying to operate in areas where regulation is weak or not clear. (In the past, it has had brushes with the Reserve Bank and Sebi). It was caught out in one such case where Sebi managed to prove in the Supreme Court that two Sahara companies - Sahara Real Estate Corporation and Sahara Housing Investment Corporation – could not evade its scrutiny for an optionally fully convertible debenture issue to raise up to Rs 20,000 crore each through "private placements". The SC ordered both companies to refund the money by 30 November 2012, but to date the Saharas have not complied with the order (Read the SC order here ).
At the last hearing on the case, the Supreme Court called the behaviour of the Sahara group "obnoxious" for failing to disclose the source of funds used by two group companies to repay investors. The two companies glibly claimed all their investors had been repaid, and declined to share the details with Sebi, which has been tasked by the apex court to repay all genuine investors after identity checks. The court blasted the group for its "audacity" in suggesting that the source of funds was "immaterial."
Faced with the group's apparent intransigence, the Supreme Court even threatened to send the CBI after them. "If you are not willing to inform about the source, we will order investigation. We will summon CBI and registrar of companies (RoC)." The court warned the Saharas: "Don't think that the court is helpless." In fact, the Saharas have been repeatedly rapped by the apex court – but they have successful cocked a snook at the law. At a hearing in October last year - more than a year after the 31 August 2012 judgment of the Supreme Court – the court ordered the group to stop playing "hide and seek" . It warned that "there is no escape and the money has to be paid…. You indulge too much in hide and seek , we cannot trust you any more."
According to another newspaper report of October 2013, the court threatened to have Sahara officials arrested for failing to comply with its 2012 order and being in contempt. Business Standard reported then: "When Sahara's counsel suggested that Subrata Roy (Sahara chief) was not liable to contempt, a testy Justice (JS) Khehar suggested that the court would 'try to find a way out' and pointed to a 1960 judgment which allowed detention till court orders were complied with."
On another occasion, the lead judge in the case, KS Radhakrishnan, told the Sahara counsel that it was making a "mockery" of its 2012 order .
The 31 August 2012 judgment had ordered the following: (1) the court asked Sahara to submit documents to Sebi in 10 days (which it failed to do), (2) repay the money to Sebi by 30 November (which it failed to do), (3) It also gave Sebi sweeping powers to incur any cost, including the cost of hiring expert investigators to check the veracity of Sahara's investors, and seek court directions when needed (which Sebi has done, but Sahara has tried to block at every stage); and (4) it even set up a former Supreme Court judge as overseer to help Sebi implement the judgment.
In its original order, the Supreme Court came close to suggesting that Sahara may not have as many investors as it claimed. Justice Khehar, one of the two judges on the bench, observed frostily: "Despite restraint, one is compelled to record that the whole affair seems to be doubtful, dubious and questionable. Money transactions are not expected to be casual, certainly not in the manner expressed by the two companies."
While charitably admitting that he would not like to "make any unrealistic remark", Justice Khehar said in his judgment, after scrutinising just one single record provided by Sahara, that "there is no other option but to record... the impression emerging from the analysis of the single entry...that the same seems totally unrealistic, and may well be, fictitious, concocted and made up".
Clearly, the Supreme Court has not been convinced about the bonafides of the Sahara group's investors. But it has not been able to force the Group to fully comply with its orders either so far. When orders of the highest court can be dealt with so lightly , it is no surprise that the Saharas think they can overawe the media with court cases.
The writer is editor-in-chief, digital and publishing, Network18 Group
