“We cannot allow your incarceration to continue indefinitely,” observed the Supreme Court in the Sahara case, perhaps a tacit acknowledgment of the fact that group chairman Subrata Roy has spent an unusually long time — over a year now — in jail. Ironically, it is the conditions laid down for his bail — which are extraordinary to say the least — that have led to his continued incarceration as an undertrial. At the same time, the Sahara case is no closer to a denouement now than it was three years ago, when SEBI passed its final order holding the group guilty of illegal fund-raising. More than two years have elapsed since the Supreme Court directed the Sahara group to deposit ₹24,000 crore with SEBI so that the monies could be refunded to investors, an amount that has escalated with interest. The truth is that the group hasn’t even been able to make the part payment of ₹10,000 crore to secure Roy’s release. After Sahara’s abortive attempt to sell off its foreign properties, one wonders whether the group has the financial wherewithal to meet a demand of this magnitude. In the latest hearing, the Supreme Court bench expressed its frustration over the lack of progress, warning that it would appoint a receiver for the Sahara group’s assets if this last attempt to raise cash failed.
Subrata Roy has a lot to answer for the dubious manner he conducted his business, but the Sahara case raises two questions for the judiciary and the regulator. Has the unusually large figure set for his bail held up the resolution of the case? Also, what exactly does the Court or SEBI hope to do with the additional money it secures from the group? After all, SEBI has managed to refund only a miniscule fraction of the initial tranche of ₹5,120 crore that Sahara deposited with it. Repeated calls for claims have resulted, as the regulator itself admits, in only 4,900 people coming forward. Both SEBI and the Court are aware that the reason for this is that the three crore investors, which Sahara claimed to have, simply did not exist. This points to the heart of the problem about the Sahara case — that it should have been investigated and prosecuted as a massive money-laundering operation. This was never a case about investor protection, which is SEBI’s remit. If sums collected from Sahara end up being merely lodged in SEBI’s Investor Protection Fund, what purpose would that serve?
Given the circumstances, it is time the Court had a rethink about the case. Sahara is already under the investigative lens of the Enforcement Directorate for possible violations under the Prevention of Money Laundering Act — a case that is much more deserving of close judicial monitoring. Continuing to pretend the case is about investor protection will only result in more absurdity — and more delay.