Pay up or Face Prison... Again

India Today - - UPFRONT - By M.G. Arun

The law ap­pears to be com­ing down ever more heav­ily on Subrata Roy, chair­man of the em­bat­tled Sa­hara Group, who’s out on bail af­ter spend­ing more than two years in Ti­har jail in a case of seek­ing il­le­gal de­posits from the pub­lic. On Feb­ru­ary 6, the Supreme Court or­dered the seizure of Sa­hara’s Aamby Val­ley project in Pune, to force the group to pay Rs 14,799 crore more to the Se­cu­ri­ties and Ex­change Board of In­dia (Sebi). Roy’s op­tions are run­ning out. If his lawyers can­not come out with an al­ter­na­tive list of prop­er­ties to sell, the prime Aamby Val­ley prop­erty, a town­ship in Pune that spans over 10,000 acres and is re­port­edly worth Rs 39,000 crore, could go un­der the ham­mer. A Mum­bai-based cor­po­rate lawyer with knowl­edge of the case says, “Sebi is likely to seek the help of some top real es­tate con­sult­ing firm to auc­tion off the project and raise the money.” The case will next be heard on Feb­ru­ary 27.

Roy’s prob­lems date back to

The move to seize the Aamby Val­ley project is seen as an ef­fort to get Roy to pay up

2008, when the Sa­hara Hous­ing In­vest­ment Cor­po­ra­tion (SHICL) and Sa­hara In­dia Real Es­tate Cor­po­ra­tion (SIRECL) raised Rs 19,400 crore from 22.1 mil­lion in­vestors through op­tion­ally fully-con­vert­ible deben­tures (OFCDs), which are loan cer­tifi­cates that can be con­verted into eq­uity shares when the in­vestor wishes. Later, when Sa­hara Prime City Ltd, a de­vel­oper of homes and com­mer­cial prop­er­ties, sought Sebi’s nod to raise money from the pub­lic, it was al­leged that the other Sa­hara com­pa­nies hid facts about the deben­ture is­sue in the doc­u­ments they had sub­mit­ted.

Af­ter a tough le­gal bat­tle, in Au­gust 2012, the Supreme Court or­dered SIRECL and SHICL to re­turn the in­vestors’ money with 15 per cent in­ter­est. This amounted to Rs 24,000 crore, which could be paid in in­stal­ments. With the group play­ing tru­ant, the court later or­dered that at least the prin­ci­pal amount must be paid back to in­vestors. The com­pany has so far de­posited Rs 11,000 crore, Sa­hara’s coun­sel Kapil Sibal told the apex court in Novem­ber last year. Cor­po­rate lawyers see the move to seize the Aamby Val­ley project as the next log­i­cal step in get­ting Roy to pay up.

“It is not an empty threat from the apex court,” says another lawyer. “The com­pany is tak­ing too long to com­ply with the court’s ear­lier or­der, which leaves it with no op­tion but to tighten the screws.” Sa­hara is not even able to pay off the prin­ci­pal amount, which has in­fu­ri­ated the court, he adds. The apex court now wants to take the case to its log­i­cal con­clu­sion. If Roy can­not pay, he faces the spec­tre of go­ing back to jail.



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