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01 April, 2014

The Law's lengthening arm

BRP Bhaskar
Gulf Today

Years ago, on a Friday, two judges of the Supreme Court of India sat at the home of one of them after dinner to hear the bail application of an industrialist who had been given a jail term by the Delhi high court earlier in the day. They did so to avoid the tycoon having to remain in prison until Monday, the court’s next working day.

An urgent hearing by judges after working hours is not something an ordinary citizen can hope for. It is a privilege available only to a rich litigant with high-paid counsel. 

Against this background, the Supreme Court’s pursuit of the cases against N. Srinivasan, President of the Board of Control for Cricket in India, and Subrata Roy, head of the Sahara Group, who modestly describes himself as its Managing Worker, comes as a refreshing change. Both are businessmen who are under scrutiny in connection with suspicious deals.

Srinivasan is Chairman of the India Cements Limited, owners of the Indian Premier League team Chennai Super Kings. His son-in-law and CSK official Gurunath Meiyappan was arrested by the Mumbai police last year in a betting and spot-fixing case. While police and a BCCI team were probing the scandal he got himself re-elected as BCCI president.

When the Cricket Association of Bihar brought the issue before the Supreme Court, it asked how the BCCI could conduct a proper inquiry with Srinivasan at the helm and gave him two days’ time to step down. Publicly he took the position that under the BCCI bylaws he could not be removed but in the court he offered not to perform the president’s functions until the case was disposed of.

Rejecting the offer, the court appointed former Indian cricket captain Sunil Gavaskar as interim president of BCCI and entrusted him with responsibility of conducting this year’s IPL matches. BCCI vice-president Shivlal Yadav was asked to look after other duties of the president.

Subrata Roy’s troubles began when the Securities and Exchange Board of India (Sebi) started investigating a complaint that the Sahara Group committed various illegalities in raising over Rs240 billion from more than 30 million investors.

The group had filed a prospectus before Sebi in 2009 in preparation for an initial public offer of the shares of its real estate venture, Sahara Prime City. When Sebi sought some clarifications, the group sent to its office 127 truckloads of documents — more than 30 million applications and 20 million bond redemption vouchers the companies had received from investors.

Sebi’s scrutiny showed the two companies had resorted to large-scale fund-raising exercises without complying with the rules. It ordered refund of the money. The Securities Appellate Tribunal turned down the group’s appeal against the Sebi directive. So did the Supreme Court, which asked the two companies to deposit Rs 240 billion with Sebi for refund to the investors. It said payment could be made in three instalments. The group paid only one instalment of Rs 51.20 billion.

Roy who played truant was arrested four weeks ago on a non-bailable warrant issued by the apex court. He is still in custody, unable to meet the bail bond terms of a cash deposit of Rs 50 billion and a bank guarantee for an equal amount. The court rejected a scheme Roy submitted for refund of investors’ money, saying it was impractical.

The Sahara Group says it has raised funds to the tune of Rs 2,250 billion since its inception in 1978. It puts its net worth at Rs 681.74 billion and total assets at Rs 1,525.18 billion. Its employees are said to be working on a plan to contribute their mite and raise a Rs100 billion to secure Roy’s release. 

The Supreme Court has acted against Srinivasan and Roy without any adverse legal findings against them. Roy’s counsel told it last week that under the law a man cannot be jailed for not honouring a money decree without first establishing through inquiry that he had the capacity to pay but had defaulted.

The court is acting on the strength of the constitutional provision which gives it the authority to pass any order to do complete justice in a matter before it. Its readiness to invoke this omnibus provision to check exploitation of the unwary public by the rich and the powerful may serve as a warning to those who are inclined to take advantage of loopholes in the laws. -- Gulf Today, April 1, 2014.

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