Why The Incarceration Of Sahara Chief Roy Was A Legal Necessity

NEW DELHI: February,2014: it was late afternoon and the corridors of the Supreme Court wore an empty look. A group of gentlemen from Sahara India rushed past, one repeating, “they cannot send Sahara Sri to jail!” while another named prominent people who owed them a favour. Later one came to know that the Supreme Court had issued a non-bailable warrant against Subrata Roy. Over the next few months, the Court would witness one of the most hostile and dramatic hearings in recent times.

On March 4, 2014 (now referred to as the detention order), amidst much drama Roy was produced in the Supreme Court of India. He told the bench of Justice K.S. Radhakrishnan and J.S. Kehar his story about the Sahara Family (what others see as a multi billion dollar corporation) and why that should change their mind on the company’s alleged contempt of court. The humane side of Sahara incorporated didn’t impress the Bench. The court found that Roy and others had been given ample chances to comply with orders. Yet the accused had chosen dilatory tactics to delay implementing court instructions.

How did one of the most influential persons in our country get into this situation? In 2012 a three-judge bench (Chief Justice Altamas Kabir, Justice SS. Nijjar and Justice Chelameswar) of the Supreme Court upheld the findings of SEBI and SAT (Securities Appellate Tribunal) and held two Sahara companies (Sahara India Real Estate Corporation Ltd and Sahara Housing Investment Corporation) guilty of floating fictitious deposit schemes. The companies were asked to refund Rs 10,000 crores to the investors. The enterprises failed to deposit this amount and were found to be in contempt of court. Two years on, the detention order came to be passed against Roy.

This detention order was challenged on March 12, 2014 by Sahara asking that this order be declared null and void in law and that the custody of Roy should be declared illegal. This petition was mentioned in the Chief Justice’s court and an early hearing was requested. The matter came up for hearing in front of Justice K.S. Radhakrishnan and J.S. Justice Khehar.

At the very outset, Ram Jethmalani appearing for Roy requested that the judges should recuse themselves. The senior lawyer submitted that the nature of arguments were such that it would be embarrassing for the judges. He also articulated his client’s apprehension of prejudice.

The Bench felt that recusal in this case would violate their oath to office. The oath mandates them to perform their duty without fear or favour, affection or ill will. They asked why should there be any bias? To which Dhavan asked that is it not possible that the court might have made a mistake serious enough to give the presumption of bias even if it did not as such exist?

Arvind Datar appearing for SEBI argued vociferously against this request for recusal. He went on to say that in his entire career he had never seen a petition signed by 5 senior counsels of such imminence (the five included Ravi Shankar Prasad and Ram Jethmalani). The Bench decided to hear the petition as listed by the Court registry.

The petition raised the following issues, (a) the order violated article 21 (right to life) of the constitution. The accused without having been given a hearing was sent to jail, this was a contrary to the principle of natural justice. (b) Whether the court had correctly followed the law as per the Civil Procedure Code, 1908 (Section 51, Order 21 Rule 37 and 40). That the aforesaid provisions provide procedural steps to be followed before putting the judgment debtor in prison. Including issuing show cause notice and allowing the debtor to lead evidence on why he should not be committed to prison. (c) Violated order XIII Rule 6 of the Supreme Court rules 1966, wherein in this court could not exercise power as an executing authority when dealing with an order passed by them previously in appeal (that is the order demanding refund to investors).

The bench rejected the above propositions of law and also found the petition as being not maintainable (that there is no provision in procedural or constitutional law that justifies the legal nature of such a petition).

The Court was clear that first, disobedience of court orders strikes at the very root of rule of law. Defiance of judicial orders would lead to the breakdown of constitutional machinery. Second, the contemnor was well aware of the consequences of repeatedly defying court orders. Several opportunities were given to the petitioners to respond to the contempt petition (25 dates of hearing).

In fact, at one point the court had ordered (order dated 28.10.2013) that the accused could not leave the country without court permission. But later relaxed this direction on the contemnors request for urgent business travel. Third, the conduct of the contemnors was abrasive and disrespectful to constitutional courts and statutory bodies. There was repeated stonewalling by the contemnors against SEBI’s inquiries.

In spite of repeated requests the aforesaid companies gave few details on the investors, details on applications and subscriptions etc. Every tactic possible to disregard institutions was made. In fact, even though High courts have no jurisdiction on issued regulated by the SEBI Act yet orders of such nature were assailed by Sahara at the Allahabad High Court. Fourth, the contemnors systematically frustrated the orders of the court. And Article 142 and Article 129 of the constitution provides exceptional power to the court power to compel obedience and observance of judicial orders so as to do complete justice.

The judgment ended by asking what a judge should be made off to deal with litigants who have nothing to lose. That today there is a superhuman amount of grit and composure required by judges.

On May 7, 2015, Justice J.S. Kehar asked for recusal from the Sahara case and a week later Justice K.S. Radhakrishna retired from the Supreme Court of India. On the day of his retirement he went on record to say that the bench was under great pressure and thanked Justice J.S. Kehar for being brave.

Now 18 months later, there is barely any progress in getting the billionaire to furnish the bail amount. Yet another new bench headed by Chief Justice T.S. Thakur has had a confrontation with Counsels appearing for Sahara. This time regarding extension of Roy’s parole. Following an argument on the conduct of the contemnor the bench passed an order denying Roy parole. However, later that day Kapil Sibal tendered an apology and this order was modified and parole was extended.

Over the last few years SEBI’s counsel has consistently maintained that rarely do the properties of Sahara have a clean title and it is difficult to auction such assets. Lawyers from Sahara insist that there is plenty to sell but if only Roy can negotiate as a free man. In the meanwhile the properties that are put up for sale attract all kinds of buyers and curiously the deals never go through.

The argument that the incarceration of the Sahara chief is a result of misuse of the law is incorrect. From K.M. Abraham’s detailed SEBI order in 2011 to the High court’s various strictures against Sahara to the disobedience of Supreme Court orders, the detention order was a necessity. The courts promise of justice cannot be seen to be held to ransom by the powerfuls ability to maneuver the legal process.

(Abhik Chimni is a lawyer)

(Editor’s note: The Supreme Court is expected to hear Sahara Group chief Subrata Roy's plea for extension of his interim parole on Wednesday.)