SVKMS NMIMS

SCHOOL OF LAW
A PROJECT SUBMITTED ON

SUBROTO ROY (SAHARA) VS SEBI- INVESTOR FRAUD CASE

IN COMPLIANCE TO THE PARTIAL FULFILLMENT OF THE MARKING
SCHEME FOR TRIMESTER IV 2014-15, IN THE SUBJECT OF JOURNALISM AND
MASS COMM-I

SUBMITTED TO FACULTY
Mr. JOYANTO MUKHERJEE
FOR EVALUATION

SUBMITTED BY:-YASH VIJAY

ROLL NO: - A049
COURSE: - B.A. LL.B. (Hons.)
DATE: - 13 SEPTEMBER, TIME: 11:00 am
RECEIVED BY: - ..
ON DATE: - ..
TIME: - .
1

INDEX

SR.NO
.

TOPICS

TABLE OF ABBREVIATIONS
RESEARCH METHODOLOGY
1.)

Relevance of the Topic

Objective of Study
Research Questions/Hypothesis
Limitation of Research

2.)

INTRODUCTION

3.)

MAIN CONTENT

4.)

ROLE OF MEDIA AND MEDIA TRIAL

5.)

THE CASE STATUS

ABBREVIATIONS

PG.N
O

1. OFCD- optionally fully convertible debentures

2. SC- supreme court
3. HC- high court
4. SEBI- securities and exchange board of India.
5. TDS- tax deductable at source
6. SAT- Securities Appellate Tribunal
7. RTAs- registry and transfer agents
8. SIREC-Sahara India Real Estate Corp.
9. SHIC-Sahara Housing Investment Corp.
10. ROC- Registrar of Companies
11. RBI reserve bank of india

RESEARCH METHODOLOGY
In my research, I have adopted the secondary research method wherein I have read and
researched through the statistics provided by the others. Though my topic is a case study
wherein I should have involved primary research, due to the time constraint, I relied on
secondary research.
AIM AND OBJECTIVE:
THE main objective of the above study is to know the inside out of the SAHARA vs SEBIinvestor fraud case. The main aim is to know the role of Mr. Subroto roy in the fraud case as
director of the sahara parivar. To know the functions of SEBI as market regulator and
significance of SEBI in this particular case. the objective is to know the facts and importance

of case as to investor point of view and to know the functioning of the banks and market
regulators and most important is to understand the role of media in this case.

RESEARCH QUESITIONS:
1.
2.
3.
4.
5.
6.
7.
8.

What are the functions of SEBI as capital market regulator?

Role of subroto roy in investor fraud case ?
What is investor fraud case?
Role of SEBI in fraud case?
Role of supreme court?
What is the present condition of the case?
Role of ROC in fraud case?
Role of media in case?

SCOPE OF STUDY
The analysis of the case gave a new perspective to it and the legal aspects came to be known.
By researching and analyzing the case and the outcomes, there is a better understanding of
the procedure of a trial, the collection of evidence and the procedure of forming a new law.
LIMITATION OF THE STUDY
Since the research is secondary in nature, there could not be a much better
perspectiveprovided. Also due to the time constraint, primary research could not be
conducted

INTRODUCTION:

SAHARA INDIA PARIVAR

6

Sahara India Parivar is an Indian conglomerate headquartered in Lucknow, India. The

company has a market capitalisation of US$25.94 billion as of March 2011. Current there are
121,653 employees. In 2004, the group was termed by the Time magazine as the second
largest employer in India' after the Indian Railways.
Sectors:
1.
2.
3.
4.
5.
6.
7.
8.

Financial services
Construction
Media and entertainment
Information technology
International hotel
Dairy& Hospitality
Manufacturing
Sugar factory

FINANCIAL SERVICESSahara has interests in insurance and asset management. Sahara India Life Insurance
Company Ltd. (SILICL) is a life insurance company in the private sector. Sahara Asset
Management Company Pvt. Ltd manages 16 equity and debt mutual funds. Sahara Banking
& Financial Services Fund has been adjudged the Best Performing Banking Sector Fund
over a three-year performance by the international agencies. SAHARA HOUSINGFINA
CORPORATION LIMITED: A National Housing Bank regulated & BSE listed company
targeting to meet the finance needs for housing all over the country. It serves its clientele
through attractive and competitive home loan schemes. In India, incremental disbursement is
around 2,00,000 Crore with a growth rate of around 15-20% .

INTERNATIONAL HOTELS:
Grosvenor House London- the Sahara India Pariwar purchased the hotel
from Royal Bank of Scotland for 470 million (4700 CR).
Plaza Hotel - New York-Acquired by Sahara in 2012-. The Plaza Hotel is
recognized as a Historic Hotel of America by the National Trust for Historic
7

Preservation.75% stake for $570 million from El Ad Properties. A $4 billion

price tag was placed on The Plaza stake.
Dream Hotel - New York- Acquired by Sahara in 2012.

MEDIA AND ENTERTANMENT:

The group owns a national Hindi News Channel Samay and 36 city specific regional news
channels Sahara Samay. It also owns Sahara One A General entertainment channel, FilmyA Hindi movie channel, and Firangi- An entertainment channel. Sahara Samay received the
"Broadcast Engineering Excellence Award" in 2008 for its network newsroom technology.
The group owns publishes and sells one magazine in English, 7 editions of Hindi Daily
Newspaper Rashtriya Sahara, nine editions of Urdu Daily Newspaper Roznama Rashtriya
Sahara and one International Urdu Weekly, Aalmi Sahara.
Sahara produces, markets, and distributes Hindi and other regional language films. Well
known

films

produced

by

the

company

include Bewafaa, Page-3, Sarkar, No

Entry,Wanted. In September 2010, the company was in talks to acquire MGM Studios, but
the deal collapsed. Sahara is willing to try again to take over MGM.
Indian conglomerate could offer up to $2 billion, source says 1The diversified Indian
conglomerate recently surfaced as a potential bidder for MGM.

REAL ESTATESahara India Real Estate Company and the Sahara Housing Investment Corporation,
subsidiaries of the conglomerate, buy and develop land for residential housing projects across
India. The company has projects in Kanpur, Lucknow, Gorakhpur, Hyderabad, Bhopal,
Kochi, Gurgaon and Pune. Sahara has a collaboration with Turner Construction, an
American building company, in some of its projects. Esteemed Customer Segments are
1 http://www.hollywoodreporter.com/news/-11:58 AM PST 09/29/2010 by Carl
DiOrio
8

Ultra High Networth Individuals (UHNIs), High Networth Individuals (HNIs) and Non
Resident Indians (NRIs).Total Estimated Revenue of 15,00,000 Crores, Aamby Valley City
is a township developed by the Sahara India Pariwar in Pune district.
SPORTS:

In badminton, it owns the Awadhe Warriors of Lucknow, one of six teams in

the Indian Badminton League.
In cricket, it owned the Pune Warriors India, a franchise team that played in
the Indian Premier League (IPL).
Sahara owns the Formula One team Sahara Force India.
The company launched a polo team, the Sahara Warriors Polo Team in 2012.
From 2005 Calcutta Football League is also sponsored by Sahara.
In July 2012, Sahara India Praiser picked up the Lucknow franchise of the Hockey
India League (HIL), the Uttar Pradesh Wizards.
It is also the sponsor of the Bangladesh Cricket Team since 2012.
SUBROTO ROY

Subrata Roy was born in Araria in Bihar, India 1948 to Sudhir Chandra Roy and Srimati
Chhabi Roy. He studied at Holy Child School in Kolkata and later studied mechanical
engineering from Government Technical Institute, Gorakhpur. Roy started his first business in
Gorakhpur. He is the son of Smt. Chhavi & Late Shri Sudhir Chandra Roy. He is married to
Swapna Roy who is the Dy. Managing Worker (Personnel and welfare). He has 2 sons, Mr
Sushanto Roy who is the Executive Director and Chief Executive Officer of the Company
and Mr Seemanto Roy who is the Executive Director of the Company.
In the year 1978, he opened a small office in Gorakhpur (Uttar Pradesh). He started with
savings of Rs. 2000 and a Lambretta scooter. His office consisted of a table and two chairs
and a staff of one clerk and a runner boy. Initially he single handedly took up the business of
Deposits and Para - banking.
In a span of just 29 years, the Sahara India Pariwar has grown from just 42 depositors in all
and a single establishment in the beginning to over 6.1 crore depositors through 1707
establishments, across the nation. He has created an empire of over Rs.50,000 crore which is
now recognized as one of the fastest growing business groups in the country.
He has been conferred the ITA TV Icon of the Year (2007)He has received the Global
Leadership Award (2004), Sahara is said to have 29.6 million investors, representing about
8.5% of all households in India.
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MAIN CONTENT
SAHARA INVESTOR FRUAD CASE

Saharas case is all about OFCD and its investor. OFCDs are optionally fully convertible
debentures. They are issued by the company to potential investors in order to raise money.
OFCD holders can become shareholders of the company if they choose to do so. Generally
(which is true in the case of Sahara) there is no asset marked against such investment. In
other words, they are unsecured in nature and in case of a default and liquidation of the
company, they will be one of the last stakeholders to be refunded.
In 2008, RBI debarred Sahara India Financial Corporation from raising fresh deposits.
The growth of Saharas empire was always a mystery; many believed it ran a Ponzi scheme
by collecting funds from investors. The group needed continuous flow of fresh funds to keep
it afloat. With RBI closing a door on the group from collecting deposits from the people, the
group needed a financial instrument that would be out of the purview of RBI but still get
access to public funds. Sahara decided to issue OFCDs by floating two companies Sahara
India Real Estate Corporation (SIREC) and Sahara Housing Investment Corporation (SHIC).
It was the Registrar of Companies (ROC) that needed to clear these investment vehicles.
ROCs role in the entire episode is critical since it cleared the proposal without raising the
most basic questions. Consider these facts- Both the companies had negligible net worth.
SIREC had an equity capital of only Rs 10 lakh and a negative net worth at the time of
issuance while the net worth of SHIC was around Rs 10 lakh.

But both the companies planned to raise Rs 20,000 crore each. Imagine applying for a
bank loan of Rs 20,000 crore with only Rs 10 lakh as your contribution? A banker would
fall laughing on such a proposal, but ROC allowed the Sahara Group companies to go
ahead with the proposal. More than one law was flouted by Sahara in issuing these
OFCDs, which it calls private placement.
Firstly, the sheer size of the issue makes it a public issue. Any company seeking money from
more than 50 persons has to take the approval of SEBI in doing so, in which case the
10

company would have to make all the disclosures required as per SEBI norms. The Sahara
group had sought money from nearly 30 million investors. Apart from the size and number of
investors, another deliberate error was keeping the issue open ended; ideally such issues
should be closed within six weeks. In fact a Sahara group company kept an issue of Rs
17,250 crore open for 10 years.
Saharas money-making machine could have continued had it not committed another major
mistake. Sahara decided to tap the stock markets to raise money through Sahara Prime City.
In doing so the company had to file a Red Herring Prospectus and disclose working and
financials of other group companies. This is when K M Abraham spotted SIREC and SHIC
and found that the money raised through OFCDs was camouflaged as private placements.
Abraham (director of SEBI) found out that even though the Sahara group companies
collected money they did not have proper records of the identity of its investors. How and to
whom would they then return the money? Even professional agencies were unable to locate
the investors. The two companies, Abraham alleged, intended to rotate money between group
companies. Though the OFCD instruments were issued in the name of the two companies,
cheques were sought in the name of Sahara India. It was Abrahams watertight investigation
in the entire Sahara OFCD issue that the case might see its logical end.

EVENTS:
Nov 24, 2010 -| Sebi bars two Sahara cos, Subrata Roy from raising funds
Securities and Exchange Board of India (Sebi) has asked two entities of Sahara Group not to
mobilise funds from equity markets or from issuance of any security to the public while
restraining group supremo Subrata Roy from approaching public for raising money
Nov 26, 2010 | Sahara moves HC challenging Sebi ban on raising funds
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A Sahara firm has moved the Allahabad High Court challenging market regulator the
Securities and Exchange Board of India's (Sebi) order barring some group entities and its
promoters, including Chairman Subrata Roy, from raising funds from public for nondisclosure of information.
Jan 4, 2011 | Sebi approaches apex court in Sahara group case
Securities and Exchange Board of India (Sebi) has moved the Supreme Court against a high
court order staying the market regulators ban on a Sahara group company raising funds from
the public. Sebis petition is likely to be taken up by the apex court on January 5.
Jan 5, 2011 | Sahara can raise funds, but Sebi can seek details
The Supreme Court has declined to interfere in the dispute between the Securities and
Exchange Board of India (Sebi) and the Sahara group and has allowed the company to raise
funds from investors. It has, however, said that the market regulator can seek relevant
information from Sahara directly.
Jan 8, 2011 | Sebi warns investors of 2 Sahara companies
The Securities and Exchange Board of India (Sebi) has informed investors in optionally fully
convertible debentures (OFCDs) of two Sahara group companies that it would not be able to
provide redress to any investor on any complaint in connection with these instruments.

Jan 22, 2011 | Ministry examines Sebi charges against Sahara

The corporate affairs ministry has started examining the charges levelled by the Securities
and Exchange Board of India (Sebi) against two Sahara group companies over fund raising
without proper approvals.
Apr 18, 2011 | Sebi moves apex court on Sahara

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The Securities and Exchange Board of India (Sebi) has filed a caveat in the Supreme Court
claiming that any petition on its ongoing case against two Sahara group entities cannot be
decided without its knowledge.
May 10, 2011 | SC questions Sahara on fund-raising
The apex court has asked Sahara India Real Estate Corporation to produce before it on May
12 the proforma in which investors were asked to apply for debentures. A bench headed by
Chief Justice S H Kapadia also asked the corporation to produce the list of its agents
employed to raise money.
SC tells Sebi to probe Sahara scheme
Asking Sebi to proceed with its probe into Sahara group's Optionally Fully Convertible
Debentures (OFCD) scheme, the Supreme Court today said investors may not have any
knowledge about these products and might feel cheated like in the Harshad Mehta scam.
June 23, 2011 | Sebi asks Sahara to refund Rs 4,843 cr to investors
In the biggest refund order in its two-decade history, the Securities and Exchange Board of
India (Sebi) has directed two Sahara group companies to return at least Rs 4,843 crore
collected under their debenture schemes to investors. The two companies are Sahara
Commodity Services Corporation and Sahara Housing Investment Corporation.
June 25, 2011 | Sahara alleges media trial by Sebi
The Sahara group has criticised the Securities and Exchange Board of India (Sebi) for making
an order against two group companies public and accused the regulator of resorting to a
media-trial in a sub judice case. A Sebi official declined comment.

June 27, 2011 | Sahara moves SC against Sebi order for refund to investors
The Supreme Court will hear on July 4 a Sahara group firms plea challenging a Sebi order
directing the company to return money collected from investors through a scheme along with
15 per cent interest.
July 08, 2011 | SC rejects Sahara plea over OFCD

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The Supreme Court has declined the Sahara group's plea to issue a notice to the government
in on a dispute with market regulator Sebi. The Securities and Exchange Board of India had
directed the firm to return funds raised from investors under an optionally fully convertible
debentures (OFCD) scheme along with 15% interest.
Sept 08, 2011 | SAT asks Sahara to give details of OFCDs
The Securities Appellate Tribunal has asked two Sahara group firms to file an affidavit,
detailing their money raising activity. The tribunal said it wanted to know the total amount of
money raised, the process and the details of investors in the issues of optionally fullyconvertible debentures (OFCDs) done by the two companies Sahara India Real Estate
Corp and Sahara Housing Investment Corp.
Oct 18, 2011 | SAT orders Sahara to refund Rs 24,029 cr in six weeks
The Securities Appellate Tribunal (SAT) has directed two Sahara group firms to refund a sum
of Rs 24,029 crore to 29.6 million investors who had subscribed to its optionally fully
convertible debentures (OFCD). The tribunal also gave a timeline of six weeks to the
companies to complete this unprecedented and massive refund operation.
Nov 11, 2011 | Sahara challenges SAT, Sebi order in SC
Two Sahara group companies, which were asked to refund about Rs 24,000 crore to investors
who had invested in optionally fully convertible debentures (OFCDs), have challenged the
Securities Appellate Tribunal (SAT) order in Supreme Court (SC).
Jan 10, 2012 | Aamby Valley gets Sahara OFCD money
Two Sahara group firms have invested a significant portion of the money raised through the
issue of Optionally Fully Convertible Debentures (OFCD) in Aamby Valley, a luxury
township project developed by the group in Maharashtra.

Feb 12, 2012 | SC pulls up Sebi for leaking Sahara's proposal to media
The Supreme Court has pulled up market regulator Sebi for leaking to media details of the
proposal of Sahara Group's list of property sent to it as a guarantee to ensure that interest of
investors are protected.
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Jun 05, 2012 | SC asks Sebi for list of Sahara-like cases

The Supreme Court has asked the market regulator, Securities and Exchange Board of India
(Sebi), to furnish details of unlisted firms which have raised capital from 50 or more people.
The court asked for the data while hearing an appeal by the Sahara group against an order by
Sebi, in the matter of issue of optionally fully-convertible debentures (OFCD) it issued to
over 22 million investors.
Aug 31, 2012 | SC upholds SAT order, Sahara to refund money
The Supreme Court upheld the Securities Appellate Tribunal (SAT) order directing two
Sahara group firms to refund over Rs 24,000 crore collected from investors through
optionally fully convertible debentures (OFCD).
Sept 12, 2012 | Sebi acting out of vengeance: Sahara
The Sahara Group has accused the Securities and Exchange Board of India (Sebi) of acting
in vengeance, after the capital market regulator failed to acknowledge a vehicle carrying
documents of its investors.
Oct 19, 2012 | Sebi duty bound to take action against Sahara: SC
Refusing to grant more time to the Sahara group of investment companies, the Supreme
Court has allowed the Securities and Exchange Board of India (Sebi) to take action against
the companies if they failed to provide details about some three crore investors from whom
the companies raised Rs 24,000 crore.

Oct 24, 2012 | Sebi to outsource Rs 100-cr Sahara job

The Securities and Exchange Board of India (Sebi) is eager to remove the burden of the
truckloads of investor database that Sahara has given on a Supreme Court order. The market
regulator has thus floated a multi-crore tender, under which it has invited registry and transfer
agents (RTAs) who can handle data processing work for an estimated 300 million application
forms of nearly 30 million beneficiaries. The cost of such a project, say industry sources,
could come to around Rs 100 crore.
Nov 4, 2012 | Sebi seeks help from banks, KRAs to verify Sahara investors
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Market regulator Sebi has decided to seek help from public sector banks and KYC
Registration Agencies (KRAs) for carrying out 'in-person verification' of about 3 crore
investors in the high-profile Sahara case.
Nov 25, 2012 | Sebi prosecution proceedings kick off against 2 Sahara firms
The Securities and Exchange Board of India (Sebi) has begun prosecution proceedings
against two Sahara companies and their top officials, while accusing them of failing to
provide documents related to 30 million investors as directed by a Supreme Court order.
Nov 28, 2012 | Sahara collecting consent letters from OFCD investors showing refunds
Several agents of Sahara India Parivar are collecting sehmat patra (consent letters) from
holders of optionally fully convertible debentures (OFCD), showing that the money has been
refunded to them.
Dec 20, 2012 | SAT dismisses Sahara appeal on extension of deadline
In another setback to Sahara, the Securities Appellate Tribunal (SAT) today rejected its
appeal seeking extension of time for submission of investor documents.
Jan 09, 2013 | SC dismisses Sahara firms' review petition
The Supreme Court has dismissed the review petition moved by two Sahara companies,
saying none of the grounds raised in it justify reconsideration of the August 31 judgment.
Feb 06, 2013 | Sebi free to seize properties of Sahara Group companies: SC
In fresh trouble to Sahara group, the Supreme Court today said that Sebi is free to freeze
accounts and seize properties of its two companies for defying court orders by not refunding
Rs 24,000 crore to investors.

Feb 14, 2013 | Sebi cracks whip on Sahara

A week after the Supreme Court pulled up the market regulator for not taking action against
two Sahara group firms for defying the courts August 2012 order directing refund of Rs

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24,000 crore to investors, the Securities and Exchange Board of India (Sebi) has swung into
action.
Feb 27, 2013 | Sebi tightens noose around Sahara
The Securities and Board of India (Sebi) has written letters to around 2,000 entities,
including public and private sector banks, co-operative banks and mutual funds, to identify
assets belonging to the Sahara group and prevent their transfer.
March 15, 2013 | Sahara claims it paid Rs 700 cr TDS on interest payments
The Sahara group claimed that it has deposited taxes on the interest paid to investors with the
Income Tax Department.
Sebi seeks SC permission for arrest of Sahara chief
The Securities and Exchange Board of India (Sebi) moved the apex court, seeking the
detention of Subrata Roy Sahara, chairman of the Sahara Group, and directors Ravi Shankar
Dubey and Ashok Roy Choudhary.
March 19, 2013 | Despite Sebi glare, Sahara still raises funds
Even as the Securities and Exchange Board of India (Sebi) is considering how to return
funds to Sahara investors, Q Shop retail, Sahara Groups latest venture, is raising funds from
its franchises by charging a stiff non-refundable fee of up to Rs 3 lakh, depending on the
classification of a town.
Apr 04, 2013 | Sebi is rich men's regulator: Sahara
Justifying its claims of over Rs 20,000 crore refunds made to investors in cash, Sahara group
hit back at Sebi and accused it of "being a "rich men's regulator that does not understand poor
investors"
Apr 10, 2013 | Sebi quizzes Sahara chief, seeks asset details
Market regulator Sebi questioned Sahara group chief Subrata Roy and three other top
executives about their assets and investments in connection with the high profile case
involving refund of an estimated Rs 24,000 crore to over three crore investors.
On 26 February 2014, the Supreme Court of India ordered the arrest of Subrata Roy,
Chairman & Founder of Sahara India Pariwar, for failing to appear in connection with
the Rs.24,000-crore deposits his company has not refunded to its investors. He was
eventually arrested on 28 February 2014 by Uttar Pradesh police on a Supreme
17

Court's warrant, in a dispute with Market Regulator - SEBI. In a statement after the
arrest, his lawyer said Mr. Roy's 92-year-old mother was in poor health and needed
"her eldest son" by her side, and hence he failed to appear at the court. He was granted
interim bail by Supreme Court of India for the same on 26 March 2014 on condition
of depositing Rs 10,000 crore with the market regulator Sebi. As of August 2014, Roy
is still in jail and is trying to sale some of his hotel properties to enough money.
MAY19-2014-The Supreme Court ordered Sahara Group companies SIRECL and SHICL to
deposit Rs.10,000 crore of investors' money to secure the release of Sahara chief Subrata
Roy and two other directors in judicial custody.
AUGUST 1-2014-Subrata Roy allowed to negotiate property sales from Tihar
conference hall.
They will be allowed two secretarial staff and one technician, a mobile phone, two
computers, two laptops and stationery. Staff will be allowed in the conference room from
6am to 8pm on working days. All expenses are to be borne by the Sahara group.
SEPTEMBER-9-2014-SC relief to Sahara chief Subrata Roy, grants him 15 days more to
finalise hotel deals.

ROLE OF MEDIA AND MEDIA TRIAL

18

 Sahara alleges media trial by SEBI-2

The Sahara group on Friday criticised the Securities and Exchange Board of India (Sebi) for
making an order against two group companies public and accused the regulator of resorting to
a media-trial in a sub judice case. A Sebi official declined comment. The matter is sub
judice and it is not appropriate for Sebi to go public by putting its order dated 23/06/2011
on its website and issuing a press note, in spite of the orders of the Supreme Court that the
order of Sebi will not be given effect to, Sahara group spokesperson Abhijit Sarkar said in
a statement. It was expected of Sebi to simply place the order before the Supreme Court
and maintain the sanctity of the (SC) order.
Sebi has been vindictive and malicious towards the Sahara Group and this has been apparent
from the chain of events since the last one and a half years. Such an act is really not expected
from such a responsible regulator institution. Of course it is not Sebi, it is by some wrong
people of Sebi.The group said that as a responsible regulator, Sebi was meant for protecting
the interest of the investors but in its case, it is continuously scaring investors. The group
said investors interests were safe. Over 6.6 million people had invested in the bonds,
according to it. Investors interest is absolutely protected by Sahara. Further, the matter is
still sub judice and there is no direction/order of the courts against Sahara, the statement
said.
3

SC pulls up Sebi for leaking Sahara's proposal to media:

The Supreme Court has pulled up market regulator Sebi for leaking to media details of the
proposal of Sahara Group's list of property sent to it as a guarantee to ensure that interest of
investors are protected.

The apex court said it was "distressed" that the proposal sent by Sahara's counsel to the
advocate of Sebi has come on one of the TV channels and such incidents which have been

BS Reporter | Mumbai -June 25, 2011

Press Trust of India | New Delhi February 12, 2012

19

increasing day-by-day "not only affect the business sentiments but also interfere in the
administration of justice".
"We are distressed to note that even 'without prejudice' proposals sent by counsel for the
appellants (Sahara) to the counsel for Sebi has come on one of the TV channels.
"Such incidents are increasing by the day. Such reporting not only affect the business
sentiments but also interfere in the administration of justice," a bench headed by Chief
Justice S H Kapadia said.
Taking strong note of the incident, the bench said it would pass appropriate orders regarding
reporting of sub- judice matters."In the above circumstances, we have requested counsel on
both sides to make written application to this court so that appropriate orders could be passed
by this court with regard to reporting of matters, which are sub-judice," the bench, also
comprising justices A K Patnaik and Swatanter Kumar said.The leakage of the proposal was
brought to the notice of the court by Sahara's counsel and senior advocate Fali S Nariman,
who had sent it to the Sebi's counsel. Sahara's another counsel Kehav Mohan said the
proposal was about the Group's assets to the tune of Rs 35,000 crore as against the liability of
Rs 24,000 crore towards its investors.

20

Tilting the balance SC's order on trial coverage is prone to

misuse-

THE Supreme Court has ruled that if publishing news concerning a trial creates

a real and substantial risk of prejudice to the proper administration of justice or to the
fairness of trial, the court could allow a postponement of its publication through an
appropriate order. The order was passed on complaints that had alleged breach of
confidentiality during the hearings of a dispute between the Sahara group and stock market
regulator Securities and Exchange Board of India, when some documents pertaining to the
case were leaked to the media. The 56-page judgment, coming from a bench headed by Chief
Justice S H Kapadia, is likely to be interpreted in different ways.

That the apex court refrained from framing guidelines on how the media should report on
court trials is welcome, since any such directive could have had an adverse impact on the
freedom of the media. That the order allows an aggrieved or accused party to move a high
court or the Supreme Court with a plea for restraining publication of news on a case under
trial could be seen as only a reiteration of well-established principles of law and justice. Even
earlier and in the normal course of things, anyone with a genuine grievance that publication
of news on a trial could result in miscarriage of justice could move any court of law pleading
for remedial measures. In spite of that, however, no significant court intervention so far has
effectively put a blanket ban on the reportage of court cases under trial. But what Tuesdays
judgment has done is to tilt the balance in favour of litigants seeking court interventions
which might well result in the imposition of such gag orders on the media. To that extent, the
apex courts order is prone to misuse.

Business Standard | New Delhi September 13, 2012

21

Indeed, the danger arising out of such misuse lies elsewhere. Of late, India has been
witnessing the unravelling of a large number of corruption scandals that have shaken the
peoples faith and confidence in the governments ability to run a clean administration. The
2G spectrum scam case is already being heard in the courts and the ongoing coal block
allocation scandal too will go the same way. A beleaguered government will be desperate to
prevent further political embarrassment arising out of these corruption scandals and may be
encouraged to use the Supreme Court order to seek a stay on the coverage of the daily court
hearings on these cases. Similarly, companies accused of wrongdoing may be emboldened to
seek relief from the courts.
Even when such petitions are not granted, the legal process itself is certain to cast an adverse
impact on the freedom of the media and undermine the peoples right to know about such
cases before the court. Instead of paving the way for such curbs, it would perhaps make more
sense if the courts took upon themselves the responsibility of allowing independent and
comprehensive electronic coverage of court cases that both the people and the media can
freely access for information or reportage. That would be a more effective way of ensuring
that the coverage of court proceedings does not create the risk of prejudice to the proper
administration of justice or to the fairness of trials.
5

Let's fight it out on TV, Sahara challenges Sebi-

A signed full-page advertisement in the newspapers on Sunday invited the Securities and
Exchange Board of India to a live debate on television-

I hereby challenge and invite the Chairman or/and Members or/and Executive Directors
of Sebi for a live debate with me on a TV channel and let people know their wrong intent
and deed, as a corporate regulator and clearly understand what extreme degree of injustice
is being done by them to malign the image of Sahara India Pariwar, said the
advertisement entitled Enough is Enough.

Sachin P Mampatta | Mumbai

-March 16, 2013

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It futher asks for a 10-day notice to organize the appropriate channel and 60 minutes of airtime to facilitate the debate. Subrata Roy Sahara would represent his group in the discussion,
to expose the truth, claimed the advert. The advertisement also noted that he had written
thrice to the chairman of Sebi seeking an appointment, but without any luck. BN Agarwal, a
former judge of the Supreme Court who is overseeing the refund, also refused to meet with
Sahara group officials, said the advertisement. The advertisement further accused Sebi of
malafide acts and of acting under the diktats of powerful third parties.

PRESENT CASE STATUSThe case is still pending in the Supreme Court of India Mr. Subroto Roy is allowed to work
from Tihar jail (Delhi). Currently he is negotiating to sell three Sahara hotels abroad to
furnish a bail of rs 10,000 crore as ordered by SC.

BIBLIOGRAPHY:

NEWSPAPERS
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1.
2.
3.
4.
5.
6.
7.

Business standard
Economic times
Times of india
Indian express
The hindu
Dna
Live mint

WEBSITES :
1.
2.
3.
4.
5.
6.
7.
8.
9.

moneybhai.moneycontrol.com
http://in.reuters.com
www.saharaindiapariwar.
www.firstpost.com
timesofindia.indiatimes.com
ww.thehindu.com
economictimes.indiatimes.com
www.business-standard.com
www.hollywoodreporter.com

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