" It said that if the money not chained by the investors had to go to the consolidated fund of India, then there could be no tax demand and if there was a tax liability, then after clearing it, the balance should go back to Sahara companies."
New Delhi, Aug 1 - The Supreme Court Friday cleared the decks for shifting Sahara chief Subrata Roy and two other directors to a make-shift jail in the conference hall at the Tihar Jail court complex to facilitate his negotiations for the sale of his properties in India and abroad.

A bench of Justice T.S.Thakur, Justice Anil R. Dave and Justice A.K.Sikri said that the Delhi government will issue a notification designating the conference hall as a jail by Aug 4 where Roy along with two other directors - Ravi Shankar Dubey and Ashok Roy Choudhary - will be shifted Aug 5 and stay for ten working days.

This is being done to enable Roy to raise Rs.10,000 crore to make part payment of the investors money raised in 2008-09. The apex court by its March 4 order had asked Sahara to deposit Rs.5,000 crore to be paid in cash and Rs.5,000 crore through bank guarantee.

Raising this money is also a condition for the release of Roy and two other directors who are in judicial custody since March 4 for not complying with the apex court order of Aug 30, 2012 and Dec 5, 2012 to pay back to the investors the Rs. 24,000 crores that two Sahara companies SIRECL and SHICL had raised through optionally fully convertible debentures (OFCDs) in 2008-09.

Roy had moved the court seeking to be shifted to an outhouse with conference facilities within the Tihar jail complex for negotiating with prospective buyers or lenders of three overseas Sahara hotels - Grosvenor House Hotel in London and the New York Plaza and Dream New York hotels in New York.

In the make-shift jail in the conference hall, Roy will have the assistance of two secretarial staff and a technical person who would operate the electronic equipment including video conferencing.

The court permitted the use of two computers, two laptops, a mobile and a landline. They will be provided with the facility of video conferencing, wide screen and WiFi by the jail authorities but Sahara will have to bear the cost.

The secretarial staff and technical person will be allowed to enter the jail premises by 6 a.m. (lock out time) and leave at 8 p.m. (lock in time).

Solicitor General Ranjit Kumar, appearing for the government, opposed the plea to allow the three Sahara staffers to stay beyond 8 p.m. as contact with American buyers/lenders will take place only after that time.

He also said that Sahara staffers should not be allowed to come to Tihar Jail on Sundays and gazetted holidays.

All the visitors should be subject to jail rules and regulations as per the affidavit filed by the Tihar jail authorities on July 30, he added.

Initially, Roy and two other directors had sought 20 days lodging in the conference hall but the court scaled it down to 10 days. But as Ranjit Kumar said that no secretarial facilities could be allowed to Roy and two other director on Sundays and gazetted holidays, the court allowed the Sahara plea for 10 working days.

Even as the court paved the way for the shifting of Roy, Dubey and Choudhary to the make-shift jail, it asked that soon after they have arranged Rs.10,000 crore, they must outline their plans for the payment of the balance amount which SEBI has now scaled upto Rs. 39,000 crores with the income tax department raising a tax demand of Rs.10,000 crore.

As Additional Solicitor General Tushar Mehta appearing for the income tax department told the court that tax demands on money raised by SIRECL and SHICL were Rs.10,000 crore and the tax department treats this money as an undisclosed income of Sahara, the court found the situation tricky.

It said that if the money not chained by the investors had to go to the consolidated fund of India, then there could be no tax demand and if there was a tax liability, then after clearing it, the balance should go back to Sahara companies.

Saying that it would examine the matter at a later stage, the court said Sahara will have to comply with the earlier court order of returning the investors money.


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