I have written about this earlier too, and have taken the liberty to reproduce some statements from my earlier editorials on this topic. I do not believe that Subrata Roy is wrong. However, that bit later. What amazes me is the way media has declared him a cheat and is almost celebrating his arrest without any mention of his arguments that are compellingly logical. To me, headings like “Subrata Roy brought to justice” are such shameful giveaways of media’s hidden jealousy against a self-made one-generation success story, something that the media just cannot handle. His group is said to be India’s biggest private sector employer and second biggest overall. He has shown absolute commitment to support sports – an area where success is always associated with a nation’s pride internationally. His open assertions of being a patriot have their weight in the various behemoth social initiatives undertaken by his group – with no apologies to the slanted English media in India which, I feel, hypocritically slanders anyone who represents the ‘other’ India (lest you should forget, it was this very media that shamelessly reported gossip a few years ago about him being ‘critically ill’ and on his deathbed; no surprises then that the same English media during his hay days never wrote a good piece on his amazing story of unbelievable hard work). His management philosophies are noble and he is a good human being.
However, he has never compromised with the establishment and has always taken it head on, whenever harassed, with full page advertisements, explaining his reasoning quite logically and clearly. Even his harshest critics accept that the man is a visionary – his mammoth investments in media, housing, hotel, sports and other industries being compelling evidence. He may not be as polished as the Tatas and the Birlas and may have certain quirks in his living style or office culture, which can be an eyesore to some. But that cannot be the reason to celebrate his agony. And yes, having known him personally over many a long discussion, I can guarantee that the man religiously knows his numbers and has a financial acumen that is better than the combined intellect of all Indian regulators in the industries where he operates.
However, India is a strange place of a handful of ruling clique who try to influence thoughts of all others. That Subrata Roy Sahara titles himself as the Managing Worker of his group only adds to the ire of India’s very caustic bourgeoisie, which, hand in hand with the English media, would be loath to have such an unabashed community representative of workers amongst their well ‘oiled’ and ‘greased’ group. So every time Subrata Roy Sahara and his likes attempt to tread the path of diligent and astute effort – assuming the same equated to returns – they’re pulled down acerbically and vindictively by the group representing the old, feudal India. You see, this group believes that only they know how India should be run and by whom. Look around and you’ll see many examples strewn across India of how honest upstarts have been trampled upon by the powers that be before they could gain ground – wherever there has been anyone attempting to improve the condition of India, they’ve had a horde of regulatory, tax, police and judicial bodies running up their door to initiate the so-called enquiries and ‘search’. The same group has billionaires aplenty thanks to the existing crony capitalism, in cahoots with a similar group of corrupt bureaucrats (regulators included) and politicians, and they fight tooth and nail, criminally and illegally, to ensure that there is no new honest and ethical claimant to their industry space, especially if such an entrepreneur were from the proletariat. And that is the sad game which has unfortunately victimised Subrata Roy.
Having studied in detail the entire case between Sahara and SEBI, I am compelled to say that the manner in which the market regulator has treated the Sahara Group is not only in violation of the laws of the land but also sets a bad precedent for India’s capital markets. In April last year, I had written on how various points in a 2012 Supreme Court judgement against the Sahara Group, on the basis of an earlier Securities and Exchange Board of India order, were erroneous (The Unputdownable, http://www.thesundayindian.com/en/story/the-unputdownable/25/47189/). Let me try and give a short synopsis. The Sahara group, which had issued Optionally Fully Convertible Debentures since 2001 with Government permission, and had submitted all details as required by the authorities, suddenly got a prohibitory order from SEBI in November 2010 against the OFCDs issued by two unlisted group companies, Sahara Housing Investment Corporation Ltd and Sahara India Real Estate Corporation Ltd. This, despite the fact that just seven months before SEBI had said that as these unlisted companies had not filed a draft red herring prospectus with it, any complaint with respect to these two should be handled by the Ministry of Corporate Affairs. Of importance is the fact that the Ministry of Corporate Affairs, in its written submission to the Allahabad High Court in 2010, mentioned, “The issuance of OFCD [by] the petitioner company after the registration with the Registrar of Companies has been permissible under law. The Central Government remains the regulating authority for the company.” Similar were the notings of Additional Solicitor General, Mohan Parasaran (who is now Solicitor General), and of the Minister of Corporate Affairs, Veerappa Moily.
True to its past, SEBI disregarded all this and brought out an order against the two Sahara companies in June 2011, demanding that they immediately pay back all the moneys collected through OFCDs, with due interest. After subsequent hearings in the Securities Appellate Tribunal, finally in August 2012 in the Supreme Court, the two Sahara firms unfortunately again received the short end of the judgement, when Sahara was ordered to pay back the OFCD moneys with interest. Interestingly, not only were a few of the statements in the judgement seemingly wrong, but the judges also weren’t clear on how much money was in contention. While one believed that the OFCD money collected by two Sahara firms was around Rs 27,000 crore, the other said that the amount collected was around Rs 40,000 crore. Moreover, the August 2012 judgement gave powers to SEBI much beyond the SEBI Act. It directed SEBI to attach all bank accounts related to the two companies, in case the two Sahara firms fail to comply with the orders. But as per the SEBI Act then, SEBI could have attached only those bank accounts that related to the proceeds involved in the violation of any of the provisions of this Act.
The Supreme Court order resulted in SEBI attaching not just the movable and immovable properties of the two companies involved, but also of other group companies even though this wasn’t mentioned in the judgement. This not just violated the SEBI Act, but went beyond the basis of capitalism that distinguishes between group entities and shareholders. Because that’s what SEBI did against the Sahara group after the August 2012 order. It made a plea to the Supreme Court in July 2013 requesting it to act against Subrata Roy for not following the earlier order. This is despite the fact that Subrata Roy is not a director in those companies, and cannot be held liable. In other words, what SEBI wished the Supreme Court to enforce is that any shareholder of any company should be indicted for the respective company’s shortcomings. SEBI also pleaded to the court that the Sahara Group was a single economic entity and any group company’s commitments were liable to be paid by the other group companies. And finally, erroneously influenced by SEBI’s argument, we now have Subrata Roy being sent to Tihar by the court. SEBI claims that thousands of crores are payable to investors, despite the fact that SEBI can’t line them up, and no one is coming and claiming they have been cheated by Sahara. By basic logic, had it been true that Rs.20,000 crores and above worth money was cheated off the Indian public, then there would have been millions grouping up, staging protests, making FB groups, filing cases, and hundreds committing suicides. One just needs to see what happened in the recent Sharda scam to understand. None of that has happened in this case.
The basic fact is that Subrata Roy represents the other India, what I call ‘Bharat’, but it seems like the English media can’t handle the trust that ‘Bharat’ holds in him and his companies. Why am I saying it? The simple reason is that I am convinced that the English media is now a voice of the old feudal India where just a few people claim to know what is best for Indians. Yes, when he started working in 1978 armed purely with a mechanical engineering diploma and a two wheeler (a Lambretta), one could not have forethought his business gumption. But capitalism does work for some; and if one is jealous that he is ultra-rich and his group has acquired riches too much, too soon, then lynch-mobbing is not the appropriate way to respond. Capitalism was never about pulling down growing corporations by hanging them in public. And if that is what it has become in India, then we have to change it, rationally and immediately. And it is the Supreme Court itself that will have to play a role to see through this reality and come out with a correct judgement that really does justice.