March 4th

He won’t forget this day in his life. This is the day he was jailed.Mr.Subrata Roy Sahara, 66, is the founder of the Sahara India Pariwar. He was born in Bihar and studied Diploma in Mechanical engineering.

Sahara Finance: Mr. Roy joined Sahara Finance in 1978, ran it as a chit fund company and later purchased it. He changed the financial model of the company into a Residuary Non-Banking Companies (RNBC) that accepts deposits of low amounts. It is said that they have taken deposits from over 3 Crores of people

Sahara India Pariwar was founded in 1978. They have diversified business interest in real estate (Amby Valley), media (Sahara One TV channel), tourism, healthcare and hospitality. Some of their well known establishments include London’s Grosvenor House, New York’s Plaza Hotel and Force India.

Employees: The group claims that they are the second largest employer in the country, next only to Railways, hiring over 10,00,000 people.  

Among other things, some of the notables are Sahara Airways (failed and subsequently sold to Jet Airways), sponsorship of the Indian cricket team and hockey team and a owning stake of 40% stake in Indian Formula 1 Team.  

Now let’s discuss about the big Issue – Default in refunding deposits.

Starting Point– Sahara India Real Estate Corp Ltd and Sahara Housing Investment Corp Ltd have raised money (over Rs.24000 crores from 3 Crore investors) from the public through Optionally fully Convertible debentures (OFCD). Securities and Exchange Board of India (SEBI), the regulator for the securities market in India found that the methods in which Sahara is mobilizing the funds are against the laws of the land.

So, SEBI directed Sahara Companies to refund the money collected    from investors (in 2011). Sahara challenged the order of SEBI in Appellate Tribunal. But tribunal upheld the order of SEBI.

Against the order of tribunal, Sahara went to the Supreme Court (SC) and SC gave an order in favor of SEBI (in 2012) asking Sahara to deposit Rs.24000 with SEBI for refund to the investors. Sahara deposited Rs.5000 Crores with SEBI and failed to pay the balance amount.

As Sahara failed to pay the full amount by December 2012, SC ordered for attachment of all the bank accounts of the companies and summoned the Sahara Chief to appear before them.

SEBI found that Sahara is not complying with the order and moved the Supreme Court seeking the arrest of the promoter Mr. Roy. Though SC issued a summons to personally appear before them, Mr. Roy didn’t turn up.

As a last resort, SC issued a non-bailable warrant after Roy failed to make a personal appearance and arrested him on 4th March, 2014. Mr. Roy’s repeated bail requests have been trashed by the court. He was finally granted the bail on condition of deposit of Rs.10,000 Crores but till date Sahara has failed to deposit the amount. Hence Mr. Roy continues to remain in jail.

Thought for the day 

There is no greatness where there is no simplicity, goodness and truth

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About B E Kumar Prasad

B E Kumar Prasad
He is a Practicing Chartered Accountant in Bengaluru, India. He has 28+ years of experience in income tax, business setup, and NRI matters. He is also an Insolvency Professional, Registered Valuer (F&SA) and Social Auditor.Prasad welcomes your comments and questions. Please email him at

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