The Supreme Court on Tuesday directed that the head of the Sahara conglomerate, Subrata Roy, remain in custody over the group’s failure to comply with its orders to repay investors in an outlawed multi-billion-dollar investment scheme.
Roy, 65, was arrested on Friday after he did not appear last week at a Supreme Court hearing – which he says he missed to attend to his ailing mother – in its long-running battle with India’s securities regulator.
Sahara is best known as the former main sponsor of the national cricket team, as well as owner of New York’s Plaza Hotel and London’s Grosvenor House. It has a net worth of $11 billion and more than 36,000 acres of real estate, according to its website.
“Non-compliance of the orders passed by this Court shakes the very foundation of our judicial system and undermines the rule of law,” the court said, ordering that Roy and two other directors be held until the next hearing on March 11.
The court said the next appearance could be brought forward if an acceptable proposal is offered.
Sahara did not have immediate comment after the hearing.
Roy is prone to public shows of patriotism and full-page newspaper ads defending Sahara against the authorities. He is often photographed with Bollywood stars and cricketers.
He was driven the roughly 500 km from Lucknow to appear on Tuesday at the court in New Delhi. When Roy arrived, a man threw ink on his face and was taken away by police.
The Securities and Exchange Board of India (SEBI) brought contempt proceedings against Sahara for failure to comply with a 2012 court order to repay billions of dollars to investors.
Sahara has said it repaid most investors and that its remaining liability was less than the 51.2 billion rupees it deposited with SEBI.
The Supreme Court on Tuesday questioned the veracity of investor documents provided by Sahara.
“Documents and affidavits produced by the contemnors themselves would apparently falsify their refund theory and cast serious doubts about the existence of the so-called investors,” it said.
“All the fact finding authorities have opined that majority of investors do not exist,” the court said in its order.
Sahara had offered to give SEBI title deeds of properties it said were worth 200 billion rupees as security, but the regulator has said the properties were far over-valued.
Sahara’s core business includes selling financial products, largely to small investors in towns and rural areas. It was two such products, later ruled illegal, that drew SEBI’s attention.
Critics, including activist groups, argue Sahara’s investment products are designed to evade regulatory oversight and that it lacks transparency on the source and use of funds.
Police went looking for Roy on Thursday at his sprawling Sahara Shaher estate in the northern city of Lucknow. He turned himself in on Friday and denied he had been “absconding,” saying he was meeting doctors over the condition of his 92-year-old mother, as well as a lawyer, and was taken to a government guest house on the outskirts of Lucknow.
Roy started out from the city of Gorakhpur in the hardscrabble east of Uttar Pradesh state and styles himself a man of the people, though he makes a show of opulent living.
Like many business leaders, he is perceived to be close to politicians.
He is often described in the media as a billionaire, but last year said his assets were less than $1 million.
His titles at Sahara are chairman and managing worker, and he refers to himself as “guardian of the world’s largest family” of more than one million employees and agents.