RBI spanner in Subrata Roy's bail bid

The Supreme Court directed the Sahara Group on Wednesday to get clearance from the Reserve Bank of India before furnishing the Rs 10,000-crore bail money for its jailed chairman Subrata Roy from abroad.

"Transfer of money from an escrow account of a foreign bank agent requires special permission by competent authority under the Foreign Exchange Management Act (Fema)," a Bench headed by Justice T.S. Thakur said.

"Before the issue of transaction of amount from an escrow account is settled, we would not like to pass any order on the issue," the Bench added.

"We do not consider it necessary to pass any direction on transfer of the proposed account which exists of third party. Any direction can be passed on satisfaction of Sebi (Securities and Exchange Board of India) and amicus curiae", the Bench said.

The issue came after senior advocate Shekhar Naphade, who is assisting the court as amicus curiae, submitted that the legal requirement for external commercial borrowing requires clearance under FEMA, which has not been complied with by Sahara.

The court was hearing the issue of Sahara seeking its nod for raising 'junior loan' of $650 million (around Rs 3,600 crore) as a part of the scheme to overcome the liability with Bank of China, which had lent money to it in purchasing stakes in three overseas hotels-Dream Downtown and The Plaza in New York and Grosvenor House in London.

The Bench said that certain aspects arising out of the foreign properties have to be verified specifically the amount likely to be deposited in the Sebi-Sahara refund account. Sahara also informed the Bench that the escrow account has been shifted to Bank of America. The Bench made it clear that it is not ready to consider any plea to allow Roy to walk out of jail for some period to arranging money for his bail.