India regulator asks court to allow arrest of Sahara boss

NEW DELHI (REUTERS) - India's securities regulator is seeking Supreme Court permission for the arrest of the head of the Sahara conglomerate, which it accuses of failing to comply with an order to repay billions of dollars collected from investors in outlawed bonds, according to a court document and a lawyer present at a Friday court hearing.

The court is likely to hear the matter next month, the lawyer told Reuters, declining to be identified because he was not authorised to speak with the media.

The application, a copy of which was seen by Reuters, asks that the court pass an order allowing SEBI "to take measures for arrest and detention in civil prison of .... Subrata Roy Sahara ... after giving reasonable opportunity of hearing".

The application by the Securities and Exchange Board of India (SEBI) also asks the court to allow the arrest of two Sahara directors.

A Sahara spokesman had no immediate comment.

SEBI, which has waged a lengthy battle with unlisted Sahara and its head, Subrata Roy, also offered no comment.

Last month, SEBI ordered a freeze on the assets and bank accounts of two Sahara Group companies as well as on all bank accounts and properties in Roy's name.

Sahara, a household name in India for its sponsorship of the national cricket team, owns the Grosvenor House hotel in London, and last year bought the Plaza Hotel in New York.

The group was ordered in August to repay sums raised by what the court called "dubious" means from nearly 30 million small investors, with 15 per cent interest a year.

The two Sahara firms raised a total of 257.8 billion rupees (S$6 billion) in the outlawed bonds as of April 2011, according to Sahara court affidavits cited by SEBI.

In December, the court ordered Sahara to pay an initial deposit of 51.2 billion rupees with SEBI, another 100 billion rupees in the first week of January and the remainder in the first week of February.

Sahara said last month that its total liability was unlikely to exceed the 51.2 billion rupees it had deposited with the regulator.