In the prolonging Sahara saga, following a contempt action initiated by SEBI last year the Supreme Court ordered judicial custody for Mr. Subrata Roy Sahara and certain other individuals. This is on account of their failure to comply with a previous judgment of the Supreme Court that orders two Sahara companies to repay monies to investors obtained in violation of various securities laws. Although the Court had granted interim bail to these individuals, the conditions pertaining to the bail have not been fulfilled due to which they remain in judicial custody. By way of a judgment issued on June 19, 2015, the Supreme Court set new terms of their release on bail, including requiring Sahara to furnish a guarantee on agreed terms.
Of relevance for the present post are not the Supreme Court’s conclusions, but its engagement with a certain policy tension, namely conflicting pressures relating to personal freedom of the individuals concerned weighed against the public interest (which presumably refers to the impact of their actions on the financial markets and the investing public). In its order, the Court quite explicitly confronted the policy conflict and sought to address it. This is best appreciated in the Court’s own words in a lengthy paragraph, which is extracted below:
This Court feels concerned with the fact that three persons are deprived of their liberty for the last fifteen months and this situation is quite onerous to them. On the other hand, public interest as well as public good demands that the two Sahara Companies, which had collected whopping amount of more than [Rupees] 22,000 crores from the public in an illegal and unauthorised manner, are made accountable for the same .... By any yardstick, this is a huge liability, which the contemnors are bound to discharge by depositing the same with SEBI. It is, thus, an unprecedented situation of personal liberty of the three applicants on the one hand vis a vis majesty of law and ensuring larger public good, on the other hand. It is this sense of justice, in an unprecedented kind of situation, that has compelled the Court to take such an extreme step. It is this legal realism which has compelled the Court to adopt an approach which sounds more pragmatic. It is “doing what comes naturally” approach to the problem at hand, which required such a drastic step, going by the experience of this case, giving rise to 'Reflection' that provided 'Understanding'. This case is a burning example where the true dictate of justice is difficult to discern, and the law needed to come down on the side of practical convenience. We may borrow the jurisprudential theory propounded by Ronald Dworkin, albeit in somewhat different context, viz. the “conventional jurisprudential wisdom” which holds that in certain cases of a particularly complex or novel character the law does not provide a definite answer. In denying that judges in hard cases have a discretion to determine what the law is, Dworkin has instead argued for the judicial use of public standards or principles in a way that is capable of providing the right legal answer. The process of reaching a right answer in hard cases obviously differs from the process of reaching the legal answer in easy cases. After all, the avowed objective of rule of law is also to ensure that the orders of this Court are respected and obeyed. Therefore, [it is] a classic case where the approach adopted is influenced by the necessity of “making the law work”. Therefore, the orders passed may not be strictly construed as arising out of contempt jurisdiction, but in exercise of inherent jurisdiction vested in this Court to do complete justice in the matter and to ensure that the applicants render full compliance of its orders. It's the unprecedented situation which has led to passing of unprecedented, but justifiable, orders.
Pragmatism trumps legal doctrine. The Supreme Court has repeatedly stressed the “unprecedented” nature of the situation, and hence it decided to exercise its inherent jurisdiction to adopt a practical approach as opposed to resorting to legal reasoning.