UPDATE 1-India regulator asks court to OK arrest of Sahara boss

Last Updated: Fri, Mar 15, 2013 16:20 hrs

(Adds Sahara statement in paragraph 3)

NEW DELHI, March 15 (Reuters) - India's securities regulator is seeking court approval to arrest 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 Supreme 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.

Sahara, in a statement late on Friday, said it had complied with the court's order and that its total liability was less than the 51.2 billion rupees ($943 million) it had deposited with the regulator.

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

SEBI's application also asks the court to authorize the arrest of two Sahara directors.

The regulator, which has waged a lengthy battle with unlisted Sahara and its head, Subrata Roy, 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 described as "dubious" means from nearly 30 million small investors, along with 15 percent interest a year.

The two Sahara firms had raised a total of 257.8 billion rupees ($4.75 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. ($1 = 54.3100 Indian rupees) (Reporting by Devidutta Tripathy; Writing by Tony Munroe; Editing by Ron Popeski and Jane Baird)

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