Sudhir Mehta, brother of the “Big Bull” Harshad Mehta, and 5 others, including senior bank officials and stock brokers, were convicted by a special court here in connection with defrauding of National Housing Bank to the tune of over Rs 700 crore. The Judgement comes 24 years after the securities scam rocked BSE and other stock exchanges in 1992. Harshad Mehta was also an accused in this case but the case against him was abated after he passed away in 2002.
Justice Shalini Phansalkar-Joshi, on November 25, convicted Harshad’s brother Sudhir Mehta, Harshad’s cousin and stock brother Deepak Mehta, the then NHB officials C RaviKumar and Suresh Babu, former SBI officer R Sitaraman and stock brother Atul Parekh.
The convicts were sentenced to jail terms ranging from six months to four years and fined collectively Rs 11.95 lakh after they were found guilty under the Indian Penal Code for cheating, forgery and criminal breach of trust.
They were also found guilty under the Prevention of Corruption Act.
However, the court acquitted three others, including Harshad’s cousin Hiten Mehta. The other two are stock brothers Pankaj Shah and Virendra Damani. They were given the benefit of doubt on all the charges faced by them.
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The court suspended the sentence and fine for eight weeks to enable them approach the Supreme court as the convicts pleaded that the apex Court was already on a winter vacation and in view of the demonetisation situation it would be difficult for them to pay the fines.
In this case, the prosecuting agency, CBI, argued that the accused had entered into conspiracy with an object to commit a criminal breach of trust by misappropriating funds of National Housing Bank with an intention to obtain valuables, securities and pecuniary advantage to accused Harshad Mehta without any public interest.
The CBI alleged that the bank officers had transferred the funds to Mehta’s account by showing fake transactions of purchase of securities from SBI by preparing forged documents with the help of stock brokers.
Ten cheques amounting to Rs 700 crore were issued for these transactions, it said.
The accused, however, had pleaded that they were following market practise and had not committed any criminal offence.
Between November 1991 and April 1992, C Ravikumar and Suresh Babu issued 10 cheques for above Rs 700 crore in favour of State Bank of India in respect of ready-forward transactions, the CBI told the court.
“This was done without obtaining the sale memos, securities or bank receipts from the kingpin of scam Harshad Mehta who had acted as a broker of SBI,” CBI argued.
Convicting the accused, the Judge said, “it is true that in this case the offence has taken place, way back in 1992. It is also true that during this period of 24 years, the accused have undergone both physical and mental suffering.”
“However, the gravity of the offence would also have to be considered. (The offence) is of grave and serious nature (and) it is siphoning of crores of rupees of a nationalised bank to the account of some third person who was not entitled to it, like the accused Harshad Mehta,” said the Judge.
“The country has witnessed the repercussions of the said offence in the sense that the economy was totally shattered on account of this scam,” Justice Joshi said in her Judgement.