SBI gets back only Rs 611cr from NHB

In a major settlement relating to the securities scam, the Supreme Court on Friday approved a deal in which State Bank of India agreed to ta...

In a major settlement relating to the securities scam, the Supreme Court on Friday approved a deal in which State Bank of India agreed to take back only Rs 611 crores of the Rs 707 crores it gave to National Housing Bank way back in 1992.

A three-judge bench headed by Chief Justice B.N. Kirpal put its stamp of approval on the settlement between the two banks by which it was agreed that ‘NHB shall pay a sum of Rs 353,78,19,500 ie, 50 per cent of Rs 707,56,39,000 to SBI. ‘NHB shall not be responsible to pay any interest on the said sum of Rs 707,56,39,000 paid by SBI to NHB on June 13, 1992,’ the agreement noted.

However, appearing for SBI, solicitor general Harish Salve and advocate Sanjay Kapoor moved an application seeking possession of the securities deposited by Harshad Mehta with SBI valued at Rs 258 crore. With this Rs 258 crore, SBI net gain from the deal works out to Rs 611 crore.

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The court allowed SBI to take possession of ‘securities along with all accruals thereon handed over by the late Harshad Mehta to the officers of NHB in March 1992 having an aggregate value of Rs 258 crore’.

The settlement noted ‘SBI shall be entitled to withdraw the said sum of Rs 75,84,55,421 along with all accruals thereon deposited by NHB with the special court with the interest accrued thereon.’

‘The aforesaid sum of Rs 353,78,19,500 shall be reduced by the amount ie Rs 131,20,23,980 and the interest thereon so withdrawn by SBI. NHB shall pay the balance amount to SBI,’ it said.

Disputes and differences had arisen between SBI and NHB relating to an aggregate amount of Rs 707.56 crore on account of 13 cheques drawn on the RBI by NHB and issued in favour of SBI during the period October 25, 1991 to March 30, 1992. The proceeds of these cheques were utilised by Mehta during the securities scam period. RBI had directed SBI to pay a sum of Rs 707.56 crore to NHB and pursuant to which SBI on June 1992 paid the same to NHB reserving its right to recover the said amount.

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In March/April 1992 Mehta delivered securities, bonds and other documents to certain officers of NHB in the securities scam case valued at Rs 258 crore, which was handed over to the custodian.

SBI had filed a suits against Mehta, NHB and the custodian before the special court trying the securities scam cases and its subsidiary State Bank of Saurashtra filed a suit against NHB making a demand for Rs 75.84 crore with 24 per cent interest per annum. When the matters reached the Supreme Court, it proposed that the union finance minister look into the disputes between NHB and SBI and the amicable settlement thereof.

The finance ministry held discussions with SBI and NHB and by its letter dated August 26, 2002 approved a package for resolving the disputes between SBI and NHB. The two banks, with this settlement, would withdraw all suits pending against each other.

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