The scam litigation crying out for speed

Both trials have implicated a large number of very ordinary people, many of them are guilty of nothing more than negligence or innocent. Yet, justice is nowhere in sight, their careers have been ruined and they have been bankrupted by the sheer cost of defending themselves. In terms of human suffering the bomb blast case is far worse several wrongly implicated persons arelanguishing in jail for seven years along with hardened criminals. In the case of the scam, much of the litigation is civil disputes and issues which are now meaningless. In this 7-year period the disputed money would have more than doubled and the saving in terms of time and cost of litigation would have been a bonus. In retrospect those foreign banks who quietly wrote off their losses and settled claims without publicity seem really smart, while nationalised banks do not even have the luxury of taking such decisions.

It is extremely difficult for a Judge to comprehend the intensely complicated financial transactions involved in the Securities Scam without some expert help – but the Court never sought it. The result is a slow trial where the Judges learn to grasp complicated deals during hearings. After seven years when the process could have picked up speed, one Judge was transferred and the other retired. We are now back to the learning process with two new judges handling the scam cases. If that werenot bad enough, every few months one of the key accused or witnesses have passed away; almost the entire investigation team of the Central Bureau of Investigation which started the scam investigation has been transferred, promoted, retired or are no more. Those who worked with foreign banks have collected golden handshakes and left the country. Now let us look at how the Scam trial has progressed.

There are 72 charge sheets filed by the CBI of which 46 have gone to trial. Several investigations such as those into Goldstar, which involved Prime Minister Narasimha Rao’s sons or that against former union minister B Shankaranand have simply been dropped. There are over 600 civil cases of which a tiny fraction have been heard and disposed of. The Custodian appointed by the government has attached properties, money and shares of the accused but it remains locked up. In so many years the Custodian has not been able to sell the shares in spite of the farce of an expert committee to advise it. Instead, it is lockedin a battle with the accused over application for rights issues of share in its custody, the money for which has to be released by the Custodian.

Believe it or not, the biggest function of the Special Court in the last seven years has probably been the clearance of permission by notified persons to leave Mumbai (this includes permission to visit to the suburb of Thane). By October 30, 1999, the Special Court has disposed of 14,927 such applications. It should be noted that even Tada detenues who are out on bail in the serial bomb blast cases do not need permission to leave Mumbai. Each application involves a cost of around Rs 10,000 because it needs an affidavit, four copies, lawyer’s fees and at least 10 minutes of the Court’s time to look at the application and dictate an order. It often takes longer because the judge grills the accused, works out a rough cost of the trip and asked the accused to deposit a sum equal to that amount with the Custodian. Often the effort is wasted because those who were askedto pay preferred to drop the trip. Then there are endless applications from the accused to ask the Custodian to release money for their lawyer’s fees.

The Harshad Mehta group alone has probably moved 50 such applications. There is also the pending issue of flushing out benami shares. These shares were held in street names by investors in 1992 and if they bore the broker’s stamp of the scam accused, they have to be certified as clean. This requires proof of legitimate transactions and statements from the scam accused whose stamp appears on the transfer documents. Often there have been 10 accused through whom shares have passed to a bona fide buyer. Having paid good money and purchased the shares on the stock market, such investors have been forced to collect statements from each of the accused. In one case, an investor needed 32 such statements. Often brokers simply refuse to oblige because their records are confiscated by the CBI. The suffering goes on with no end in sight. Clearly, there is enormous scopefor a clean up.

The certification process, permission to travel and disposal of shares and assets with the Custodian have no business being delayed and cannot be allowed to bleed the tax-payer endlessly. As for civil cases, if the Court chooses to use some expert advice, the 600 odd cases can be settled or be persuaded to be settled through withdrawal or consent terms. But this requires a thorough study, application of mind and finally decisive action.

It is of course, true that any attempt to hasten the trial will also open the doors to some corruption and influence peddling to let off some of the main accused, but that cannot be a stumbling block. All talk of development and liberalisation is meaningless unless India finds a way to settle business disputes and litigation quickly and efficiently.

Author’s email: suchetadalal@yahoo.com