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1992 Harshad Mehta Stock Market Scam: Harshad Mehta’s Brother, 5 Others Convicted

November 29, 2016
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MUMBAI: Twenty-four years after the securities scam broke, a special court convicted Sudhir Mehta, Harshad Mehta’s brother and five others, including stock brokers and senior bank officials, in a case relating to defrauding of National Housing Bank to the tune of more than Rs 700 crore.

The case against Harshad Mehta, who was one of the main accused, abated after his death in 2002. Justice Shalini Phansalkar-Joshi refused appeals for leniency by the accused, who claimed to have suffered for over two decades and had different health problems.

“It is true that in this case the offence has taken place, way back in the year 1992. It is also true that during this period of 24 years, the accused persons have undergone both physical and mental suffering,” said the judge, but added that the gravity of the offence would also have to be considered. “(The offence) is of a grave and serious nature (and) it is of siphoning off crores of funds of the nationalized bank, to the account of some third person, who was not entitled to it, like the accused Harshad Mehta. The country has witnessed the repercussions of the said offence in the sense that the economy was totally shattered on account of this scam,” the judge said.

The court convicted Deepak Mehta, a stock broker and cousin of Sudhir and Harshad Mehta, along with SBI officer R Sitaraman and stock broker Atul Parekh, NHB officials C Ravikumar and Suresh Babu.

The court held them guilty under diverse provisions of the Indian Penal Code relating to forgery, cheating and criminal breach of trust and under the Prevention of Corruption Act. They have been sentenced to jail terms from six months to four years.

The court also imposed fines of Rs 11.95 lakh on the accused. Three others, including Hiten Mehta, another of Harshad Mehta’s cousins, who was 19 years old at the time of the scam, were acquitted in the case. The court has suspended its verdict for eight weeks, after the accused claimed that the supreme court was going on a winter vacation soon and due to demonetisation effects, they would have a hard time to gather fines.

The 1992 securities scam involved SBI, officers of NHB and other financial institutions and banks “illegally siphoning off crores of funds of the institutions for speculative returns by systemic and deliberate abuse of the system”.

In the current case, the prosecution’s case was that the accused “entered into a conspiracy with an object to commit a criminal breach of trust by misappropriating the funds of NHB with an intention to obtain valuables, securities and pecuniary advantage to the accused Harshad Mehta without any public interest.”

The CBI said that the bank officers transferred the funds to the accounts of Harshad Mehta, by showing false transactions of purchase of securities from SBI by organizing forged documents with the help of stock brokers.

Ten cheques totaling over Rs 700 crore were issued for the dealings. Mainly the accused’s defence was that they had not committed any crime and were following market practices.

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