Rs.2,196 cr Harshad Mehta dues paid to SBI, IT department (Lead)

The payments - the first and biggest ever single lot of its kind so far - was released by the Satish Loomba, the custodian for trial of offences relating to transactions in securities, at the ministry of finance, who was appointed by the centre to deal with the mega-securities scam unearthed in 1992.

The amounts were handed over to B.P. Gaur, director general of investigations (central) and Nilima Mansukhani, chief commissioner of income tax in Maharashtra (Rs.1995.66 core) and B. Sriram, chief general manager (securities) of SBI (Rs.199.25 crore), at the custodian’s office in Nariman Point Wednesday.

The developments follow the refusal by the Supreme Court Tuesday to stay the distribution order of Justice D.K. Deshmukh of the special court, Mumbai, Feb. 25 with respect to the pending payments to be made to the IT department and the SBI.

Harshad Mehta, who came to be known as "Big Bull" after the scam in 1991-92, died of a cardiac arrest in December 2001.

Loomba told reporters "these (payments) are of an interim nature and released on the basis of undertakings submitted by the department of revenue, and the SBI that the amounts would be returned, if so ordered by the special court."

“After this payment, the claims of the principal amounts due to the IT department have settled. As per the order of priority, the IT department’s claim of the principal amount had to be settled first and thereafter those of banks and financial institutions,” Loomba explained.

If there was any excess money left then the claims pertaining to interest, penalties and the like would settled for the IT, banks and financial institutions, he added.

Initially, Loomba said, there were 70 notified parties of which 25 were de-notified later.
Out of the total of Rs.4,500 crore garnered from the liquidation of the Harshad Mehta Group, Rs.4,000 crore has been disbursed, the remaining Rs.500 crore would be distributed as per the Supreme Court orders, according to Loomba.

He said that of the Rs.1,717 crore claimed by the banks and FIs, nearly Rs.1,000 crore was claimed by the SBI, around Rs.500 crore by the Standard Chartered Bank and the rest by other banks and financial institutions.

With Wednesday's payment, the SBI has so far received the principal amount to the tune of nearly Rs.800 crore.

The release of Rs.21.96 billion made against the dues of Harshad Mehta Group is the largest and first of its kind, based upon a distribution proposal filed by the custodian before the special court.

The Special Court (Trial of Offences Relating to Transactions in Securities) Act was legislated by parliament in 1992.

It was empowered to deal with the extraordinary situation arising out of the 1991-92 securities scam with the objective of recovering the huge amounts of money lost by the banks and to restore public confidence in the financial system.

The custodian was the principal administrative officer under the Act for the attachment, management and liquidation of assets of notified persons. The custodian functioned under a system of concurrent judicial review by a Special Court, comprising of sitting judges of Bombay High Court.

The appeal against the orders of the special court lies only with the Supreme Court.