HC Allows Release of Rs 650 Cr From Harshad's Assets

HC Allows Release of Rs 650 Cr From Harshad's Assets
The Bombay High Court has allowed release of Rs 650 crore from the liquidated assets of the Harshad Mehta Group of companies to the Income Tax department, banks and financial institutions against pending claims.

Justice D K Deshmukh of the Special Court in Mumbai has ordered payment of Rs 28.34 crore to Income Tax department, Rs 259.65 crore to State Bank of India, Rs 16.25 crore to SBI Caps and Rs 345.76 crore to Standard Chartered Bank, aggregating to Rs 650 crore, from the attached accounts of the Harshad Mehta Group.

It is for the second time that funds have been released against the outstanding dues of the Harshad Mehta Group.

The payment would be released on an interim basis on undertakings given by the receiving entities that the funds would be returned to the Custodian appointed by the central government if so ordered by the Special Court.

In the case of Standard Chartered Bank, the court has ordered for submission of a Board resolution along with an undertaking from the bank that it would return the amount if ordered.

The Custodian has been asked to release the amount to the Standard Chartered Bank only after final court clearance.

Known as the Big Bull, Harshad Mehta had allegedly siphoned off funds from inter-bank transactions and bought shares, triggering a rise in their prices at the Bombay Stock Exchange. When the scam was exposed, banks demanded the money back, causing collapse of the share market.

Mehta died in 2002 with many civil suits pending against him.

In March this year, the Custodian Satish Loomba had released Rs 2,200 crore, of which Rs 2,000 crore had gone to the Income Tax Department and the rest to the State Bank of India.

In ordering the release of pending dues, the Special Court has followed the priorities of claims laid down under Section 11 of the Act, placing primary income tax liabilities above the claims of banks and financial institutions.

The Special Court (Trial of Offences Relating to Transactions in Securities) Act was legislated by Parliament in 1992 to deal with the extraordinary situation arising out of the securities scam and to recover huge amount of money lost by the banks and for restoration of public confidence in the financial system.

The Custodian (Trial of Offences Relating to Transactions in Securities), Ministry of Finance, is the principal administrative officer under the Act for the attachment, management and liquidation of assets of the notified entities who function under a system of concurrent judicial review by a Special Court, comprising sitting high court judges at Mumbai.
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