Harshad Mehta scam: Rs 650 cr to settle claims

The Ministry of Finance has secured another order from the Special Court, Mumbai, allowing a release of a total amount of Rs 650 crore (Rs 6.5 billion) to the Income Tax Department, banks and financial institutions from the liquidated assets of the Harshad Mehta Group of entities, against pending claims.

The payments are to be released on an interim basis on undertakings to be provided by the receiving entities that the amounts will be brought back to the Custodian if so ordered by the Special Court.

The payments are to be released on an interim basis on undertakings to be provided by the receiving entities that the amounts will be brought back to the Custodian if so ordered by the Special Court.

In the case of Standard Chartered Bank, the court has ordered for the submission of a Board resolution along with an undertaking from the Bank.

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

This release, to be made against the outstanding dues of the Harshad Mehta Group will be the second of its kind.

It may be recalled that in March this year, Custodian Satish Loomba had released Rs 2,200 crore (Rs 22 billion) out of which Rs 2,000 crore (Rs 20 billion) had gone to the Income Tax department and the rest to the State Bank of India.

In ordering these releases, the Special Court has strictly 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 with the objective of recovering huge amounts 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 functions under a system of concurrent judicial review by a Special Court, comprising sitting high court judges at Mumbai.