A decade after the Rs 8,000 crore (Rs 80 billion) securities scam rocked the country, the Supreme Court on Tuesday upheld the conviction by the special court at Mumbai of stock broker Harshad Mehta.
Mehta died during the pendency of the appeal in the Apex court.
A bench comprising Justice M B Shah, Justice B N Agrawal and Justice Arijit Pasayat by a 2:1 majority upheld the verdict of the special court, but altered the sentence awarded to Mehta and two others to the period of imprisonment already undergone.
While Justice Shah acquitted all the accused, Justice Agrawal and Justice Pasayat upheld the conviction of Mehta, Pramod Kumar Manocha and a public servant Vinayak Narayan Deosthali.
The bench unanimously rejected the appeal of the Central Bureau of Investigation challenging the acquittal of Sushil Mukar Jain. It also acquitted another public servant Ram Narain Poply.
The accused were charged with hatching a criminal conspiracy to divert surplus funds of Maruti Udyog Limited, deposited in Canara Bank, to Harshad Mehta's account in the ANZ Grindlays Bank in New Delhi and then to UCO Bank in Mumbai.
Keeping in mind that the scam took place more than ten years ago, the lengthy trial, and Mehta's death during the pendency of the appeal, the bench said: "We feel custodial sentence for the period already undergone (which we are told was for a number of months) would meet the ends of justice."
"While fixing the quantum of the sentence, we have duly considered the fact that in the instant case, the amounts have been paid back," Justice Pasayat, writing the majority judgement, said.
However, it refused to alter the amount of fine imposed on the accused convicted in the scam.
The securities scam broke out in May 1992 and the Reserve Bank of India had appointed Janakiraman Committee to go into it. The committee in its first report quantified the scam amount at Rs 4,300 crore (Rs 43 billion) involving the units of Unit Trust of India.
The scam took place in two stages. The first stage involved the sale and purchase of stocks, while in the second stage the reversal thereof took place, the bench noted. The banks involved were United Commercial Bank, Bank of America, and ANZ Grindlays Bank.
The Apex court said: "Unfortunately, in the last few years, the country has seen an alarming rise in white collar crimes which have affected the fibre of the country's economic structure. This amounts to nothing but private gain at the cost of the public and lead to economic disaster."
"Cases involving offences which corrode the economic stability are to be dealt with sternly," the bench said. "Manocha and Deosthali were small flies who happen to have been caught in Mehta's machination. Apparent reason for their involvement is greed and avarice."
The bench noted with concern that there might be substance in the argument of the counsel for the accused that higher ups in Maruti Udyog Ltd and banks could not be unaware of a scam of this magnitude.
However, it said this could not be a ground to take a sympathetic view of the offences committed.
The Capital Market Crisis
