"The decision by the Supreme Court is an important step in putting the matter behind us as it halts further accumulation of interest and caps ANZ's contigent liability," ANZ chief financial officer Peter Marriot said in a statement. ANZ had made an application to the Supreme Court to lodge the disputed amount with NHB.

ANZ will deposit Rs 1,522 crore - Rs 912 crore awarded to it by arbitrators in 1997 plus interest of Rs 610 crore. The amount is to be placed in a fixed deposit with the State Bank of India (SBI) pending a final decision on April 10.

ANZ has also pleaded, in a miscellaneous petition, for interest waiver on the sum of Rs 912 crore, arguing that 18 per cent interest is untenable in today's scenario. ANZ had sold its local operations in April 2000 to Standard Chartered Bank. The bank has provided StanChart with indemnities on credit and litigation issues, including for the NHB case. Provision for these indemnities was also made in ANZ's year 2000 financial results. ANZ moves to deposit the amount comes amdist strong rumours that an out-of-court settlement between the principal players in this drama could be on the cards.

The original amount in the case is Rs 506 crore: account payee cheques to that extent issued by the NHB in favour of Grindlays Bank for the purchase of securities. Harshad Mehta, represented that the cheques were meant for him and Grindlays Bank parted with the proceeds in favour of Mr Mehta. The NHB recalled the entire sum on no-delivery of securities and at the RBI's intervention. The matter was referred for arbitration, which ruled by a majority of 2:1 that NHB should return the money at 18 per cent interest.

Grindlays Bank, on its part, had to give an undertaking that if the decision is finally set aside, it too would have to pay back at the same interest.

Having made the payment, which by now had swelled to Rs 912 crore (Rs 406 crore as interest), the NHB appealed in a special court in Mumbai in May 1997. The arbitration award was set aside in February'98 which was appealed against in the Supreme Court by the foreign bank five months later.