Securities scam: SC pulls up finmin, SBI, others

Written by Indu Bhan | Indu Bhan | Updated: Aug 7 2013, 10:19am hrs
Irresponsible handling of loan

Flaying the government for its duplicity and absolute indifference in unravelling the truth behind the 1990s securities scam, involving stock broker Harshad Mehta, the Supreme Court has directed the National Housing Bank (NHB) to return to the State Bank of India R95.39 crore with 19% interest (approximately R900 crore) since 1992.

While pulling up the SBI for its irresponsible handling of the loan transactions worth R95 crore, it also indicted the NHB for initiating legal process against SBI to recover the amountwhich NHB had lend to Mehtato hide its own misdeeds.

Stating that SBI did not owe any money to NHB, the apex court set aside the special court order of 1999 that directed SBI to pay R250 crore including 19% interest on the principle amount of R95 crore to NHB.

The top court did not even spare the finance ministry for failing to make an attempt to find out the truth behind the scandal and for not resolving the dispute between the two public sector banks despite a direction. No attempt appears to have been made by the government to find out the truth as to how the plaintiff bank parted with a high denomination cheque and gave custody of the same to Mehta and as to how the NHB paid the various amounts to the dictation of Mehta in the absence of any authorisation by the plaintiff bank. Be that as it may, if the government really believed that the judgment of the Special Court does not require any interference, nothing stopped the government from directing both banks to withdraw their appeals before this court. The whole exercise appears to be eyewash. A thinly veiled scorn for the orders of this court. The professed purpose of the Special Courts Actthe backdrop of the scandal that shook the nationand the manner in which the litigation was conducted, coupled with the absolute indifference of the government to get at the truth, only demonstrate the duplicity with which governments can act.

The order came on an appeal filed by SBI against NHB, its employees and Mehta (since deceased) against the order of the Special Court for Trial of Offences Relating to Transactions in Securities.

Cheque bounce and courts jurisdiction

In a cheque bouncing case, Nishant Aggarwal vs Kailash Kumar, the Supreme Court said that a complaint can be filed either at the place where the drawer resides or the place where the payee resides or at the place where either of them carries on business. During the course of business, Aggarwal, who was residing at Guwahati in Assam, had issued a post-dated cheque for R28.62 lakh in favour of the complainant situated in Bhiwani (Haryana).

The cheque was returned by the Standard Chartered Bank due to stop payment by Agarwal. After serving notice, Kumar had filed complaint before a civil court in Bhiwani. While the Additional Chief Judicial Magistrate held that the court at Bhiwani had no jurisdiction, the Additional Sessions Judge set aside the order of the Judicial Magistrate, Bhiwani holding that filing a complaint in Bhiwani was proper. Even the Punjab & Haryana HC dismissed Agarwals petition.

On appeal, the top court rejected the accuseds argument that it was the Guwahati court which had jurisdiction. The Supreme Court said the locality where the bank (which dishonoured the cheque) is situated cannot be regarded as the sole criterion to determine the place of offence. As the amplitude stands so widened and so expansive it is an idle exercise to raise jurisdictional question regarding the offence under Section 138 of the Negotiable Instruments Act, 1881, it said.

SC asks insurance co to pay R1 cr compensation to actor

The Supreme Court has asked the National Insurance Company to pay compensation to the tune of R79.65 lakh with 6% interest to one Rekha Jain, who was aiming for a successful career as an actress, but a car accident in 2001 cut short her career in films.

In this case, Rekha Jain vs National Insurance Co Ltd, while a medical Board certified that Jain suffered 30% physical disability, the Motor Accident Claims Tribunal asked the insurer to pay R23.5 lakh as compensation. However, the Orissa HC reduced the compensation to R14 lakh on the ground that she suffered only 30% physical disability. On appeal, the Supreme Court while factoring in the loss of career enhanced the compensation to R79.65 lakh with 6% interest from 2002, when she filed the claim before the tribunal. For her mother's death in the accident, the apex court also awarded R10.62 lakh with 6% interest. For a film actress, the physical appearance particularly the facial features are very important to act in the films and in TV serials Having regard to the nature of injuries, we have to record a finding of fact that the appellant's permanent disability should be treated as 100% functional disablement as she cannot act in the films and in TV serials in future at all, the apex court stated.