The dismissal of petitions filed by Harshad Mehta's mother Rasila Mehta and sister-in-law Rina Mehta may result in banks and financial institutions receiving an additional Rs800 crore to Rs1,000 crore

Moneylife Digital Team

The Supreme Court has upheld notifications issued by the Custodian against stockbroker Harshad Mehta's mother Rasila S Mehta and his sister-in-law Rina S Mehta for their involvement in the securities scam of 1992. This decision may result in additional distribution of about Rs800 crore to Rs1,000 crore to banks and financial institutions who are creditors of the Harshad Mehta group.

In March, the office of the Custodian—that operates from Mumbai—released about Rs2,194.9 crore from Harshad Mehta's assets to the State Bank of India (SBI) and the Income-Tax (I-T) department.

Following the apex court's decision, the Custodian is likely to liquidate the assets of the Harshad Mehta group, including shares and immovable properties, apart from cash and fixed deposits.

The judgment of the Supreme Court, delivered by a bench consisting of Justice P Sathasivam and Justice BS Chauhan, laid down clear judicial precepts in ruling that the notifications carried out by the Custodian, which came several years after the securities scam, without any pre-decisional hearing, were not violative of the principles of natural justice.

According to a statement by the Custodian, “The Court said that in construing a statute of this nature, the courts should not adhere to a literal meaning, but construe the same, keeping in view the larger public interest.”

During the hearing, the Custodian argued that the income of these women had risen from near-nil levels to tens and hundreds of crores of rupees, in a short period, without any asset base, through transactions involving huge amounts of money sourced from Harshad Mehta.

With this additional amount, nearly all the principal liabilities of the Harshad Mehta Group towards taxes, banks and financial institutions, are expected to be met.

Harshad Mehta, who died of a heart attack in Mumbai in December 2001, faced allegations of diverting huge amounts of public money to the securities market. The Joint Parliamentary Committee set up to investigate into the 1992 scam had estimated the quantum of the scam at approximately Rs4,400 crore.

Last year, the Bhupen Dalal family agreed to pay Rs12.6 crore to buy back their flat in an auction, against the market value of about Rs9 crore. The Special Court had allowed the auction of the flat at Chitrakoot building, on Altamount Road, in south Mumbai, to recover income-tax dues running into crores of rupees.

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