Custodian to release Rs.650 cr from Harshad Mehta's assets

The Special Court, Mumbai, has ordered the Custodian, appointed by the Union Government, to release a total amount of Rs.650 crore to the Income-tax Department, banks and financial institutions from the liquidated assets of the Harshad Mehta Group of entities, involved in the Securities Scam of 1992, against pending claims.

SBI to get Rs. 260 crore

Based on a distribution proposal submitted by Custodian Justice D. K. Deshmukh, the Special Court, Mumbai, has ordered for payment of Rs.28.34 crore to the Income-tax Department, Rs.259.65 crore to State Bank of India, Rs.16.25 crore to SBI Caps and Rs.345.76 crore to Standard Chartered Bank, aggregating Rs.650 crore, from the attached accounts of the Harshad Mehta Group.

“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,” said in a press release issued by the Office of The Custodian, Department of Financial Services, Ministry of Finance, here.

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 Standard Chartered Bank only after final court clearance. This release of funds, to be made against the outstanding dues of the Harshad Mehta Group, will be the second of its kind.

In March, the Custodian had released Rs.2,200 crore, out of which Rs.2,000 crore had gone to the Income-tax Department and the balance to SBI.

In ordering these releases, the Special Court has strictly followed the priorities of claims laid down under Sec. 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.