SC stays Bombay HC order directing federal bank to pay Rs 4 crore to Harshad Mehta wife
Amit Anand Choudhary | TNN | Mar 9, 2019, 19:22 IST
NEW DELHI: A month after Bombay high court directed Federal Bank to pay Rs 4 crores with 18 per cent interest from 1992 to the wife of tainted stock broker Harshad Mehta, the Supreme Court has put on hold the operation of the order and agreed to hear plea of the bank that it cannot be asked to pay the amount to a third party.
In this case, one stockbroker Kishore Janani had an account in Federal Bank and he had in 1992 requested the Bank to issue Pay Order of an amount of Rs. 4 crores in favour of one company Mazda Industries and Leasing Ltd. but the pay order was not presented for encasement and remained unpaid.
The Special Court of HC, which is looking into the securities scam involving late Harshad Mehta, came to the conclusion that the said amount of Rs. 4 crores has come to the account of Janani from the bank account of Harshad Mehta and had in February held that the amount be refunded to legal heir of Mehta who died of a cardiac arrest in 2001 when he was in jail.
Mehta’s wife Jyoti Mehta approached court twelve years thereafter in 2014 for refund after coming to know about the transaction. The HC entertained her plea and said, "It is a matter of record that all the accounts were seized during the relevant period and only on receipt of the books of accounts in 2014 after going through the relevant entries, they could file such an application. Therefore no fault could be found if there has been any delay."
The bank now has approached the Supreme Court challenging the order. Senior advocate Dushyant Dave and lawyer Haris Beeran, appearing for the bank, contended that HC erred in directing it to transfer the money to a third party who is neither the account holder nor the pay order holder. “In the absence of any statutory guidelines the Special Court was not right in determining the actual owner of the amount lying unclaimed,” the petition said.
“Whether the Special Court was right in imposing an interest of 18% from 1992 to an amount which has been lying under a pay order in favour of a third party and which has not been cancelled by the payee? What is the liability of the Bank in case pay order or demand drafts remain unclaimed for a large period of time in the absence of any statutory framework? Whether the Bank is liable to pay interest on the amount when the same is kept in a current account having the nature of non-interest-bearing demand liability,” the petition said.
It said that special court committed a mistake in holding that the bank has utilized the said amounts to further gain when it has maintained the same in the general payable account of the bank.
After a brief hearing, a bench headed by Justice A M Khanwilkar stayed the HC order and agreed to adjudicate the issues raised by the bank.
In this case, one stockbroker Kishore Janani had an account in Federal Bank and he had in 1992 requested the Bank to issue Pay Order of an amount of Rs. 4 crores in favour of one company Mazda Industries and Leasing Ltd. but the pay order was not presented for encasement and remained unpaid.
The Special Court of HC, which is looking into the securities scam involving late Harshad Mehta, came to the conclusion that the said amount of Rs. 4 crores has come to the account of Janani from the bank account of Harshad Mehta and had in February held that the amount be refunded to legal heir of Mehta who died of a cardiac arrest in 2001 when he was in jail.
Mehta’s wife Jyoti Mehta approached court twelve years thereafter in 2014 for refund after coming to know about the transaction. The HC entertained her plea and said, "It is a matter of record that all the accounts were seized during the relevant period and only on receipt of the books of accounts in 2014 after going through the relevant entries, they could file such an application. Therefore no fault could be found if there has been any delay."
The bank now has approached the Supreme Court challenging the order. Senior advocate Dushyant Dave and lawyer Haris Beeran, appearing for the bank, contended that HC erred in directing it to transfer the money to a third party who is neither the account holder nor the pay order holder. “In the absence of any statutory guidelines the Special Court was not right in determining the actual owner of the amount lying unclaimed,” the petition said.
“Whether the Special Court was right in imposing an interest of 18% from 1992 to an amount which has been lying under a pay order in favour of a third party and which has not been cancelled by the payee? What is the liability of the Bank in case pay order or demand drafts remain unclaimed for a large period of time in the absence of any statutory framework? Whether the Bank is liable to pay interest on the amount when the same is kept in a current account having the nature of non-interest-bearing demand liability,” the petition said.
It said that special court committed a mistake in holding that the bank has utilized the said amounts to further gain when it has maintained the same in the general payable account of the bank.
After a brief hearing, a bench headed by Justice A M Khanwilkar stayed the HC order and agreed to adjudicate the issues raised by the bank.
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