Federal Bank obtains favourable interim order from Supreme Court

KOCHI: A month after the Bombay High Court directed Federal Bank to pay Rs 4 crore with 18 per cent interest from 1992 to the wife of late stock broker Harshad Mehta, the Supreme Court has stayed the order and agreed to hear the bank’s plea 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 Aluva-headquartered bank to issue a Pay Order of an amount of Rs 4 crore in favour of one Mazda Industries and Leasing Ltd. But the pay order was not presented and remained unpaid.

Mehta’s wife, Jyoti, in 2014 (ie after a delay of 22 years) approached the special bench of the Bombay High Court, for refund of the amount with interest. The special bench came to the conclusion that the amount of Rs 4 crore had come to the account of Kishore Janani from the bank account of Harshad Mehta and held in February that the amount be refunded to the legal heir of Mehta, who died of a cardiac arrest in 2001.

Challenging the order the Bank approached the Supreme Court through senior advocate Dushyant Dave and lawyer Haris Beeran. The bank contended the HC erred in directing it to transfer the money to a third party who is neither the account holder nor the pay order holder. The bank was exercising lien on the amount for the huge liabilities of Kishore Janani with the bank under his two loan accounts for which recovery suits are pending.

Mohamed Sageer T A, vice-president (Recovery Department) of Federal Bank said the apex court has found a prima facie ground in the issues raised by the bank and expressed confidence in obtaining favourable final judgement.