The Supreme Court seems inclined to hasten the disposal of the 1992 scam cases
In July this year, Justices Jagdish S Kehar and Adarsh K Goel of the Supreme Court (SC) issued an order that cut through the mindless proceedings and appeals in the 1992 securities scam. Disposing off a clutch of appeals by Hiten Dalal, a key accused in several cases, the order said, “Since it is pointed out that the appellants herein were not the main accused, and since they have faced investigation and trial for about two and a half decades, we are satisfied that ends of justice would be met if, while maintaining the appellants’ conviction, their sentence is modified to the period already undergone.” The fines imposed remain payable.
The Court noted that Harshad Mehta, the main accused in many scam cases, had died. Further, that Hiten Dalal had either been acquitted in some of the scam cases, or had the sentence modified to the period of jail-term already served. It was a tacit recognition that being dragged through litigation in dozens of cases over 23 years was crippling punishment in itself.
The order (Criminal Appeal 360 of 1999 and others) indicates that more of the 1992 scam appeals may see quick decisions. But what about the Special Court in Mumbai, set up under a special statute for speedy hearing of the scam cases? It shows no sign of winding up for at least a decade more.
On 30th October, her last day in office, Justice Roshan Dalvi delivered a judgement in what should have been among the first scam cases to be decided. It involved R Sitaraman, former manager at State Bank of India’s (SBI) treasury department and a cohort of Harshad Mehta.
Mr Sitaraman’s leave of absence for his son’s thread-ceremony triggered a chain of events leading to my first newsbreak on 23 April 1992. In his absence, SBI discovered that securities receipts of over Rs574 crore were missing and the money was due from Harshad Mehta.
Justice Dalvi sentenced R Sitaraman and a manager of State Bank of Saurashtra to four years rigorous imprisonment and a fine. They were part of a list of 22 accused of whom three are dead; three were discharged; and 16 were let off giving them the benefit of doubt. This has become a pattern of sorts in deciding the scam-related cases that are tiredly dragging through the courts.
Often, a couple of the accused are convicted and the rest are let off. Bank officers are more likely to be convicted when their conduct is examined outside the context of the now forgotten ‘cowboy banking’ days of the 1990s.
The top management of banks had permitted the most egregious flouting of rules those days, in their rush to take advantage of economic liberalisation while operating with antiquated rules and systems of banks and regulators. It may seem incredible today, but top nationalised and foreign banks issued fake ‘Bank Receipts’ representing non-existent government securities, UTI units or public sector bonds. Bankers’ cheques for a few hundred crore rupees, in the name of top banks, were being credited to brokers’ accounts for transactions involving government securities. ANZ Grindlays had even argued, in an arbitration case with the National Housing Bank, that this was an ‘accepted market practice’. In many of the cases filed in the Special Court, the top management, which sanctioned these practices, is not even listed among the prime accused, especially in the case of foreign banks.
The token convictions by the Special Court are often a bigger travesty. Innocent bankers have been convicted and sentenced to rigorous imprisonment while brokers known to have amassed wealth and fully complicit in the scam have been acquitted—often because they can afford better and more expensive lawyers to argue their case.