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1992 Scam cases: Litigation continues even after 23 years
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.

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COMMENTS

manoharlalsharma

1 year ago

USP of LITIGATION is afford better and more expensive lawyers to argue their case or BRIBE the COURT staff sample is available in cases like(1) WP- 8508/2003, (2) WP (St) No 15277/2014 and (3) WP (St) No-8132/2015, all concerned to the denial of membership in a housing society.

TIHARwale

1 year ago

The fake bankers receipt was in vogue since 1988 and it was a couple of cooperative banks which issued fake bankers receipt and Nationalised and Foreign banks merely endorsed the fake receipts using allonges and receipts journey never came to end. The fake bankers receipt continued to survive because at no point the Banks buying the securities asked for physical delivery of securities. only when securities ledgers were tried to match with RBI ledgers and issuing authorities like NTPC, NHPC etc informed RBI the actual value of securities issued RBI realised the claims of Banks (both Public Sector and Foreign) having purchased securities from secondary market the problems exploded

manoharlalsharma

1 year ago

1992 Scam cases: Litigation continues even after 23 years / Litigation is a GREAT Business especially in INDIA I have learned from a HOUSING society MC how it broke the majority and going to cap legal rights to under right the plan of redeveloping of 20,000 sq/mte of land without fear of COURT orders full details @ Bombay HC/WP-8508/2003

rangan v

1 year ago

SINCE LIKE POLITICIANS BROKERS ALSO KNOW TO DELAY THE CSE IN COURTS AFTER THAT EVERYBODY WILL FORGET SINCE NEW STORIES OF MUCH BIGGER SCAM WOULD HAVE SURFACED THIS IS BHART NOTHING CAN BE DONE INFACT CORRUPTION IS 100PERCENT AT TOP LEVEL ONLY AND NOT AT LOWERE LEVEL

RANGAN V
CHENNAI

Vaibhav Dhoka

1 year ago

The cause of most national ailment is judicial system where there is no time confinement and is most delayed and unpredictable system.The Spacial courts and other are just farce to calm public uproar.You know the result of CRB Scam of Bhansali. Only court received gained and public lost.

Gopal

1 year ago

What happened to Margabandhu who was the head of State Bank of Saurashtra when the scam took place?

Collateral Damage of the 1992 scam
What happens to innocent victims caught up in the securities scam of 1992?

 

Justice delayed, they say, is justice denied. In India, there is another element to this dictum. Even delayed justice is available only to those who can  afford the best (and most expensive) legal counsel possible. While cases drag on for decades in courts, the cost of litigation has shot up exponentially. Senior counsel work with a support team that includes mid-level lawyers, juniors and solicitors that only corporates or super-rich individuals can afford. Some of us, including NGOs, are fortunate enough to benefit from the generosity of top lawyers and get high-quality help on a pro bono basis. Some are able to get even the SC’s attention, multiple times in quick bursts, sometimes even in the middle of the night. What happens to the vast majority who have no such access and are destroyed by the miscarriage of justice? 
 
At a time, when the Supreme Court itself has admitted that the judicial system needs correction, it is time to highlight some of these cases and bring them to back to public attention. One victim of the 1992 scam is AN Bavdekar, a manager in charge of the vault at SBI’s main branch, who was told to counter-sign the cheques signed and issued by R Sitaraman in the treasury department. 
 
Mr Sitaraman was the official who colluded with the late Harshad Mehta in allowing him access to the vast reservoir of funds at SBI. Mr Bavdekar, like his predecessor, continued the system of counter-signing these cheques, even while protesting that he had no knowledge about what was being signed. When the going was good, everybody ignored him—remember those were the days of cowboy banking! To his bad luck, the music stopped in April 1992; the Central Bureau of Investigation (CBI) stepped in and, suddenly, the rulebook became sacrosanct.
 
Mr Bavedekar was arrested along with Harshad Mehta and 13 others, none of whom he had met barring R Sitaraman, who colluded with the broker. He spent 107 days in jail before I even heard of his story. The superintendent of police (SP) in charge of investigations for the CBI agreed that Mr Bavdekar was an innocent trapped by events and that his name would be dropped when the charge-sheet was filed. But the SP died in a strange road accident soon after and it was years before the charge-sheet in the first case was even filed. Mr Bavedekar’s name was routinely put in the list of accused. The SBI Officers’ Union supported him strongly in the early days, but then delayed justice has a way of ensuring that such support also fades away when colleagues retire. A few brokers, who remain extremely wealthy, offered Mr Bavedekar financial support; but the man who is convicted of ‘corruption and collusion’ had refused their help. SBI terminated Mr Bavdekar’s services in 2000, on the day he was to retire. Even the dismissal letter clearly said, ‘‘There is no evidence to prove that the charged officer had any knowledge regarding the malafide intentions and dishonesty on the part of Shri Sitaraman.’’ It made no difference in court. 
 
In 2006, the Special Court went by the book and convicted him. Consider this: Mr Sitaraman, a known Harshad Mehta crony, got a four-year jail term on 30th October, while Mr Bavdekar was given a five-year rigorous imprisonment. Harshad Mehta’s brothers were acquitted in the case, along with several others. So, Mr Bavdekar waits patiently for his matter to be heard by the apex court with a senior counsel having agreed to take up his case pro bono. A strange turn of fate has also given him access to a strong judicial mind who will hopefully help him when the case is finally heard. But who will ever compensate him for the lost 23 years, the huge costs, job loss, the ignominy and humiliation he has had to bear? 

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COMMENTS

Leslie Menezes

1 year ago

Very sad state of affairs. This is injustice and one such known case. How many more .... and the SC/HC are blind to the reasoned demand of litigants. They blame the government while the courts have to set thier own house in order. In civil cases at least they can follow the French system

Santhanam Krishnan

1 year ago

Prior to the outbreak of HM scam hardly any body except the Treasury guys had any knowledge of BRs and the treacherous investment side of banking even in a Bank. That being the case how do you expect a counter signing official that too from an unconnected department, know the inside out of a transaction? Even many Chairmen of Banks merely sign the credit proposal sanctions merely on the strength of their sub-ordinates initials! There is no space in BRs to even put a legend that the second signatory is merely counter signing on the strength of the department in-charge's signature! The investigating officials from external agencies too mercilessly book innocent victims and subject them to harassment! Is this equity in justice?

Rajendra M Ganatra

1 year ago

Unfortunately, India's judicial system has become a tool for the culprits to delay matters ad-infinitum. Lack of accountability of judiciary is creating crisis. As a true remedy, it is available only to the privileged few. No government has ever done anything substantive to dispense speedy justice by strengthening the institution. Bavdekar may eventually get acquitted but the government, which is responsible for dragging will not be asked to compensate him for decades of torture.

TIHARwale

1 year ago

The fake bankers receipt was in vogue since 1988 and it was a couple of cooperative banks which issued fake bankers receipt and Nationalised and Foreign banks merely endorsed the fake receipts using allonges and receipts journey never came to end. The fake bankers receipt continued to survive because at no point the Banks buying the securities asked for physical delivery of securities. only when securities ledgers were tried to match with RBI ledgers and issuing authorities like NTPC, NHPC etc informed RBI the actual value of securities issued RBI realised the claims of Banks (both Public Sector and Foreign) having purchased securities from secondary market was many times more than what was issued by the organisations like NTPC, NHPC etc. Thus the problems exploded. Now why Bankers Receipt thrived was just image a Bank purchases 5 crores worth security of Rs 1,000/- denomination it means 50,000 share certificate and 50,000 interset booklets containing 12 half yearly interest cheques. Now imagine storing in the first place and subsequently endorsing each certificate and interest cheque if security is sold as it is call money market where another Banker is the new secondary purchaser who reimburses by a single cheque. the first purchaser encashes the proceed cheque but secondry purchases doesn't bother to take possession of the security comprising of 50,000/- certificates and 6,00,000 interest cheques because physical space is not there. it is this factor certain cooperative banks used to cheat the banking system.

TIHARwale

1 year ago

Bavdekar might have been a victim of collateral damage. But few things need to be looked into. Definitely Sitaraman might have taken leave on a few occasions if yes how did the securities department in that SBI branch function. this countersigning business happens in a number of transactions when passing amount crosses certain pre approved threshold.it can be in passing cheque, issuance of demand drafts, bank guarantee etc. So Bavdekar cannot plead ignorance even as Sitaraman is a criminal officer. This security scam happened because of fake bankers receipt ( for non existing security). So Bavdekar should have involved branch head, branch inspectors etc because the cheating happened over a number a number of transactions spread over a long period of time extending over many months. this fake bankers receipt were in circulation since 1988

REPLY

Sucheta Dalal

In Reply to TIHARwale 1 year ago


A 1000 word article on a 23 year old issue cannot go into all the details all over again.

It is fine to raise questions , two decades later. Please give me the benefit of having followed this 23 years ago and written it then and reminding it now.

The courts are doing to Bavdekar today, exactly what you are doing... you only prove my point .

On Sitharam's leave too... do read our Book or go back to Times Archives

best

TIHARwale

In Reply to Sucheta Dalal 1 year ago

yes there is no dispute you invested lot of your time in understanding the scam but you also agreed that me and court have almost identical view about role of Bavdekar. yes Bavdekar once he is charged should have used the opportunity to expose the going in SBI but unfortunately he didn't do due to his involvement or guidance by Union or top Bank Management who might have misled Bavdekar in believing case can be managed just like many a corrupt acts are managed by weak investigation and prosecution carried regularly in internal investigation. a typical example in those days is Service Branch of big banks like SBI, PNB, UCO, Andhra Bank etc in their main centres of prominence receive Demand Drafts running into 8,000-10,000 for reimbursement and 3-4 officers are expected to pass so the passing officer will rarely cross out and affix signature as a mark of having verified the Demand Draft for payment. So corrupt elements used to encash the draft more than once. So such systemic failures were not taken seriously in those days

TARNINDARSINGH MEHTAB

1 year ago

While I do not know the specifics of the crime committed by Mr Sitaraman, from the above write-up, it appears that he was senior to Mr. Bavdekar in the bank's hierarchy. It is a well accepted management principle that responsibility cannot be delegated. By that logic, Mr. Bavdekar should get a lesser, if not zero punishment. Of course in all organisations, even though there may be a system of whistle-blowers, in reality this system never really works - otherwise why will organisations make monumental errors.

NARENDRA NEGANDHI

1 year ago

And the courts surprisingly on a regular basis fix time limit for the government, municipal corporations to achieve certain results which are nearly impossible to achieve but for themselves- there is no time limit.

pvmaiya

1 year ago

this is the tragedy of our justice system. Besides, Bavdekar, there was one other tragedy- one of the most honest officers, namely, R.L Kamath died pennyless, humiliated and helpless.

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