The dismissal of petitions filed by Harshad Mehta's mother Rasila Mehta and sister-in-law Rina Mehta may result in banks and financial institutions receiving an additional Rs800 crore to Rs1,000 crore
The Supreme Court has upheld notifications issued by the Custodian against stockbroker Harshad Mehta's mother Rasila S Mehta and his sister-in-law Rina S Mehta for their involvement in the securities scam of 1992. This decision may result in additional distribution of about Rs800 crore to Rs1,000 crore to banks and financial institutions who are creditors of the Harshad Mehta group.
In March, the office of the Custodian—that operates from Mumbai—released about Rs2,194.9 crore from Harshad Mehta's assets to the State Bank of India (SBI) and the Income-Tax (I-T) department.
Following the apex court's decision, the Custodian is likely to liquidate the assets of the Harshad Mehta group, including shares and immovable properties, apart from cash and fixed deposits.
The judgment of the Supreme Court, delivered by a bench consisting of Justice P Sathasivam and Justice BS Chauhan, laid down clear judicial precepts in ruling that the notifications carried out by the Custodian, which came several years after the securities scam, without any pre-decisional hearing, were not violative of the principles of natural justice.
According to a statement by the Custodian, “The Court said that in construing a statute of this nature, the courts should not adhere to a literal meaning, but construe the same, keeping in view the larger public interest.”
During the hearing, the Custodian argued that the income of these women had risen from near-nil levels to tens and hundreds of crores of rupees, in a short period, without any asset base, through transactions involving huge amounts of money sourced from Harshad Mehta.
With this additional amount, nearly all the principal liabilities of the Harshad Mehta Group towards taxes, banks and financial institutions, are expected to be met.
Harshad Mehta, who died of a heart attack in Mumbai in December 2001, faced allegations of diverting huge amounts of public money to the securities market. The Joint Parliamentary Committee set up to investigate into the 1992 scam had estimated the quantum of the scam at approximately Rs4,400 crore.
Last year, the Bhupen Dalal family agreed to pay Rs12.6 crore to buy back their flat in an auction, against the market value of about Rs9 crore. The Special Court had allowed the auction of the flat at Chitrakoot building, on Altamount Road, in south Mumbai, to recover income-tax dues running into crores of rupees.
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Maharashtra housing secretary says notification for this project to be finalised by July. However, nothing appears to have happened on the MoU, signed last year with MCHI, for five lakh houses in five years
The Maharashtra Housing and Area Development Authority (MHADA) will, in partnership with private builders, supply 20,000 affordable apartments in the next few years, Gautam Chatterjee, state housing secretary and former vice-chairman MHADA, said today.
"MHADA will cooperate with private developers and offer the government's share of FSI to them. The builders, in turn, will hand over the constructed units to MHADA, which will be made available to people at rates much lower than the current price quoted by builders," Mr Chatterjee said at a conference on affordable housing, organised by the Mumbai Press Club.
The preliminary notification for this has already been issued in the ministry and will be finalised by July, he said. Sixty per cent of this housing stock will be for the weaker sections. This year, MHADA has supplied some 4,000 houses at highly subsidised rates.
This announcement comes at a time when MHADA is facing an acute land crunch, and land acquisition moves in various parts of the country have seen stiff opposition.
Dharmesh Jain, vice-president, Maharashtra Chamber of Housing Industry (MCHI), expressed his support for the scheme. "We welcome the move, and we appreciate that MHADA is looking innovatively at FSI management. Mumbai being an island city, the only option is to expand vertically. For that, we must rethink the concept of FSI," Mr Jain said.
MCHI signed a memorandum of understanding with the state government last year to provide about five lakh affordable houses in the next five years, but there has been no progress on this to date. Mr Jain, like most other builders, blamed this on administrative delays and the lengthy process for getting clearances. But this does not explain why also more than 88,000 flats remain unsold in the city. (This is an estimate according to realty research firm Liases Foras.)
Activist Ms Neera Adharkar, who attended the conference, said it was necessary to focus on the concept of 'affordable housing'. "Is there really any affordable housing scheme? When more FSI is granted, buildings will grow taller, and the population density in the area will increase. Automatically, affordability will come down. Builders view affordability in terms of apartment size and not price," she said.
Mr Chatterjee pointed out that skyrocketing prices could be reined in only if supply increases or the government intervenes. "There are two types of houses that we build: ones that are cheap and mostly for slum redevelopment, and the others which will cross subsidise the former. We need to supply a third kind of stock, which will be accessible to commoners. For that, either the government has to intervene, or the supply has to be increased, to exert downward pressure on existing prices," he said.
Are bank managements working to cut the roots of the trade unions? Dhanlaxmi Bank, Federal Bank are doing this, says the monthly journal of Corporation Bank Officers’ Organisation. Dhanlaxmi Bank has denied the charge
The outspoken official journal of the Corporation Bank Officers’ Organisation (CBOO), Officers’ Voice, has criticised the managements of Dhanlaxmi Bank and Federal Bank for disregarding their respective trade unions.
The journal, known for its strong opinionated stand, has hammered its own management in the past. (Read, ‘Corporation Bank officers continue to openly criticise their head honchos’.)
“In the recent past a number of affiliates of All India Bank Officers’ Confederation (AIBOC) have come under severe attack from arrogant management. They are becoming intolerant towards the right to form associations and espouse their cause through democratic means,” says the front-page editorial, headlined ‘One for All and All for One’.
It has criticised the management of Dhanlaxmi Bank for trying to destabilise the Dhanlaxmi Bank Officers’ Organisation (DBOO), while describing various instances. The editorial states that the new management, which took over Dhanlaxmi Bank last year, offered various benefits to its employees, like a 30% salary hike, offering ESOPs (employee stock ownership plans) and it also recruited 3,000 officers on a cost-to-company (CTC) basis.
Officers’ Voice says that the new management which had earlier said CTC officers could be members of the association, back-tracked subsequently, threatening that their services would be terminated if they continued with their membership; and the officers resigned from the union. It also says that out of the 40 lakh ESOPs that were offered, 35 lakh were given to the bank’s managing director.
Officers’ Voice also states that the general secretary of DBOO was called for a discussion on this issue by the managing director, but he was humiliated and sent away. AIBOC intervened, and an understanding was reached.
However, the managing director declared that the agreement would come into effect on condition that DBOO advised the AIBOC leadership to disassociate from its affairs and the good conduct of DBOO.
Similarly, the editorial thrashes Federal Bank for dismissing KV Prasad, president of the Federal Bank Officers’ Association and Secretary AIBOC (Kerala unit) from service. He faced disciplinary proceedings for alleged lapses while sanctioning housing loans and purchasing cheques.
Describing Mr Prasad as an “honest and upright leader”, the editorial says, “If the lapses were so serious, warranting dismissal, how did the management keep him in service without suspending him?” Officers’ Voice states that “the dismissal of Mr Prasad is nothing but an arrogant and colourable exercise of power, intended to hit at the very root of trade union rights.”
Manish Kumar, president of human resources and corporate social responsibility at Dhanlaxmi Bank, said, “Since 2008, Dhanlaxmi Bank has undergone changes and expansion. Accordingly in 2009, when we recruited new officers, they preferred the CTC formula as opposed to the IBA compensation formula. Hence we gave them their preferred option of salary cut and higher ESOPS, based on their earlier ESOPS and CTC. We even gave the older employees the ESOPS option based on their seniority, grade and experience.”
“The ESOPs option is governed by the compensation board of the bank and is under the purview of the Securities and Exchange Board of India and the Reserve Bank of India (RBI). ESOPs for the managing director require RBI approval and the ESOPs were allotted in compliance of the rules,” he added.
Mr Kumar said, “Under normal circumstances, CTC employees are not part of any trade union. This is the case with private sector banks. Dhanlaxmi has four unions, two each of clerical staff and officers. Apart from DBOO, the other three are perfectly happy with the bank.”
He described the comments in Officers’ Voice as factually incorrect. “We, at no point humiliated anyone from the union. The meeting was between the bank and DBOO and not with AIBOC, where DBOO was told to inform its parent body to withdraw the agitation and that an agreement could be reached after observation for two months. We never asked DBOO to disassociate itself from ABICO.”
Moneylife also talked to PV Mohanan, general secretary, DBOO, who said, “The bank earlier agreed that CTC employees could become union members, but later back-tracked. This is unfair. Even the ESOPs allocation is unfair, with the managing director getting the major share. I agree with the editorial and we still oppose what the bank management is saying.”
Former president of AIBOC, TR Bhat, told Moneylife, “The conflict between the management and trade union at Dhanlaxmi Bank has been going on for three years. The rationale behind allocating ESOPs is also highly unfair.”
Moneylife also e-mailed Federal Bank for a comment, but there has been no reply yet.