Special CBI Court Acquits Bhupen Dalal, TB Ruia and 4 Others in the 1992 StanChart Securities Scam; Hiten Dalal convicted again
A special court of Central Bureau of Investigation (CBI) has acquitted Bhupendra Dalal, Arvind Mohanlal, Tej Kumar Ruia, Krishnakant Vyas, Naresh Aggarwala and GN Hegde in the 1992 securities scam involving Standard Chartered Bank, Bank of Karad (BOK), Metropolitan Co-operative Bank (MCB) and HSBC Bank. Both BOK and MCB collapsed owing to this scam.
In her judgement on 31 January 2019, Justice Dr Shalini Phansalkar Joshi, said, "...their bail bonds stand cancelled. However, as per Section 437-A of the Criminal Procedure Code (Cr PC), they are directed to execute the personal recognizance (PR) bonds of the amount of Rs50,000 each, with Surety Bond in the like amount, to appear before the Supreme Court, as and when such Court issues notice in respect of any Appeal or Petition, that may be filed against the 'Judgment' of this Court, and such Bail Bonds shall be in force for a period of six months."
The Court convicted Hiten Dalal, Kishan Kapadia, Sudhakar Ail, CS Raje, S Ramaswamy and Santosh Mulgaonkar and sentenced them rigorous imprisonment for one year and levied a fine of Rs30,000 each. For other offence punishable under Section 471, all these were sentenced to rigorous imprisonment for two years, and to pay a fine of Rs25,000 each. Hiten Dalal, Kishan Kapadia, Sudhakar Ail, and CS Raje were further sentenced to one year rigorous imprisonment and a fine of Rs10000 each under section 414.
The case is related with unaccounted stocks worth Rs300 crore for which StanChart was neither provided securities nor any bank receipt from the counter party banks, despite paying the money. When the bank took up the matter, Hiten Dalal promised to handover bank receipts for the shortfall.
According to complaint filed by StanChart, during a meeting arranged by Hiten Dalal with others like Bhupendra, Abhay Dharamsingh (AD) Narottam and Tej Kumar Balkrishna Ruia, it was admitted by Mr Ruia of having received Rs90 crore and Rs125 crore from Mr Narottam from the proceeds of defrauded money. "It was also revealed that, substantial part of defrauded money obtained in the account of Mr Narottam with BOK was transferred to the account of Hiten Dalal with Andhra Bank."
"In the subsequent meeting dated 30 May 1992, it was further disclosed by Hiten Dalal that, Jagdish Pannalal Gandhi (since deceased) had received a sum of Rs600 crore, out of the funds diverted to BOK. Kishan Kantilal Kapadia, in his capacity as the 'Vice-President' of MCB, has issued two BRs of Rs19.89 crore and four BRs of Rs10 Lakhs, without backing of genuine securities.
"Arvind Mohanlal, the 'Chief Dealer' of SCB, and Jaideep Jagdish Pathak, 'Manager' of SCB, were also found to be involved in the said conspiracy. Bhupendra Dalal and AD Narottam were 'Directors' of BOK and all fraudulent transactions of SCB were made in the account of Mr Narottam. BOK was maintaining its 'Securities Account' in the name of Mr Narottam. CS Raje, the 'Manager' of BOK, had signed these BRs and SGL Transfer Forms. Sudhakar Ail, the staff of BOK, has issued cost memos, delivery orders, sgl transfer forms, vouchers and other documents, without back-up of genuine securities, for transferring the amount in the account of AD Narottam. Hiten Dalal was maintaining his 'securities account' with Andhra Bank, where funds fraudulently
obtained from SCB were credited," the complaint says.
After investigation, StanChart found the fraud was worth Rs890 crore after deducting securities worth Rs205 crore transferred or sold by the lender by Hiten Dalal and securities worth Rs145 crore handed over by him to the Bank.