SC uphelds conviction of Uco Bank officials and Ashwin Mehta in 1992 scam  

August 10, 2009

The Supreme Court, while upholding the Special Court's verdict in the 1992 securities scam, sentenced Uco Bank's former chairman and managing director and general manager to imprisonment.

A bench headed by Justive SB Sinha also sentenced Ashwin and Sudhir Mehta to rigorous imprisonment (RI) for one month and a fine of Rs100,000, each.

While the SC upheld 6 months RI sentence and Rs100,000 fine given by the Special Court to Uco Bank's former chairman and managing director (CMD) K Margabanthu, it lowered the three months RI given to the bank's former general manager Ramaiya Venkatkrishnan. Ramiya Venkatkrishnan is sentenced to one month's RI and a fine of Rs100,000.

However, it said the period of imprisonment undergone would be deducted from the sentence.

The apex court also said, “We must, while pronouncing on the sentence to be passed on the accused, make note of the fact that the CBI has not preferred any appeals for enhancement against the impugned judgment of the Special Court. This Court, therefore, cannot impose a higher sentence."

While upholding K Margabanthu, Ramaiya Venkatkrishnan, Ashwin Mehta and Sudhir Mehta guilty of offence of criminal conspiracy, the SC said it need not interface with conviction of Munipally Subramanium Eshwar Chandra, Sunil Samtani and Pankaj Brijlal Shah.

Uco Bank's former divisional manager SV Ramanathan is acquitted from the charges of criminal conspiracy.

This particular case was about transactions, of discounting and rediscounting of bills of exchange and two pay orders issued by the State Bank of Patiala and Syndicate Bank, in favour of the Uco Bank at the instance of the Mehtas.

CBI registered the case in June 1992 against the accused. The officials of the Uco Bank in this case illegally borrowed Rs400 million in call money market and placed the funds in the hands of late Harshad Mehta for his own use.

Call money is the transaction between banks or financial institutions wherein brokers have no role. In this case, the call money borrowed by Uco Bank from National Housing Bank (NHB) was given to Mehta.

At the instance of Margabanthu and Harshad Mehta, Uco Bank purchased Gujarat Ambuja Cement (GAC) shares worth Rs500 million, which were routed through broker VB Desai, who was paid Rs953,000 as commission. But, since Desai could not deliver all the shares of GAC, it was agreed that in place of 300,000 shares of GAC 77,150 shares of 'Castrol' would be delivered at the rate of Rs1,750/- per share.

In December 2003, the special court, sentenced Margabanthu and R Venkatkrishnan to six months’ rigorous imprisonment and fined them Rs100,000 each for conniving with other officials to place public funds amounting to Rs400 million in the hands of Harshad Mehta.

C Ravi Kumar, assistant general manager, NHB, was sentenced to three years RI while Suresh babu, assistant manager of the same bank, was given one years’ RI. SV Ramanathan, asst. general manager, Uco Bank, was sentenced to one month jail term while Atul Parekh, employee of Harshad Mehta, was sent to prison for 15 days.

Harshad Mehta, the main accused in the 1992 securities scam, expired during the trial and hence the case against him was abated. –Yogesh Sapkale [email protected]