The Supreme Court has stayed a Maharashtra Special Court order directing the recovery of ₹4 crore with 18% interest per annum from the Federal Bank and broker Kishore Janani to pay the widow of broker and scamster Harshad Mehta, who died in 2001.
A Bench of Justices A.M. Khanwilkar and Ajay Rastogi froze the order of the Special Court, which is trying the 1992 securities scam, on a direct appeal filed under the Special Courts (Trial of Offences Relating to Transaction in Securities) Act of 1992.
The appeal was moved by Federal Bank, represented by advocate Haris Beeran.
Mr. Janani had in 1992 requested the bank, where he was then an active current account holder, to issue two pay orders of an amount of ₹4 crore and ₹3.47 crore in favour of M/s. Mazda Industries and Leasing Ltd. (MILLS).
The pay order for the ₹4 crore was never encashed though the pay order was transferred to MILLS by Mr. Janani. The Special Court has now held that the amount came to the account of Mr. Janani from that of Mr. Mehta. The court declared that the amount belonged to Mr. Mehta.
“It has directed the Custodian to recover the amount from Federal Bank, along with an interest of 18% from 1992 to remit the amount to the creditors of the notified party,” the appeal said.
The bank has now asked the court whether it has any liability to a third party like Mr. Mehta’s widow, with whom it had no privity of contract.