The settlement between Standard Chartered Grindlays and National Housing Bank (NHB) became official today with the Supreme Court passing a decree incorporating the terms of their agreement with modifications regarding their income tax liabilities.
Standard Chartered Grindlays will get roughly Rs 620.43 crore and NHB Rs 1,025.43 crore of the disputed amount deposited with the State Bank of India.
The order passed by the bench headed by Justice B N Kirpal clarified that both parties can now approach State Bank of India (where the money is deposited) and claim tax concessions as claimed by them. While Grindlays wants to produce a certificate regarding tax deduction at source under Section 195 of the Income Tax Act, the National Housing Bank, a RBI subsidiary, wants to show that no tax is deductible from its share of the settlement amount. This was one point on which the settlement was delayed by one week.
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The registrar of the Supreme Court was directed to discharge the original fixed deposit receipts today and sent them to the State Bank. The court further clarified that the legal questions raised in the litigation are being kept open. Thus the curtains came down on the 10-year-old dispute involving Rs 1,645 crore.
The dispute started when NHB issued cheques worth Rs 506 crore in the name of ANZ (now, Standard Chartered Grindlays Ltd), which landed in the current accounts of late Harshad Mehta. When the securities scam broke, NHB asked ANZ to return the money. ANZ replied that the money had been given to Mehta according to the practice prevailing in trade circles.
The Reserve Bank of India is then believed to have influenced the bank and prevailed upon it to return the money to NHB. When the dispute went for arbitration, Grindlays won the case. NHB challenged the arbitration award and the special court overruled the award. Grindlays then moved the Supreme Court in 1998.
The original amount meanwhile swelled and Standard Chartered Grindlays had deposited the amount with State Bank of India on the orders of the Supreme Court in January this year. This amount has grown to over Rs 1,645 crore, which the parties will now share in the proportion suggested by the judges last month.