ANZ Grindlays and National Housing Bank (NHB) today ended their decade-old legal wrangle over disputed funds by agreeing to a settlement formula suggested by the Supreme Court.
ANZ Grindlays will get roughly Rs 620.43 crore and NHB Rs 1,025.43 crore. An order passed by a bench presided over by Justice BN Kirpal, asked the parties to work out the remaining minor issues. The formal order will be made on January 10.
ANZ counsel KK Venugopal said that the judges were relieved to note that they did not have to write a judgment on all the complicated legal issues raised by the case. Perhaps the legal firepower will now be turned on Harshad Mehta, as the NHB counsel K Parasaran said that some recoveries have to be made from him.
The dispute started when NHB issued cheques worth Rs 506 crore in the name of ANZ, which landed in the accounts of Harshad Mehta.
When the securities scam broke, NHB asked ANZ to return the money. It 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 ANZ Grindlays and prevailed upon it to return the money to NHB. When the dispute went for arbitration, ANZ Grindlays won and NHB was asked to return the money. NHB challenged the arbitration award and the special court overruled the award. ANZ Grindlays then moved the Supreme Court in 1998.
The original amount meanwhile swelled to Rs 1,552 crore and ANZ 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 warring parties will now share.
Though the dispute between these two banks has come almost to a close, pending the court's formal order, the legal issues raised by it are still waiting for definitive answers. These are bound to rise in other cases where similar transactions have occurred in the shadows, namely cheques were credited to the accounts of third parties without the drawer's mandate. The Supreme Court has not pronounced upon the legality of such transactions. If they are not legal, criminal consequences might follow, according to one set of corporate lawyers.
