Case Note & Summary
The case arose from the 1991-92 securities scam that affected the Indian economy. The Standard Chartered Bank (SCB) had an Investment Banking Division containing a Money and Investment Unit (MIU) with front-office and back-office functions. Accused No.3 Hiten Dalal operated as SCB's broker for securities transactions, while Accused No.7 Arvind Mohanlal was manager of MIU front-office . On 30 April 1992, Mohanlal disclosed to a bank director that stocks worth approximately Rs.300 crores were unaccounted for—SCB had made payments but received neither securities nor bank receipts from counterparty banks. Internal investigation revealed a conspiracy: Accused No.3 Hiten Dalal, along with other brokers and officials of Bank of Karad (BOK), Metropolitan Co-operative Bank (MCB), and other entities, had siphoned funds from SCB through ostensible securities transactions. BOK directors Accused Nos.1 and 4 maintained a securities account in the name of Accused No.4, into which SCB funds were diverted. Accused No.11, BOK manager, signed bank receipts and SGL transfer forms without genuine backing; Accused No.10, BOK clerk, issued cost memos and delivery orders without underlying securities. MCB vice-chairman Accused No.6 issued bank receipts of Rs.19.89 crores and four receipts of Rs.10 lakhs without genuine securities. Accused No.9 admitted receiving Rs.90-125 crores from Accused No.4 out of defrauded funds. In a meeting on 30 May 1992, Accused No.3 disclosed that Accused No.2 had received Rs.600 crores from diverted funds. The total fraud, after deducting securities returned by Accused No.3 (Rs.205 crores and Rs.145 crores), was estimated at Rs.890 crores. The complaint alleged criminal conspiracy, breach of trust, misappropriation, forgery of valuable securities, and falsification of accounts. The judgment text provided is incomplete and contains only the introductory narration of the prosecution's allegations; the court's analysis, findings, and verdict are not included in the excerpt.
Issue of Consideration
SPECIAL CASE NO.4 OF 1995
Case Details
2019 LawText (BOM) (01) 109
SPECIAL CASE NO.4 OF 1995
Dr. Justice Shalini Phansalkar-Joshi
R.S. Mhamane (SPP for CBI), Sunil Kale, Manoj Shukla, Jaideep Lele, Bharat Rathod, Racheeta Dhuru, Sangeeta Gudhka, N.K. Thakore, Ramesh Ramamurthy, Saikumar Ramamurthy, Dinesh Purandare, Bhushan Deshmukh, Ravi Gandhi, Mahek Kamdar, Rashmin Jain, Rishabh Ranka, P.G. Sabnis
Central Bureau of Investigation
Bhupendra Champaklal Dalal & Others
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Nature of Litigation
Criminal trial under the Special Court Act for offences relating to transactions in securities, involving allegations of fraud, conspiracy, forgery, and misappropriation against brokers and bank officials.
Remedy Sought
Prosecution and conviction of accused persons for defrauding Standard Chartered Bank through unbacked securities transactions.
Filing Reason
Complaint dated 20 June 1992 by Mr. P.S. Nat, then CEO of Standard Chartered Bank, alleging that shares and securities worth approximately Rs.1,239 crores were unaccounted for due to fraudulent transactions through broker Hiten Dalal and other banks.
Judgment Excerpts
This Special Case is fall out of the financial scam, that affected the economy of the country in the year 1991-92.
stocks worth about Rs.300 crores remained unaccounted for
total fraud worked out to Rs.890 crores after deducting the securities transferred/sold to SCB by Accused No.3-Hiten Dalal of Rs.205 crores and securities worth Rs.145 crores handed over by him to the SCB.
the accused persons have committed the offences of criminal breach of trust; criminal misappropriation of property; forging of valuable securities and using the said forged valuable securities as genuine; falsification of Accounts and receiving the stolen property.
Procedural History
Complaint filed on 20 June 1992 by Mr. P.S. Nat, CEO of SCB, with CBI. Case registered and charge-sheet filed. Accused No.2 Jagdish Pannalal Gandhi died on 14/06/2002, proceedings abated. Accused No.4 Abhay Dharamsingh Narottam died on 28/09/2012, proceedings abated. Trial commenced, judgment reserved on 07-01-2019 and pronounced on 30-01-2019.
Acts & Sections
- Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992:
