Harshad Mehta - Exposure, Trial and Conviction

Exposure, Trial and Conviction

Exploiting several loopholes in the banking system, Mehta and his associates siphoned off funds from inter-bank transactions and bought shares heavily at a premium across many segments, triggering a rise in the Sensex. When the scheme was exposed, banks started demanding their money back, causing the collapse. He was later charged with 72 criminal offenses, and more than 600 civil action suits were filed against him.

He was arrested and banished from the stock market with investigators holding him responsible for causing a loss to various entities. Mehta and his brothers were arrested by the CBI on November 9, 1992 for allegedly misappropriating more than 28 lakh shares (2.8 million) of about 90 companies, including ACC and Hindalco, through forged share transfer forms. The total value of the shares was placed at 250 crore (US$45.5 million).

In September 1999, Bombay High Court convicted and sentenced him to five years rigorous imprisonment and a fine of 25,000 (US$455). On 14 January 2003, Supreme Court of India confirmed High Court's judgement. It was a 2:1 majority judgement. While Justice B.N. Agrawal and Justice Arijit Pasayat upheld his conviction, Justice M.B. Shah acquitted him.