Hiten Dalal Gets 3 Years Ri In Canbank Mutual Case

A special court on Thursday sentenced stockbroker Hiten Dalal and former general manager of Canbank Mutual Fund (CBMF ) B R Acharya to three years' rigorous imprisonment for various offences, including defrauding CBMF of Rs 325 crore during 1991-92.

Co-accused and former funds manager of CBMF, T Ravi, was however, acquitted by the court which gave him the benefit of doubt.

The verdict was delivered by justice Sarosh Kapadia who stayed his order until October 8 to enable the accused to move the Supreme Court in appeal. Acharya and Dalal were fined Rs 150,000 and Rs 110,000, respectively, on various counts.

 

The Central Bureau of Investigation (CBI) submitted that Rs 65 crore investment was made in the names of Andhra Bank (Rs 11 crore), Andhra Bank Financial Services ltd (Rs 22 crore), IDBI (Rs 10 crore) and Sahara ISICL (Rs 22 crore).

The agency alleged that investments of Rs 11 crore and Rs 22 crore in Andhra Bank and Andhra Bank Financial Services Ltd respectively was in fact the investment of Dalal himself as the money was paid by debiting his own account.

He was therefore an 'investor' and not 'broker' and the brokerage was not payable to him, the CBI contended.

CBI prosecutors Gupte and Thakre contended that Dalal had not acted as a broker because his name or rubber stamp did not appear on the application form of IDBI or Sahara.

Witnesses from these two institutions also testified that Dalal had not acted as a broker. CBI examined witnesses to prove its case.

Acharya denied the charge levelled against him. He shirked the responsibility and put the blame on Ravi for having paid the commission to Dalal.

Acharya submitted that it was Ravi's responsibility to ensure that commission was paid to concerned brokers including Dalal. He also denied having issued instructions to Ravi to pay the brokerage.

Ravi, on the other hand, argued that he had acted in a bonafide manner on the instructions of his superior who was the then general manager of CBMF and also its chief trustee.

Dalal argued that he had rightly claimed the brokerage of Rs 32.5 lakh because he was responsible for procuring the investment of Rs 65 crore in Cancigo. As a broker he had asked IDBI and Sahara to invest in Cancigo.

Dalal submitted that there was no rule which barred payment of brokerage to an investor. The investments by Sahara and IDBI were procured by him by virtue of arrangement with Citibank, the court was told.

Dalal argued that no wrongful loss was caused to CBMF. He too had not gained wrongfully, Dalal contended. Besides, no complaint was made by anyone including CBMF. The auditors had also not raised objections for making payment of Rs 32.5 lakh as brokerage to him.

The chargesheet was filed on October 17, 1996. The trio were charged with various offences under IPC including Sections 120-B (conspiracy), 409 (criminal breach of trust), 420 (cheating), 411 (dishonestly receiving stolen property) and 477-a (falsification of accounts).

They were also charged with Section 13(1)(d) read with Section 13(2) of prevention of Corruption Act (PCA), 1988.