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Seven years for Hiten Dalal, Mohan in Canfina scam

Syed Firdaus Ashraf in Bombay

In the first verdict of its kind, the special court in Bombay, instituted for securities scam cases, today held stockbroker Hiten Dalal and former Canbank Financial Services assistant vice-president S Mohan, guilty of criminal breach of trust in the Rs 330 million Canfina Scam and awarded them seven years rigorous imprisonment.

Delivering his judgment, Justice S N Variava said, "Scams after scams are taking place and money is being siphoned out systematically in an illegal manner. It is time the court sends a message to the people that even if justice is delayed it is sure to follow. And especially in this case since the amount involved was the huge sum of Rs 330 million which was siphoned out from the system illegally."

Dalal and Mohan have been asked to pay Rs 100,000 as fines respectively; if they fail to do so, their sentence can be extended by 18 months.

The judge has given them two weeks to appeal against his judgment in the Supreme Court.

Both men were charged under sections 409 & 411 and 13I (c ) (d) of the Indian Penal Code.

The charges proved against Mohan are criminal breach of trust and criminal conspiracy under the IPC and a charge under the Prevention of Corruption Act, as he was a public servant. Dalal was convicted for criminal breach of trust and criminal conspiracy and also on the charge of receiving stolen property under the IPC.

The Central Bureau of Investigation filed the charge-sheet in the Bombay high court in 1994.

The case dates back to 1992 when it was found that two lots of Canbank Mutual Fund units (called Cancigo units) worth Rs 110 million and Rs 220 million were purchased in the name of Andhra Bank and Andhra Bank Financial Services Limited respectively. The units were paid for by Dalal.

The entire transaction was executed without the authorisation of the banks and ABFSL.

As per the scheme, Cancigo units were non-transferable for one year. However, before the end of one year, Dalal sold these securities to Canfina, a wholly owned subsidary of Canara Bank on February 6, 1992.

The CBI argued that the transaction was entered into knowing that the Cancigo units were not in Dalal's name and that they were not transferable.

Justice Variava said, "These transactions was illegal and were not transferable."

Earlier in the day, Dalal's counsel Ramakant Ovlekar asked for leniency and pleaded that his client had not committed a serious crime like smuggling or murder. To which CBI counsel Vishwas Gupte replied that any sympathy would be misplaced in this case and would affect the judge's credibility in tackling white collar crime.

Last week, Justice Variava convicted both Dalal and Mohan. Thursday was reserved for the sentence after Ovalekar sought some time to brief the judge about his client's viewpoint.

Two others named in the chargesheet, Canfina's then executive vice-president M K Ashok Kumar and then assistant vice-president N Balasubramaniam, were acquitted.

After hearing the prosecution and defence for nearly two hours, the judge decided to sentence them after lunch.

Mohan had no lawyer to defend him -- he argued his own case. He was constantly in tears during the hearing.

Dalal sat coolly and listened to the proceedings. The only time the stockbroker looked tense was when the judge got ready to deliver his judgment. Dalal then took out a small towel and wiped the sweat off his face.

Before delivering the sentence, the judge asked if the accused would like to say anything. Mohan got up and said, "For the past six years, I am out of a job. I am going through difficult times. So my Lordship, I would request you to punish me leniently."

The judge thought otherwise.