Harshad Mehta scam: Wife Jyoti breaks silence

Nearly 21 years after the scam-accused stock broker Harshad Mehta died of a heart attack in prison, his wife, Jyoti, has claimed he died of medical negligence as jail authorities denied him treatment for nearly four hours.

She also stated that her family has been harassed by the Income Tax Department and custodian for nearly three decades despite winning more than 1,200 large cases filed against them in various judicial forums. Mehta was accused of bank fraud in 1992.

Harshad Mehta opens up on the case against him

His family recently launched a website in his name, https://www.harshadmehta.in/, where his wife wrote:  “After Harshad’s demise and suffering 3 rounds of illegal assessments we have already won more than 1,200 large cases and brought down the illegal demands from ₹30,000 crore to ₹4,000 crore and also secured refunds to the Custodian of ₹814.33 crore and further refunds of about ₹5,500 crores are already overdue and not being made by the I-T department.” 

She further claimed that when the remaining appeals are heard the claims of revenue would fall to about ₹200 crore and this would entail further refunds.

Harshad Mehta, arrested by the Central Bureau of Investigation in connection with the multicrore stock scam, being taken to the Esplande Court in Bombay in June 1992. (Source: The Hindu Archives)

“Thus, we have thwarted the plan of the I-T Department and Custodian to usurp ₹3,285.46 crore released to them by completely paralysing our organisation and hurting our ability to defend ourselves though at one point after Harshad’s demise this plan had already succeeded. In the process irreparable loss of ₹20,677.28 crore is already suffered by us,” she wrote.

Stating that her family faced difficulties due to adverse media reports, the seizure of its bank accounts, the suspension of its three brokerage firms in the middle of May 1992, and reports of a likely CBI investigation against Harshad, she wrote, “We decided to buy peace with the department and on 02.06.1992 made a declaration of income u/s 132(4) of the IT Act of ₹100 crore duly clarifying that no incomes were earned outside of books of accounts and this declaration was a highest-ever declaration of income till that date.The I-T Department was extremely happy with this declaration as it was reportedly higher than their provisional assessments of our income. We made the above declaration even though our business had come to a complete halt due to all the above unforeseen events.”

“Within 4 days on 6/6/1992, the Government promulgated by way of an Ordinance Torts Act and u/s 11(2)(a) of this Act the I-T department was given a priority for recovery of its dues over the banks and other creditors. It is then that the I-T Department planned to take full advantage of the priority accorded to it and take away all the attached monies and assets lying in the hands of Custodian completely unmindful of the fact that the same would defeat the objects of the Torts Act which was brought about as a Special Statute to protect the interest of banks. From 1993 onwards, the department started making high-pitched assessments and pressed for the release of monies against these demands. The Hon’ble Special Court noticed this conduct of the department and made strong observations against it in its order dated 02.07.1993 in MA 107 of 1993 criticizing it.

“Despite the adverse observations and instead of making amends the I-T Department acted with vengeance and between 1993 and 1996 assessed abnormally high incomes in case of all Mehtas which on the face of it could not have been earned by any one of us as the incomes were assessed more than 100 to 300 times of the actual taxable incomes. I am pleased to enclose charts giving the particulars of income assessed for 6 years for individuals and 5 years for companies. In support of my allegations about the falsity of the assessments I am also pleased to enclose a few charts as samples wherein the Appellate Authorities have deleted the false additions upto 99 per cent. It can be seen that against the declaration of income of ₹100 crore based on the same seized material and records the department assessed incomes of ₹5604.92 crores in the case of 9 individuals and ₹556.80 crore in case of the corporate entities. In order to determine our true asset and liability picture the Hon’ble Special Court in 1993 also appointed 3 reputed firms of Chartered Accountants to draw our books of accounts and audit them for the crucial period between 1990 and 1993 and had empowered these Chartered Accountants to verify each and every transaction with the third parties. The books of accounts were drawn by us and placed before these Chartered Accountants who thoroughly verified them. In support of my allegations I am pleased to enclose a chart which gives a comparison between the incomes disclosed in the books of accounts and the incomes assessed by the IT department for Assessment Years 1992-93 and 1993-94 to show how patently illegal the assessments were framed by the department. The Custodian by his illegal conduct has already achieved his mala fide objects of persecuting us and ensured the continuance of his office for past 30 years.

File photo of stock market investors in a long queue in front of bank counters with share applications and deposits at Parliament street in New Delhi on May 08, 1992. (Source: The Hindu Archives)

“Thereafter when we secured reliefs from Hon’ble CIT(Appeals) and Hon’ble Income Tax Appellate Tribunal (ITAT) through more than 1200 orders, the benefit under them have been completely denied to us by the department through several illegal and high-handed methods so much so that for 12 years the 90 orders passed by Hon’ble ITAT directing the AO to assess our incomes based on our books of accounts and after giving us a proper opportunity, the same were not complied with.

“To save our residential premises ordered to be sold for the third time we placed the above facts before Hon’ble Supreme Court who was pleased to intervene and pass orders on 02.05.2017 and 08.05.2017 in Civil Appeal 6326 of 2010 directing the tax authorities to comply with the above 90 orders in 12 weeks but even the orders of Hon’ble Supreme Court have not been complied with by the department for past 5 years. In some of our largest cases, we made a grievance before Hon’ble ITAT who were pleased to hear our appeals and grant us reliefs under a combined order dated 14.01.2019, the particulars of which are provided in a summary chart together with 4 enclosed charts. The above landmark order settled long pending disputes and sharply turned around our situation. The Hon’ble ITAT is a last fact finding body and the above reliefs came to be granted because the additions were patently illegal, high-pitched and not backed by any material and largest additions were deleted in compliance with the law laid down by Hon’ble Supreme Court in the case of DCIT Vs SBI reported as (2009) 2 SCC 451. The two largest assessment orders in case of Harshad and Ashwin for AY 1992-93 have already been quashed since they were illegally framed.

File photo of buyers examining the Toyota Sierra that belonged to Harshad Mehta at his residence in Bombay. A total of 18 cars, including six Toyotas and two Hondas, were auctioned by the Special Court. (Source: The Hindu Archives)

“That despite above, the Hon’ble Special Court by an order dated 25.02.2011 passed in Report 9 of 2010 directed to make payment to the IT department of ₹1995.67 crore and ₹225 crore to banks and further directed to transfer large amounts of ₹1808.27 crore lying in the accounts of Mehtas to the account of Harshad to meet claims against him and particulars of amount transferred are enclosed.

“...in gross violation of above the Custodian, IT department and banks acting in collusion with each other have canvassed that all Mehtas should be treated as ‘one entity’ as “Harshad Mehta Group” and assets of all the entities should be used to discharge the liabilities of Harshad and in this manner more than ₹3000 crore are already transferred from the accounts of Mehtas to the account of Harshad and thereafter used to make payments to the IT department and the banks. The Custodian and the Hon’ble Special Court have sold our blue-chip shares at throw-away prices causing huge losses to us which cannot be recouped now even if monies are refunded by the IT department and banks.”

Claims related to Mehta’s death

On Mehta’s death in jail in 2001, following a heart attack, his wife wrote: “Jail authorities neglected his genuine complaint for 4 hours after he suffered the first heart attack at around 7 p.m. He immediately reported the unusual pain to his younger brother Sudhir who was in the next cell from where he could hear Harshad but could not see him. The jail Doctors saw him but did not have any medicine for a heart attack. Harshad, therefore, requested them to give him Sorbitrate, which kept him alive for about 4 hours. Unfortunately, thereafter the jail authorities did not use that golden time of 4 hours to shift him to a hospital which could have saved his life.

“At 11 p.m., he was made to walk for a long distance to the Thane hospital where he immediately succumbed in a wheelchair after his cardiogram confirmed a massive second heart attack. We were later told that an inquiry was ordered by the authorities and even a post-mortem was carried out but neither this Inquiry Report nor the post-mortem Report was provided to us despite our repeated requests.

The June 1993 press conference addressed by Harshad Mehta, flanked by counsel Ram Jethmalani and Mahesh Jethmalani, which his wife, Jyoti, describes as the “fateful day” that “changed our lives forever”

“In these 20 years, our family has observed silence and completely stayed away from the media by not making a single statement on any issue touching our lives and the huge litigation that has got thrusted upon us since then and also about our continued sufferings and group punishment being meted out to us by the authorities only because we are related to Harshad even though we have not violated any law of the land. The proximate cause appears to us to be the revelations Harshad was compelled to make in the year 1993 about his meeting with the then Hon’ble Prime Minister, Shri Narasimha Rao on 04.11.1991 which fateful day changed our lives forever. In fact, since 04.06.1992 Harshad withstood the intense pressure of investigation and questioning but never made any disclosure about the fact that he was summoned for a meeting by the Hon’ble Prime Minister on 04.11.1991 until June 1993 when the first Press Conference was organized because dragging of Harshad by numerous agencies making baseless allegations on him with which he was just not concerned as he was being framed in several cases.”

On the ongoing cases

“The assets of each and every family member and corporate entities promoted by us (Mehtas) have been brought under attachment now since past 30 years when the Custodian appointed under Section 3(2) of Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 (Torts Act) a draconian statute, notified us through Gazette and attached our assets on 8.6.1992. This attachment roped in assets of several family members and corporate entities who were not concerned at all and there was a clear discrimination by the Custodian who has not followed the uniform policy as he has not notified family members and corporate entities while notifying several other persons.

“We feel aggrieved that our fundamental and other valuable constitutional and human rights have been suspended and grossly violated for the past 30 years and our family is being meted out with a group punishment even though we have not undertaken a single transaction in securities with the banks nor any banks have lodged any claims on us,” she said

“...there is no allegation made for violation of any law of the land and even though the Torts Act does not provide for or support such a treatment to innocent persons but we have been marked and discriminated against and singled out by the political dispensation of that time. The Custodian has till date also not established any nexus or flow of any tainted monies to us as required in law and CBI even after combing through each and every transaction undertaken by Harshad and studying the flow of monies under these transactions has yet not cited any one of us as accused except the two younger brothers of Harshad.

“Since Harshad was vilified through trial by media and which continues even till date to refer to him as a “scamster” even though he was not proved guilty of allegations made against him and therefore I am constrained and compelled to atleast posthumously defend him since the subsequent facts and events completely vindicates him of what he had stated and conclusively demolishes baseless allegations made against him by some vested interests.

“Since the media, movie and the web series has kept him alive, I consider it to be my duty to defend him posthumously since all the facts have emerged and already got established, discovered, proved and become unimpeachable and most of which are in the form of orders passed by Hon’ble Courts and Tribunals,” she posted.

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