New Delhi, May 4: The Harshad Mehta-engineered securities scam of 1992 may raise a yawn today but the courts are still unravelling some of the most tortuous transactions relating to that grisly phase in the Indian capital markets.

Through an order issued last month, the Supreme Court restored a sum of Rs 2.9 crore to Canbank Financial Services which had been impounded by the scam custodian when it attached the properties belonging to stockbroker Harshad Mehta and his associates.

The amount pertained to a deal in which Canbank had authorised Harshad Mehta to sell 10 lakh shares of Reliance Petrochemicals at Rs 29 per share sometime in March 1992.

Canbank had contested the confiscation of the amount before a special court on the ground that it did not belong to the rogue broker and should, therefore, be restored to it.

In September 1993, the special court dismissed the plea stating that Canbank had “failed to show that the money was credited into or lying in any particular account”.

The special court said Canbank was only entitled to a charge on the estate of the stockbroker for recovery of the money and refused to release the amount to the financial services company.

The twist in the tale arose because Harshad Mehta and his brothers claimed a setoff of the amount against a Rs 3-crore liability that Canbank owed them.

When the case came up for hearing before the Supreme Court, Canbank claimed that Harshad Mehta had merely acted as an agent and argued that the amount he received from the sale of the shares should have been handed back to it.

It further contended that as long as the amount was not handed over, it should be considered that the broker was holding the amount in trust. It said the amount was not the property of the broker and the custodian had erred in attaching the sum.

A three-judge bench comprising Justices S. Rajendra Babu, A. R. Lakshmanan and G. P. Mathur said in its order, “The appellant is entitled to the amount to the extent of Rs 2.90 crore out of the assets of Respondent No 2.”

The court said it had to be ascertained whether the amount belonged to the broker or not. It recalled that in an earlier case, the apex court had clarified that “if any person has any interest, share, title or right in the attached property, it cannot be extinguished”. It had also been clarified that the special court could not dispose of the property which did not belong to the notified person.

In the instant case, the court said the proceeds of the share sale could not be treated as the property of the stockbroker. It said it belonged to Canbank and Harshad Mehta’s estate was only holding it in trust.

“The attachment … cannot extend to the appellant’s money (Rs 2.90 crore) and, therefore, the appellant is entitled to get back his money,” the court ruled.