Author: Kanak Vasishta, Sgt University gurugram
• To the Point
Mehta’s use of fake bank receipts and ready-to-trade transactions in the stock market caused significant volatility.His nickname was big bull.’ That time. After a long journey from middle class to wealth, he became broker Harshad Mehta and eventually rose to prominence. The article is available in Pakistani only. The share market’s scam in 1992 caused banks and other entities to suffer losses. Socia media outlets in India lauded Harshad Mehta as their most prominent and well-known figure. He was categorized as one of the rich. The partner was his elder brother and they both work together, but Harshad Mehta was the mastermind. And he done many Scam.as well and he became famous for this financial fraud in stock or share market and banks as well.
Use of Legal Jargon
When someone lies about the purchase or sale of securities such as stocks or commodities, it is considered a securities fraud.
What are the possible consequences?
A false victim is convinced to make a purchase or transaction through deceptive means.
Typically, this responsibility is shared between financial advisors, agents, or brokers and their clients, as well as fiduciaries who oversee trusts or wills.
According to Section 405 of the Indian Penal Code, anyone who has been given property to care for it and then fraudulently uses it is committing a crime.
The unauthorized, improper, or unlawful use of funds or property entrusted to one’s care.
Abstract
The scale of the Harshad Mehta scam, as well as the ethical and legal issues surrounding it, makes it an important event in Indian financial history. Mehta would not have been able to steal that much money had the banks not been exposed to such a gap in the ready-forward market. Using this money by helping to create a stock market bubble, he artificially raised prices and tricked investors. It also portrayed how people could take advantage of systemic delays in monitoring banking transactions. This resulted in the government making several changes in banking and securities and other transaction laws . And it also effect the economy because banks had to increase the interest of loan to cover the amount which they lose in this scam. The government at that time has to suffer as well. because contuiously asking them about their action against Harshad Mehta.
• The Proof
Mehta engaged in the trading of counterfeit BRs, which were allegedly provided by lesser-known banks like Bank of Karad and Metropolitan Co-operative Bank. Additionally,
Harshad Mehta misused the ready-forward deal system of SBI to steal approximately 600 crores from the State Bank of India. Why?
Stock Market Rigging: The most widely cited evidence of rigging was the manipulation of shares of (ACC) company after Mehta quickly reduced its price from 200 to 9,000 due to his interactively fraudulent buying activities.
Journalist Sucheta Dalal’s report, which was published on April 23, was a precursor to the media exposure. 1992.
Case Laws
Harshad Shantilal Mehtal and His Organization being investigated by the CBI.?…
Sections 120B, 409, and 420 were present.? IPC case. During the prosecution, it was revealed that Mehta’s relationship with bank employees and other brokers was so close as to suggest that they had conspired to pool money by illegally violating the FDRs.
HARSHAD S. MEHTA AND ANR. vs. STATE OF MAHARASHTRA A.I.R. 19992.
The current case involved petitions for bail, and it was determined whether the financial offender’s ability to secure bail would put the country’ s economic stability at risk. White-collar crime was given a new level of scrutiny by the court.
The case of Securities and Exchange Board of India v.
Harshad Mehta & Ors.
Mehta was banned from the market and fines were imposed as a result of SEBI’s civil litigation. The case emphasized the need for regulations to curb market inequity. Why would they?
State Bank of India vs. National Housing Bank (2001)
A civil dispute over 600 crore fraud. The Supreme Court’s ruling dealt with the issue of liability and the recovery of black money between the two organizations.
Conclusion
Harshad mehta the big bull,the broker. His actions were a clear indication of underlying issues: inadequate checks and balances. Mehta’s arrest and subsequent judicial detention resulted in his death in 2001, but the aftermath was more profound. What followed? They encompassed a range of options, such as mandating the SEBI’s stricter regulations and introducing online trading systems to keep brokers and financial institutions at bay. Additionally. The case continues to serve as a clear illustration of the necessity of open and accountable dealings with strong legal enforcement. This case has had a significant impact on the stock market, as it exposed the corruption scandal that implicated banks in the harshad mehta. Throughout India, harshad mehta has gained immense popularity. ” and he start get called as big bull.
FAQ: Harshad Mehta Scam, 1992
Q1. Who was Harshad Mehta?
A: A stockbroker known as the “Big Bull” of Dalal Street, who manipulated stock prices using fake bank receipts and banking loopholes.
Q2. How much was the scam worth?
A: Approximately ₹4,000–₹5,000 crore.
Q3. How did the scam work?
A: By using fake bank receipts and diverting bank funds to purchase stocks and inflate prices, then selling them at profit.
Q4. Which banks were involved?
A: Bank of Karad, Metropolitan Co-op Bank, and big PSUs like SBI.
Q5. What was SEBI’s role?
A: SEBI lacked statutory powers before 1992. Post scam, SEBI was empowered to regulate the capital markets effectively.
Q6. What legal provisions were involved?
A: IPC Sec 420 (cheating), 409 (criminal breach of trust), 468 & 471 (forgery), and provisions under SEBI Act, Banking Regulation Act.
Q7. What happened to Harshad Mehta?
A: He was arrested, spent time in jail, and died in 2001 due to cardiac arrest while trials were still ongoing.
Q8. What are the lessons from the scam?
A: Need for:
Strong financial regulations
Transparency and due diligence
Independent financial audits
Accountability of financial intermediaries
Q9. How did it change Indian finance?
A: Led to stronger SEBI powers, digitized trading, depositories, and improved investor protection norms.
Q10. Is this case still relevant today?
A: Yes, it’s cited in legal studies, financial ethics, regulatory reforms, and was the inspiration for books and the hit series Scam 1992.
