The Enigmatic Tale of Harshad Mehta and His Iconic House
The story of Harshad Mehta, often referred to as the Big Bull of Dalal Street, is one of the most fascinating and controversial tales in the history of India’s financial markets. His rise and fall in the stock market, culminating in the infamous 1992 Indian stock market scam, have been the subject of numerous books, films, and plays. But beyond his financial exploits, Harshad Mehta’s lifestyle, particularly his luxurious house, has also captured the public’s imagination. Let’s delve into the life of Harshad Mehta, his scam, and the iconic house that symbolized his meteoric rise.
Harshad Mehta: The Man Behind the Scam
Humble Beginnings and Meteoric Rise
Harshad Shantilal Mehta was born in 1954 in Rajkot, Gujarat. He moved to Mumbai, where he completed his B.Com from Lala Lajpat Rai College. Starting his career as a jobber in the Bombay Stock Exchange (BSE), Mehta’s keen understanding of the stock market soon set him apart. By the early 1990s, he had become a prominent stockbroker, earning the nickname “Amitabh Bachchan of the stock market.”
The Harshad Mehta Scam
The Harshad Mehta scam is a tale of ambition, manipulation, and eventual downfall. Mehta exploited loopholes in the banking system to manipulate stock prices, leading to a massive stock market crash in 1992. His fraudulent activities involved illegally procuring funds from high-profile banks using fake bank receipts. The scam, valued at $1.4 billion, led to significant changes in India’s financial regulations.
Key Facts About Harshad Mehta
- Full Name: Harshad Shantilal Mehta
- Birth: 1954
- Death: 2001 (at the age of 47)
- Place of Death: Thane Civil Hospital
- Cause of Death: Heart attack
- Education: B.Com from Mumbai’s Lala Lajpat Rai College
- Family: Wife - Jyoti Mehta, Son - Aatur Mehta, Father - Shantilal Mehta, Mother - Rasilaben Mehta, Brother - Ashwin Mehta
- Cars: Lexus Starlet, Toyota Corolla, Toyota Sera
- Property: Madhuli Cooperative Housing Society at Worli
Harshad Mehta’s Net Worth
At the peak of his career, Harshad Mehta’s net worth was estimated at Rs 3,542 crores, equivalent to over USD 480 million. His wealth was a testament to his stock market prowess, albeit built on fraudulent activities.
The Iconic Harshad Mehta House
A Symbol of Luxury
Harshad Mehta’s residence was a 15,000-sq ft penthouse in Mumbai’s Worli Sea Face area. This luxurious abode boasted amenities such as a billiards room, a nine-hole putting golf course, and a mini-theatre. The penthouse was created by interconnecting nine flats on the third and fourth floors of the 14-storeyed Madhuli Cooperative Housing Society.
Awe-Inspiring Amidst Mumbai’s Space Crunch
In a city like Mumbai, where space is a premium, Harshad Mehta’s sprawling penthouse was nothing short of awe-inspiring. It housed his entire extended family and was a testament to his larger-than-life persona. Mehta’s penchant for flaunting his wealth was evident in his choice of residence and his fleet of around 29 imported luxury cars.
The Downfall and Aftermath
The CBI Raid
On November 9, 1991, the Central Bureau of Investigation (CBI) raided Harshad Mehta’s house, marking the beginning of his downfall. The luxurious penthouse, once a symbol of his success, became a focal point of the investigation into his fraudulent activities.
Auction and Legal Battles
In 2009, the Supreme Court-appointed custodian began the process of auctioning eight out of the nine flats to repay Mehta’s debts to banks and the Income Tax department. The department had a claim of Rs 20,000 crore on Mehta and his associates. Mumbai-based stockbroker Ashok Samani attempted to buy the flats for Rs 32.6 crores, but the Mehta family challenged the auction, leading to prolonged legal battles.
The Court’s Verdict
The court eventually rejected the Mehta family’s plea, stating that the properties were purchased using funds from Mehta’s fraudulent activities. The court ruled that the properties of all family members involved in the scam would be disposed of to clear the liabilities arising from the transactions.
Understanding the Harshad Mehta Scam
The Settlement Cycle and Loopholes
At the time of the scam, the settlement cycle for stock transactions was 14 days, and brokers did not need a Demat account to sell stocks. These loopholes enabled Harshad Mehta to manipulate stock prices by illegally procuring funds from banks using fake bank receipts.
Manipulating Stock Prices
Mehta colluded with banks to print fake bank receipts, which he used to obtain funds for buying shares. This artificially inflated stock prices, allowing Mehta to sell the shares at a profit. Once the cycle was complete, he would return the bank’s money and take back the fake receipts.
Facing the Consequences
Harshad Mehta faced over 600 civil action suits and 70 criminal cases for his fraudulent activities. His actions led to significant changes in India’s financial regulations, including the widening of the jurisdiction of the Securities and Exchange Board of India (SEBI).
Conclusion
Harshad Mehta’s story is a cautionary tale of ambition, manipulation, and eventual downfall. His luxurious house, once a symbol of his success, became a focal point of his legal battles. While his fraudulent activities led to significant changes in India’s financial regulations, his life and legacy continue to captivate the public’s imagination. The Harshad Mehta house remains an iconic symbol of his meteoric rise and dramatic fall in the world of finance.