The counsels of both the parties met separately in New Delhi on Tuesday to chalk out their action plans.

ANZ Grindlays had moved the SC on April 3, 1998, against the special court's decision to set aside the Rs 912-crore arbitration award in the case.

"ANZ believes it has a good case and, hence, it has decided to fight it out in the SC," said sources familiar with the case. Had ANZ decided to pay up on February 4, 1998, rather than pursue the case, it would have had to cough up Rs 1,070 crore. "The interest rate on Rs 912 crore, the principal sum, works out to Rs 46 lakh a day," said NHB sources.

Justice Sam Variava, while setting aside the arbitration award on February 4, 1998, observed that, "....there are errors of law apparent on the face of the award. ....all findings of fact are based on application ofwrong principles of law."

The special court, in its ruling, held ANZ Grindlays guilty of conversion of NHB cheques worth Rs 506 crore to Harshad Mehta's account. It said that NHB is the true owner of the cheques issued under section 131 of the Negotiable Instruments Act, 1881.

The court, however, did not comment on the fraud involved since the arbitrators had taken different views with regard to the fraud between NHB and Mehta, as well as between ANZ and Mehta.

On March 29, 1997, the three-member arbitration panel, headed by former SC chief justice MH Kania, ruled in favour of ANZ Grindlays. The award was the result of a split 2:1 verdict.

The panel held that ANZ Grindlays was not guilty of wrongly crediting account-payee cheques worth over Rs 506 crore in Mehta's account. These cheques were drawn on the Reserve Bank of India in early April 1992 by NHB. The arbitration proceedings, which were spread over more than 300 meetings in five years, saw more than Rs 15 crore being spent in litigation.

NHBchallenged the arbitration award saying that if ANZ's action was upheld, it would have grave implications for the Negotiable Instruments Act, 1881. Besides, the prevailing payment system in the country -- through account payee cheque -- would be severely affected.