MUMBAI, May 14: The National Housing Bank (NHB) will challenge the award of the arbitration court at the special court of Justice S N Variava this week. Former attorney-general of India K Parasharan will represent NHB at the special court which has the status of a high court.

According to Reserve Bank of India sources, the special court does not have the power the modify the award. ``It will either have to confirm or reject it. It cannot modify the award,'' a senior Reserve Bank executive said. NHB will challenge the award under Section 15 and 16 of the Arbitration Act 1940.ANZ Grindlays won the Rs 912-crore award (including interest) against NHB, a wholly-owned subsidiary of the Reserve Bank, in a securities scam-related case involving the crediting of cheques to Harshad Mehta's account.

NHB paid up the money last month after ANZ gave an undertaking that in the event of a higher court setting aside the arbitration award, it would return the monies to NHB.

Although the arbitration award, delivered on March 29, went against NHB, it demanded a comfort letter from ANZ as a precondition to cough up the money. ANZ had put its foot down on the ground that the issuance of a letter of assurance ``was tantamount to a modification of their terms'' of the 1992 agreement. The pact had stipulated that NHB would pay up within 21 days of the delivery of the award. NHB's payment came two days before the deadline for payment expired on April 19.

The Reserve Bank has extended a Rs 700-crore ``soft loan'' to NHB, its wholly-owned subsidiary, for the purpose.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.