It is in the MUL case that Mehta's former employee, Mohan Khandelwal was replying to cross examination from Mehta's counsel, for the last two days. Yesterday, Khandelwal virtually denied every important fact in his statements made to the CBI on June 1, and June 15, 1993.

The statements recorded the details of how the amount, Rs 45 lakh, was withdrawn from the banks on November 4, 1991 and how Mehta, Khandelwal and Sunil Mittal went to the residence of Sitaram Kesri, then Congress party treasurer to allegedly deliver Rs 20 lakh of this amount.

Khandelwal,while replying to cross examination by Mahesh Jethmalani, has denied that he told the CBI that he also accompanied Mehta and Mittal to Kesri's house.

Justice Rane today also said that the CBI investigation (now ordered) will have no bearing on proceedings in the MUL case.

The court observed that the two relevant statements had not been furnished to the court or the defence when the CBI filed the charge-sheet. Justice Rane said the facts with regard to the payment made to dignitaries of the political party (as alleged in the two statements of Khandelwal) by Harshad Mehta, who is also a notified party in the scam cases, are of a grave nature, and involve huge sums of money.

The court also observed that the objective of setting up the special court was to find out how public funds had been siphoned out of the institutions, and therefore the court had to take cognisance of statements as those made by Khandelwal.

The JPC which inquired into the securities scam in 1992, had also suggested a detailed probeinto the alleged payments made by Harshad Mehta to political figures.

The court cannot ignore such serious issues, Justice Rane observed while directing the CBI to investigate the allegations contained in the two statements of Khandelawal, who, also initially an accused, had turned approver in the MUL case.

According to his statement made before the CBI on June 15, 1993, Khandelwal had said: ``As per the instructions of Harshad Mehta, I prepared another cheque for Rs 20 lakh and visited at ANZ Grindlays Bank (sic) alongwith Anuj Kalia. The cheque was encashed and cash was brought to the office, but the suitcase containing cash remained in the office car (NE 118). At about 3-4 pm, Harshad Mehta came to the office in the car of Sunil Mittal and the suitcase containing cash lying in the car was shifted to the car of Sunil Mittal.''

``Myself, Sunil Mittal, and Harshad Mehta went to the residence of Sitaram Kesri, party treasurer. There I remained alongwith them in the front room. Later Harshad Mehta andSunil Mittal went inside the next room and the suitcase containing the cash was picked up by somebody from the bungalow (residence of Kesri) and taken inside that room.''

``While returning from that room, Kesri asked Harshad Mehta to write an amount towards donation to Congress party funds and Harshad Mehta initialed in the notebook produced by Kesri. Then the three of us returned to the office and while I remained behind, Harshad Mehta and Sunil Mittal proceeded to the hotel.''