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Parekh firm paid Rs 1.75 billion to MMCB chief's outfit

George Smith Alexander & Yashajit Saha

Ketan Parekh group company Panther Fincap & Management Services had paid Rs 1.75 billion to Madhur Capital & Finance, the internal income-tax department investigation report said.

MCFL is a sister concern of Madhur Shares & Stock Ltd -- a stock broking company owned by the chairman of Madhavpura Co-operative Bank Ramesh Parekh -- through a conduit named B D Vakil & Co, it pointed out. PFMS officials could not be contacted for comment.

The money was deposited at the MCFL's account with the Mandvi branch of MMCB, which is now being revived under a central government scheme.

Akash Gangachari, data entry operator-cum-accountant of PFMS told the I-T department that certain share transactions have taken place with MSSL. MCFL being a sister concern of MSSL, the amount lent to MCFL might be meant for MSSL.

The department in its report also said that a perusal of the bills revealed that the shares were sold at an exorbitant price by PFMS to MSSL.

According to the department's calculation, a probable profit accrued on squared up transactions to PFMS amounts to Rs 5.35 billion against Parekh's claim of Rs 1.45 billion of profit.

PFMS produced the bills raised by MSSL on April 4. But the income-tax department said that there was no record of such a bill in the computerised book of PFMS seized by it.

Ketan Parekh on June 6 explained that there were margins to be paid and the transactions were done on carried forward basis. IT department, however, said that no contract note pertaining to these transactions was ever produced for examination.

The department has also said that no carry forward of shares is evident from bills raised by MSSL on PFMS.

The department, in fact, suspected that " another possibility could be that Rs 1.75 billion is the hidden profit of Ketan Parekh, which he has transferred to his close associate Ramesh Parekh, chairman MMCB and managing director Madhur group of companies and the bills have been invented to create a facade of pay out to MSSL."

According to a Securities and Exchange Board of India circular, a person who is a client cannot act as a sub-broker and trade for others.

In this context, the entire transaction of share trade between MSSL and PFMS has come under questioning as the clients were not allowed to trade for others.

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