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CSE case: Goud, IndusInd VP Pal held

BS Bureau in Kolkata

Kolkata police arrested B Virupaksha Goud, former managing director and CEO of Stock Holding Corporation of India Ltd and S N Pal, vice-president of IndusInd Bank, for their alleged involvement in the Rs 120 crore (Rs 1.2 billion) scam that brought the Calcutta Stock Exchange down to its knees in March 2001.

The detective department of the city police, which is investigating the multi-crore scam following a first information report filed by CSE, took the officials in custody late Wednesday evening. They will be produced before the Chief Metropolitan Magistrate, Kolkata, on Thursday.

Sources in Lalbazar city police headquarters said the detectives were certain about the involvement of the two in the scam.

"These two are required to be interrogated further, and therefore they should be kept in custody," they added. The police questioned Goud for two days, while Pal was examined on Wednesday.

It is learnt that the police suspected Goud on his silence over the creation of an artificial market at DSQ Industries, a dud stock, by Harish Chandra Biyani, a defaulter who was remanded to jail custody, and his associates.

Interestingly, the Sebi interim report submitted to the Joint Parliamentary Committee probing the stock market scam in 2001, mentioned that SHCIL could have staved off the trouble if Goud, the then managing director and CEO, acted in time.

The police also suspected that Pal had an "unholy alliance" with the brokers. Along side, DSQ group promoter Dinesh Dalmia received a jolt with the Calcutta High Court rejecting his writ petition to secure a stay on alleged "police harassment."

The courts decision to refuse relief to Dalmia follows the city police search and seizure at Dalmias office and residence in the city. The police also filed an application with the Chief Metropolitan Magistrate (CMM) to secure a warrant to arrest him for his alleged involvement in the scam.

The high court order, passed by Justice Pinaki Chandra Ghosh, asked the city police to continue their investigation.

The DSQ group of companies - DSQ Software, DSQ Industries and DSQ Biotech - were darlings of the share punters in the heydays of the bull run in the beginning of 2001. In addition, Dalmia, who had recently shifted his base from the city to Chennai, enjoyed a good rapport with the local punters.

The relationship was so strong that DSQ Software extended loan to local punters in the annual general meeting in 2000.

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