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Ketan Parekh, 2 others denied bail; get JCR till Apr 25

Leading stock broker Ketan Parekh, his cousin, Kartik Parekh and branch manager of Madhavpura Mercantile Cooperative Bank J B Pandya, embroiled in a Rs 1.37 billion pay order scam, were on Tuesday remanded to judicial custody till April 25 by a special court in Bombay.

Designated Judge A R Joshi also rejected their bail plea on the ground that there was no change in circumstances since their arrest.

On April 12, Ramesh Parikh, co-accused and chairman of Madhavpura Bank, was released on bail on medical grounds.

They were arrested by CBI between March 30 and April 5 for allegedly defrauding Bank of India to the tune of Rs 1.37 billion.

The judge declined to release on bail Ketan Parekh, his cousin Kartik and MMCB's Mandvi branch manager J B Pandya on the ground that investigations were at crucial stage as large sums of money was involved in the alleged scam.

It would not be proper to grant bail at this stage, he opined in a brief order delivered in the jam-packed courtroom and remanded the trio to judicial custody till April 25.

CBI alleged the accused had connived to obtain 13 pay orders to the tune of Rs 1.37 billion from Madhavpura Bank's Mandvi branch. They were purchased by Bank of India on March 8-9 and proceeds deposited in Ketan Parekh group of companies.

However, when they were sent for clearing, Reserve Bank of India returned them because Madhavpura Bank failed to meet its liability.

The CBI said the probe at Madhavpura bank's Mandvi branch had revealed that affidavits were filed for pledging properties at Bangalore and Bombay in respect of seven accounts of the 11 firms belonging to Ketan Parekh group, each of which was sanctioned Rs 200 million overdraft limits by the bank's head office.

But all these accounts were overdrawn to the tune of Rs 1.13 billion and the existence of these properties was yet to be investigated, CBI counsel Bharat Singh Raghuvanshi and Gul Asnani contended.

It transpired from the probe that J B Pandya was "visibly under pressure" for allowing undue facilities to Ketan Parekh and his staff was aware of this, CBI told the court.

Furthermore, CBI said, enquiries with Bank of India's stock exchange branch revealed that on March 7 cheques valued at Rs 620 million of BoI presented by Madhavpura bank were returned unpaid and entries had also been made in the cheque return register.

However, at 2.50 p.m. on the same day, Ketan Parekh had presented equivalent pay orders of Madhavpura bank who enabled the cheques to be paid. These pay orders were of accommodative nature, CBI alleged.

"Such return of cheques and the consequent kite flying operations was a regular feature with Ketan Parekh's accounts and Madhavpura bank was used as a conduit for the purpose. This proves the nexus between Ketan Parekh and Ramesh Parikh," CBI said.

Counsel for the accused, Sirish Gupte, I P Bagadia and Vijay Garg, said the probe had already been made and documents seized. Hence, the accused should be granted bail.

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