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Ketan Parekh, Pandya released on bail

Leading stock broker Ketan Parekh and Madhavpura Mercantile Co-operative Bank's manager J B Pandya, embroiled in the Rs 1.37 billion pay-order scam, were released on bail by a special court in Bombay on Monday.

Designated judge A R Joshi released the duo on personal bonds of Rs 500,000 and surety of the same amount each.

The court directed Parekh and Pandya to report to CBI's Bombay office twice a week until the chargesheet was filed or further orders.

They were also asked not to leave India without the permission of the designated court.

The duo were held by the CBI on the charge of defrauding the Bank of India in the pay-order scam.

CBI submitted that the probe was almost complete and chargesheet would be filed by the month-end. The court opined that no purpose would be served by keeping the accused in custody because investigation had nearly concluded.

Ramesh Parikh, co-accused and chairman of Madhavpura Bank, was released in Bombay on bail on April 12 on health grounds.

He was later arrested in Ahmedabad in a separate case filed by the bank's administrator on the charge of cheating by diverting funds in the accounts of Ketan Parekh firms and various others.

The court had also released on May 9 Ketan's cousin and co-accused Kartik Parekh on the same conditions. Kartik is the director of Panther Investrade Ltd.

The accused had connived to obtain 13 pay orders to the tune of Rs 1.37 billion from Madhavpura Bank. They were purchased by BOI on March 8 and March 9 and proceeds deposited in Ketan Parekh group of companies. When they were sent for clearing, Reserve Bank of India returned them as Madhavpura Bank failed to meet its liability.

Explaining the modus operandi, CBI alleged that six pay orders were issued by Madhavpura Bank on March 8 and seven more on March 9.

They were presented to BOI, which credited the total amount of Rs 1.37 billion in the accounts of Classic Credit Ltd (Rs 650 million), Panther Fin Cap and Management services Ltd (Rs 520 million) and Panther Investrade (Rs 200 million).

When the pay orders were sent in the clearing, Madhavpura Co-operative Bank failed to meet its liability and also did not participate in the clearing operations. By then, the funds had been credited to the accounts of Parekh's firms. Thus, money was siphoned off and Bank of India was cheated, CBI alleged.

Ketan Parekh's lawyer Sirish Gupte and Ajay Khandhar, urging for bail, argued that investigation were nearly over and their client was in custody since March 31. Since then, he had been interrogated only once. Hence no purpose would be served by keeping them in custody, they said.

Vijay Garg, counsel for J B Pandya, also harped on the same point and said his client was ready to abide by any bail condition imposed by the court.

CBI Prosecutors P M Pradhan and Rajendra Mhamane argued that chargesheet was yet to be filed and some more documents were to be obtained from the accused. Hence they should not be released on bail.

The managing director of Madhavpura Mercantile Co-operative Bank Devendra Pandya has also been arrested early this month in Ahmedabad in a case filed by bank's administrator on the charge of diverting funds to Ketan Parekh's accounts. Since then, he is in custody of Gujarat police.

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