New Delhi / Mumbai: Ketan Parekh, the stockbroker and main accused in India’s biggest stock market scam dating back to 1999-2001, was refused more time by the Supreme Court to deposit Rs26 crore, the remaining amount out of Rs396.63 crore he owed to various banks.
“The order of the court in May last year said that if he does not pay the instalments on the given dates or if the time to make the instalments is not extended by the court, his bail will stand cancelled. As the court refused to grant an extension, the earlier order that is self-operative comes into play,” said Mahesh Agarwal, counsel for the Ahmedabad-based Madhavpura Mercantile Co-operative Bank, the respondent in the case alongside the Gujarat government.
A spokesperson for the Central Bureau of Investigation said: “Since the bail has been cancelled, he has to be taken into custody.”
No relief: Ketan Parekh.
Parekh had approached the Supreme Court in 2005 to prevent the cancellation of the bail granted to him in 2001 after his arrest for allegedly defrauding Madhavpura Mercantile Co-operative Bank, among others.
Granting him bail, the apex court set a timeline for the payment of three instalments totalling Rs396.63 crore.
Following an application from Parekh in 2007, the court extended the timeline to 1 May. But, just before that deadline, Parekh sought a new extension until August.
On Tuesday, the apex court’s bench, headed by justice A. Bhan, dismissed Parekh’s application.
Parekh’s alleged modus operandi was to rig share prices of firms in collusion with promoters through circular trading, which is defined as a fraudulent trading scheme where sell orders are entered by a broker who knows that offsetting buy orders, the same number of shares at the same time and at the same price, either have been or will be entered.
As a result, these trades don’t represent any change in the beneficial ownership of the security.
Parekh and his associates borrowed from Global Trust Bank (GTB) and Madhavpura Mercantile Co-operative Bank to finance these transactions.
While GTB was merged with Oriental Bank of Commerce, Madhavpura went bust.
In December 2003, the Securities and Exchange Board of India banned Parekh and associate firms from trading in the market for 14 years.
K.P. Narayana Kumar contributed to this story.