Mumbai: The Bombay High Court Tuesday sentenced stock brokers Ketan Parekh and Hiten Dalal along with five others to one year rigorous imprisonment while two other accused were sentenced to six months imprisonment in the 1992 Canfina scam.
All of them are out on bail, and Justice V M Kanade of the special court (For trial of Offences Relating to Transactions in Securities Act) extended their bail till 31 July, to enable them file appeals in the Supreme Court.
Parekh’s name surfaced for the first time through the scam, in which the accused had entered into a criminal conspiracy to “siphon off Rs47 crore”.
“Had he been convicted and jailed earlier, he would not have commited other offences,” Justice Kanade said, in reference to Parekh’s involvment in later scams.
The modus operandi of the scam was as follows: Huge amounts of money was transferred from Banglore-based Canbank Financial Services (Canfina), a subsidiary of Canara Bank, to Mumbai-based Canbank Mutual Fund (CBMF) (another subsidiary of Canara Bank) between October 1991 to January 1992.
This was purportedly for the purchase of government securities for Canfina, but in reality the money were transferred to the accounts of Parekh, Dalal and other three stock brokers, namely S K Jhaveri, Pallav Seth and Navinchandra Parekh, who is Ketan’s uncle.
The brokers used the money -- to the tune of Rs47.7 crore -- for investing in stock market. At the end of the financial year, the money was returned to Canfina.
Court, on 13 March, convicted the five brokers alongwith Canfina’s former assistant vice presidents Sainath Mohan, M K Ashok Kumar and former general manager of CBMF B R Acharya for criminal conspiracy, misappropriation of funds and cheating.
The court held that all of them entered into a conspiracy “to dishonestly siphon off funds of Canfina and executed three bogus, fictitious and non-existent transactions”, whereby Canfina’s money was diverted to CBMF and there onwards to the accounts of Parekh and the co-accused.
Of those convicted, Sainath Mohan and Navindranath Parekh got six months’ simple imprisonment, while all others were awarded one year rigorous imprisonment.
However, court did not impose fine on any of the convicts.
Former assistant vice president of Canfina N Balsubramaniam, former general manager of CBMF P J Subbarao and B V Srinivasan of Vysya Bank were acquitted by the court.
Parekh’s lawyer Mahesh Jethmalani, pleading for a lenient sentence, argued that Parekh and others were “small fries,” and such a scam “was not possible without connivance of top financial officers”, who were never caught.
Jethmalani also said that since all the money was eventually returned to Canfina, there was no actual loss.
But CBI’s prosecutor V G Pradhan and R S Mhamane argued that the money which was diverted wrongfully was “public funds and court should award maximum sentence prescribed so that “temptation to commit such offenses would be rooted out”.
Talking to reporters later, Pradhan said that sentences were “inadequate” and he would advise CBI to file appeal for enhancement.