Six years after the Bank of India filed a case against tainted broker Ketan Parekh for the recovery of dues worth Rs 137 crore, following a pay order scam, a Debt Recovery Tribunal (DRT) has allowed the bank to take pre-sale steps with regard to the properties owned by Ketan, his brother Kartik and uncle Kirti, to collect the unpaid amount.
In 2001, Ketan had allegedly issued pay orders of the Madhavpura Merchantile Cooperative Bank (MMCB), amounting to Rs 137 crore to the Bank of India, which the MMCB failed to honour.
The DRT has also issued notices to the trio asking them to show cause why they should not be arrested for failing to clear the dues, according to a copy of the order available with Hindustan Times.
RD Gupta, recovery officer of DRT, has also allowed the bank to take steps to attach immovable and movable properties of Ketan and the other two accused, including shares held by them.
The trio has been directed to disclose their share-holding and interest in their group companies and have also been asked to reveal the source of amount paid to MMCB. They have also been directed to disclose amounts advanced to their sister concerns mentioned in the balancesheet of their firm, Panther Fincap and Management Services Ltd.
Being aggrieved, Ketan and other defendants filed an appeal before the Mumbai Debt Recovery Tribunal, which held on January 2, that there were no sufficient grounds to stay the impugned order allowing the bank to take pre-sale steps in respect of their properties and issuing show cause notices for their arrest.
KP Kotecha, presiding officer of DRT and the appellate authority, also held that grievance of Ketan and others about their arrest can be abjudicated before the recovery officer who had issued the show cause notices as the matter was at the preliminary stage.
Advocate Nishit Dhruve (owner of M Dhruve and Co) for Ketan and others pleaded that the properties could not be attached as they owned them jointly with their relatives who were not connected with the scam. However, DRT was of the opinion that only their shares in properties would be attached.
Bank of India had argued that notices were served on the appellants (Ketan and others) to file their submissions. Although they were given three chances they did not file it and the DRT Recovery officer issued show cause notices about their arrest. After notification, Ketan Parekh has deposited Rs 238 crores and attachment/sale is going to be done only about the non-notified property, the bank contended.
On January 3, the DRT, hearing a plea by Bank of India, imposed costs of Rs 1000 on each Defendant (Ketan, Kartik and Kirti) for not complying with earlier orders - declaring share-holdings in group companies, disclosing amounts paid to sister concerns and also replying to the show cause notices issued for their arrests due to failure of paying their debts to the bank. The DRT has given last chance to Ketan and others to comply with the orders and deferred the matter to January 19.
The DRT has also asked the bank to justify the arrests of Ketan and his relatives. The bank will now have to tell the DRT the reasons it apprehends such as likelihood of their absconding or leaving the jurisdiction Limits of the court.
Also the onus is on the Bank to inform the DRT whether the defendants have dishonestly or fraudulently transferred or concealed any property with a view to evade the payment of their dues. The Bank would also have to show that the defendants had the means to pay the debt but did not do so either deliberately or negligently.