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 in connection with 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 Ketan's shares, immovable and movable property along with that of the other two accused. 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 Ketan's grievance about their arrest can be redressed before the recovery officer who issued the show cause notices, as the matter was at the preliminary stage. Advocate Nishit Dhruve, owner of M Dhruve and Co, pleaded for Ketan and others saying that the properties should not be attached as they were owned jointly with their relatives who were not connected with the scam. But DRT assured that only the trio's shares would be attached.
The Bank of India had argued that notices were served to Ketan, Kartik and Kirti to file their submissions. Despite being given three chances, the defendants had not complied. Hence the DRT Recovery officer issued show cause notices about their arrest. After the notification, Ketan Parekh has deposited Rs 238 crore and attachment/sale is will be done on the non-notified property, the bank contended.
On January 3, the DRT, after hearing a plea by the bank, imposed a fine of Rs 1,000 from each defendant (Ketan, Kartik and Kirti) for not complying with the previous orders. The DRT has given a last chance to Ketan and others to comply with the orders and has deferred the matter to January 19.
The DRT has also asked the bank to justify the arrests of the trio. The bank will now state that they have reservations such as a likelihood of the defendants leaving the jurisdiction limits of the court. Also the onus is on the bank to inform the DRT whether the defendants have fraudulently transferred or concealed any property with a view to evade the payment of their dues. The bank would also have to prove that the defendants had the means to pay the debt but did not do so either deliberately or negligently.