In a surprise development, the Custodian has moved the Bombay High Court to figure out the source of Ketan Parekh’s self-admitted Rs 72.2 crore repayment to Madhavpura Mercantile Cooperative Bank (MMCB) between 2002 and 2005. The Custodian’s move probably explains several recent actions of Parekh — the only scam-accused to figure in two major financial scams investigated by a Joint Parliamentary Committee (JPC). In 1992, as a young stockbroker he was a crony of the late Harshad Mehta and named an accused in a case relating to Canara Bank. In Scam 2000, the JPC declared him the central figure of the large-scale stock market manipulation that ended with a major crash.

In early April this year, we wrote that Ketan Parekh’s lawyers had told the Supreme Court of India that he would no longer be able to repay MMCB. At the same time, he and eight associate entities have sought the Court’s permission to be allowed to re-enter the capital market. This move may have resulted from the Custodian’s application to probe his income.

Parekh had been granted bail on the condition that he would repay the money siphoned out of MCCB, leading to its collapse and causing losses to lakhs of depositors. In the next few years, as Parekh began to repay crores of rupees, even the Income Tax authorities did not bother to question his source of income, although he has been barred from the capital market for 14 years.

Meanwhile, on April 27, 2007, the minister for company affairs told the Lok Sabha that the Serious Frauds Investigation Office (SFIO) had investigated 16 companies belonging to the Ketan Parekh Group and had received sanction for prosecution under the Indian Penal Code and the Companies Act. It has also forwarded its investigation report to all government investigation agencies, RBI, and finance ministry for action under their respective statutes.

... contd.