SC orders Ketan Parekh to pay up Rs 50 cr in 2 months or face detention

Bank of India claims Parekh owes the bank Rs 1,700 crore in damages, including interest

The Supreme Court (SC) has directed Panther Fincap and Management Services, owned by former stockbroker Ketan Parekh, to deposit Rs 50 crore by September 11 or else, face detention in civil prison.

The firm was fighting an order of the Bombay High Court, in favour of Bank of India, ordering civil arrest of Parekh in the 2001 circular trading fraud case. Bank of India claims Parekh owes the lender Rs 1,700 crore in damages, including interest. 

The original amount due to the bank in 2001, when the case started, was Rs 130 crore. The bank subsequently termed Parekh a wilful defaulter.

In an order dated July 17, the SC said Panther Fincap must pay up the sum to prevent detention. Justice Ranjan Gogoi and Justice Navin Sinha ruled the petitioner must deposit Rs 50 crore “within a period of eight weeks from today, failing which the order of detention in civil prison will be given effect to”. Bank of India had initiated recovery proceedings against Parekh in the debt recovery tribunal (DRT) in 2001 and had obtained the order of arrest and detention in civil prison. However, Parekh challenged the order in the DRT, debt recovery appellate tribunal as well as in the Bombay High Court. 

All the courts had ordered his civil arrest, against which Parekh moved to the SC. The first hearing in the apex court was held by a vacation Bench on June 1, staying the high court order till the next hearing on June 7. On that day, the court granted two weeks’ time to file a counter affidavit. Business Standard has reviewed copies of the record of proceedings of the court of all three dates.

Ketan Parekh was convicted earlier for his alleged involvement in stock market manipulation scam in 1999-2001. He is stated to have engaged in circular trading in stocks of a number of companies. Currently, he is barred by the capital markets regulator from trading in the stock market.