The Hindu Business Line : Govt can go ahead with probe into Ketan Parekh entities

IN a setback of sorts to the KPG (Ketan Parekh Group) entities, the Company Law Board (CLB) today recalled its earlier order, which had `temporarily' restrained the Central Government from further probing into the group companies.

Armed with the Board order the Central Government can now resume its probe into these entities.

After obtaining the CLB nod in September the Government had referred the case to the Serious Fraud Investigation Office (SFIO), an organisation set up to look into white-collar crime.

The investigation was to bring out the nexus among various players of the stock market, including the lending banks and corporate that had indulged in market manipulation and caused losses to investors.

The 16 Parekh companies include Panther Industries Products & Others, Classic Share and Stock Broking Ltd & Others, Triumph Securities Ltd and KNP Securities P Ltd.

While dismissing the applications filed by the KPG companies for deferment of investigation against them, the Board observed that, the Central Government has already initiated action for investigations by appointing inspectors under intimation to these companies.

"There are no inherent power of this Board to review, alter, modify or to defer the decision of the final orders passed by the CLB except to amend any defect or error in any proceedings before it; and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceedings as provided in Company Law Board Regulations, 1991," it noted.

Accordingly, the Board dismissed the application as non-maintainable and vacated the temporary stay granted by it on November 9.

The 16 KPG entities had moved CLB seeking amendment of its earlier order dated September 27 and defer the decision to order investigation under the Companies Act till such time as the outcome of the investigation and adjudication on the similar issues now being handled by Central Bureau of Investigation, Income Tax Department and the Securities & Exchange Board of India are determined.

In their submission the Parekh Group companies said that the applications have been moved in order to protect the interest of a large number depositors of Madhavpura Mercantile Cooperative Bank and other creditors, to whom the entities owed money.