Sucheta Dalal :How slow investigations delay the punishment of scamsters
Sucheta Dalal

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How slow investigations delay the punishment of scamsters  

September 26, 2003


This column was published by Divvya Bhaskar on September 15, 2003 as a Gujarati translation. It is about how slow and shoddy investigations delay the trial and punishment of scamsters.


By Sucheta Dalal


In India, the wheels of justice grind slowly with many fits and starts and sometimes even come to a complete halt. The process of delaying and denying justice starts during the investigation itself. It continues in the form of shoddy enquiry, faulty charge sheets and bad arguments. So much so that that we have often seen conscientious judges virtually argue the case for the prosecution and takeover the questioning in order to keep the trial on course.

The most notorious delays are usually in filing the charge sheet. The police or the Central Bureau of Investigation (CBI) gets a big round of publicity and photo opportunity when they arrest of the accused for interrogation; they are released on bail a few weeks later, after which there is no hurry whatsoever to file charges.

A good example is the Harshad Mehta scam of 1992. The revelation began with my report that the “Big Bull” had siphoned off over Rs 500 crore ( it eventually turned out to be over Rs 660 crore) from the State Bank of India (SBI). Yet, the charge sheet in the first SBI case was filed four years later and nobody was ever questioned or pulled up for the long delay.

Such delays and diversions have ensured that the scam cases drag on endlessly, despite the Special Courts Act being enacted to ensure “speedy trial”. In fact, barely half a dozen cases have made it past the Supreme Court.

The delays have been more brazen and scandalous in the Ketan Parekh-led scam of 2000. And the investigation of the Madhavpura Mercantile Cooperative Bank (MCCB) case has been among the worst.

The collapse of MCCB in 2001 had such wide ramifications that Additional Sessions Judge, B.N.Jani who heard some of the bail applications of the accused, described it as another “earthquake” in Gujarat, which had caused the ‘whole economy’ of the State to tumble. Given the widespread losses to lakhs of depositors in cooperative banks, he had rejected the offer by some of the accused to repay “negligible” sums of money by saying that it would be “tampering with the self respect of depositors” who lost money in the MCCB scandal.

Ironically enough, it is often the scam-accused themselves who draw attention to the delays and the lop-sided investigation in their effort to wriggle out of the investigators’ dragnet.

Stockbroker Mukesh Babu was arrested only a few months ago, even though he had admitted to owing MCCB a hefty Rs 205 crore which has still to be returned. Yet, his first plea in support of his release on bail was that the First Information Report (FIR) in his case was filed way back on January 24, 2001, but “no charge-sheet has been filed till date”. And nobody has been asked to explain the delay.

All the while, Mukesh Babu continued to do business as though he was unconnected with the Ketan Parekh scam and remained empanelled with over a 100 banks, mutual funds and financial institutions.  SEBI (Securities and Exchange Board of India) and the stock exchanges did not bother to ask him any questions either. 

Mukesh Babu’s bail application correctly highlights the lop-sided trial and investigation. For instance, he points out, that Ketan Parekh the main accused who owes over Rs 880 crore to MCCB, is out on a conditional bail involving a phased repayment plan. What he does not say is that although Parekh failed to fulfil bail conditions, he is free and is reportedly active in the stock market again. More importantly, he is busy celebrating the present bull run with lavish entertainment of friends and fund managers. 

Mukesh Babu’s second plea was to shift the entire responsibility for the hefty overdrafts and non-payment to Shirish Maniar, a sub-broker of Ketan Parekh and a cousin of Ramesh Bhai Parekh, Chairman of MCCB. Maniar owes Rs 20 crore to MCCB and Mukesh Babu credits him with having engineered all the generous credit limits and accommodation by MCCB to him. In fact, he claims to have earned nothing beyond the brokerage on trades done through his firm. 

Babu’s third track was to point fingers at others who have escaped responsibility. Interestingly, he says that one Jagdish Pandya, listed as the third accused and described as one of the “main culprits” has never ever been arrested. Pandya was the branch manager of the Mandvi Branch of MCCB and conducted all the Mumbai end of the transactions.

In fact, hearing Mukesh Babu’s arguments, the Additional Sessions Judge B.N.Jani noted that the investigative agencies have no explanations for the leniency shown to Pandya.

Mukesh Babu, like Ketan Parekh is now out on bail and probably getting his business back in order, but the millions of depositors who lost their savings remain empty handed. Scamsters impoverish investors. And then official investigators add salt to injury by not bringing up a credible case in time.

Email: [email protected]

-- Sucheta Dalal