HYDERABAD: Justice K Lakshman of the Telangana High Court has given Karvy Stock Broking Limited (KSBL) and nine others, two months’ time to file their explanation to the show cause notice issued by the Adjudicating Authority under the Prevention of Money Laundering Act (PMLA) 2002. It is made clear, however, that the petitioners in both writ petitions shall not seek further extensions and shall submit explanations within the said extended period of two months, keeping in mind the object and legislative intent of Section 8 of the Act, that the adjudication process is time-bound.
The Central Crime Station (CCS) in Hyderabad lodged a complaint against KSBL and its directors in 2021, against Karvy Limited and its director for violations under Section 420 of the IPC. They are accused of failing to repay debts that have been categorised as fraudulent accounts. The ED launched the inquiry under the Act’s provisions.
Several additional FIRs filed in connection with the case were also taken into consideration. C Parthasarathy, chairman of the Karvy Group of Companies was held in judicial custody in Hyderabad’s Chanchalguda Central Jail for multiple offences from August 19, 2021, to May 25, 2022.
According to the ED’s inquiry, the loans outstanding in KSBL’s accounts as of March 31, 2020, were Rs 1,705.23 crores. KSBL unlawfully secured these loans from banks/financial institutions by claiming clients’ shares as its own. Furthermore, KSBL unlawfully transferred shares of completely paid-up clients/ who did not owe any payments to the firm and pledged them with banks/financial institutions. It amounted to the flagrant abuse of the client’s Power of Attorney granted to the KSBL/petitioner.