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Indian Overseas Bank CMD to be held for links to Indian Bank scam

The principal sessions court in Madras on Wednesday directed the Central Bureau of Investigation to arrest Indian Overseas Bank Chairman and Managing Director K Subramanian in connection with the scam in the Indian Bank, where he had earlier served as general manager.

Principal Sessions Judge S S P Darvesh gave the above direction on a petition filed by Gopal Pasupathy, a Singapore-based businessman and promoter of Greenseas Shipping Company, which had been given a loan of $3.6 million by the bank in violation of banking norms in 1990.

The judge, while dismissing Pasupathy's plea for relaxation of his bail conditions, also directed the arrest of S Veeraraghavan and M B N Rao, who were deputy general managers in Indian Bank when the loan was granted to GSC.

He directed the Central Bureau of Investigation to complete the probe and file the final report before the court within the next three months.

The case relating to the sanctioning of the loan to GSC was the first major case to be registered by the CBI after the Indian Bank scam unfolded. Subsequently, the then Indian Bank chairman and managing director M Gopalakrishnan and some other bank officials were arrested in other scam-related cases.

The CBI had registered the case in December 1993 against the three bank officials saying they had entered into a criminal conspiracy with GSC in March 1990 to sanction the loan. Pasupathy, who was arrested in April 1995, was released on bail in early 1996.

In his petition, Pasupathy contended that the probe into the case was over and that his presence was no longer required in India. As he was based in Singapore, he had no source of income in India and was staying with relatives, he added.

He also pointed out that the CBI had not arrested the other accused in the case.

Opposing his plea, the CBI counsel said Pasupathy was likely to tamper with the evidence, affecting the course of the probe, if his bail conditions were relaxed. The probe had reached a crucial stage, he added.

The judge said he was giving three months to the CBI to complete the probe and file the report. The CBI should arrest the remaining three accused, all Indian nationals, who had conspired in the sanctioning of the loan, he added.

UNI