The Securities and Exchange Board of India's (Sebi) investigations into Jaiprakash Industries have taken a new turn -- duplicate shares of the company are floating around, a Sebi source said.

A Sebi official said: "It is more a police matter than a matter for Sebi, since it involves the issue of duplicate shares."

A Jaiprakash Industries source, however, explained that the fake shares issue was nearly three years old. The company had come across two lots of 20,000 fake shares. When detected, those holding the fake shares were asked to surrender them so that they did not circulate.

The company had also filed a petition in the Delhi High Court and got a stay order to stop the shares from circulating. Those holding the shares, however, appealed against the order and the matter is now still sub judice. Company officials said that Sebi had been informed of the entire matter.

Sebi's chief of investigations C S Kahlon said that though investigations have barely commenced, preliminary indications pointed to a complicated web of cross holdings among the various members of the promoter's family and that the issue of fake or duplicate shares is connected with the cross holding.

The markets regulator is pursuing a line of investigation that is looking at those responsible for issuing the fake shares in the market and tracing their connection to the company.

Sources familiar with the investigations said that details had been sought from brokers, the stock exchanges and the company just two months ago.

Based on the data obtained, the probe has begun. When contacted, however, Jaiprakash Industries officials said that no enquiries had been made by Sebi so far.

Investors, on whose complaints the inquiry was launched in the first place, had also complained about violations in the takeover code - that the promoters had claimed a 53 per cent stake in the company, but had reported a 38 per cent stake to the stock exchanges.

This, some investors claimed, suggested that the promoters had acquired additional equity without making an open offer, thereby violating the takeover code.

Company officials, however, said that according to the latest quarterly results, the non-promoters have a stake of 57.88 per cent, which implies that the promoters' shareholding is 41.12 per cent.