I want to know is Khatm is allowed to muslims or not? What is wrong if we recite some quranic ayat and pray to Allah that forgive our elders and place them in janat and send some food to the people.

There is nothing wrong with what you described. Actually it is very praiseworthy, and a noble act of worship. Only it shouldn`t become a limited act of worship, which people would think they have to do all the time, you know. That would open a door to bid`ah, even when the act itself is not bid`ah. Do you see the difference? So some people are very careful, so they fear Allaah more, and they are the best among us, who fear Him the most. But may Allaah give us all understanding.
It was a practice of a saHaabii -rA`a- as I`ve heard that whenever he would make khatam Quràn, he would have his children say "Aamin" while he made du`aa. I forgot which soHaabii, I`m sorry. In any case, the Quràn itself is an intercessor, which is accepted on The Last Day, which is proven by many AHadiith of Nabii -sAaws. And to seek help of Allaah by virtue of your good deeds for His sake is the Sunnah correct meaning of tawassul, and not praying to others besides Allaah, as some extreme suufiis claim, and it is Fire in which they invite -a`uuthu Billaah. May Allaah forgive us.

Here`s the evidence for the permissibility of seeking help of Allaah by virtue of your Good deed:
http://salaattime.wordpress.com/2009...men-in-a-cave/