Bombay HC dismisses as withdrawn NSEL investors’ plea for disbursal of funds

The Bombay HC’s announcement means the NSEL investors’ petition cannot be acted upon till more facts are available


Photo: Abhijit Bhatlekar/Mint
Photo: Abhijit Bhatlekar/Mint

Mumbai: The Bombay high court on Friday dismissed as withdrawn a petition by investors who lost money in the National Spot Exchange Ltd (NSEL) payments scam seeking disbursal of funds that have so far been recovered from the sale of the spot exchange’s properties.

Dismissed as withdrawn (in this instance) means the petition cannot be acted upon till more facts are available. 

In his order, Justice G.S. Patel said applicants can file another motion after the panel, headed by Justice V.C. Daga, realizes funds and assets, completes compiling the list of investors and ascertains the genuineness of claimants. 

In April 2014, the Bombay high court had formed a committee headed by Justice Daga to reconcile the claims of 13,000 investors who lost money in the Rs5,574.35 crore payments scam at NSEL. 

According to Justice Patel, “it is not the opportune time to start disbursal of funds”. 

The investors were seeking funds that are lying with various authorities, said the suit. It added the investors haven’t received any money since November 2014. 

The Daga panel passed an order in August 2014 to NSEL not to disburse any funds to investors without the consent of the court. The panel, which includes solicitor member J.S. Solomon and chartered accountant Yogesh Thar, has powers to pass a decree against defaulting borrowers. 

The panel in April 2016 submitted to the high court that it has come across discrepancies in the figures submitted by investors and trading members of NSEL. Later, it ordered for an audit of the records of the exchange, its investors and trading members. 

Mint had reported on 5 April 2016 that the committee had found discrepancies in 15 instances involving eight brokers. The anomalies were with respect to claims via-a-vis data submitted by NSEL and issues of permanent account number (PAN) in some cases.

In January, the panel submitted its report to the high court in a sealed envelope, where it has verified claims of 11,000 investors.

The petitioners argued the Rs47 crore so far recovered from the sale of various attached assets of the defaulting NSEL members and NSEL be distributed among investors whose claims have been verified. “The committee is taking an inordinate time in compiling the list of investors,” argued the petitioners. 

Justice Patel, however, did not agree with the argument and said the panel is facing difficulties in recovering the funds from defaulters. 

“I would not subject the committee to a timeline,” said Patel in the open court. 

Trading on NSEL was halted in July 2013 after a settlement crisis at the commodities bourse snowballed into an approximately Rs5,574.35-crore payments scam.

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