Home / Companies / People /  Jignesh Shah bail plea: Bombay HC to pronounce order on 22 July

Mumbai: The Bombay high court on Monday reserved its order on the bail application of Jignesh Shah, promoter of Financial Technologies (India) Ltd, who was arrested in connection with the 5,574.30 crore payment crisis at the National Spot Exchange Ltd (NSEL). The court will pronounce its order on 22 July. Shah is in judicial custody since 7 May.

On Monday, justice Abhay Thipsay asked the Economic Offences Wing (EOW) of the Mumbai Police to produce evidence to support its claim that Shah benefited from the payment crisis at NSEL.

“What gain has Shah made? I fail to understand how is his case any worse than that of Anjani Sinha," said Thipsay. Sinha is former chief executive of NSEL, who had secured bail in May.

Avinash Avhad, public prosecutor representing EOW said the agency is still investigating the case and is yet to file specific charges against Shah.

The high court also turned the heat on the police when Mahesh Jethmalani, senior counsel for Shah, said the brokers had enticed investors to put in their money in NSEL by promising assured returns.

“The brokers were fully aware of the NSEL crisis. Why haven’t you arrested them?" asked justice Thipsay.

At this point, 50-odd investors present in the court who have lost their money in the crisis shouted that Shah and the spot commodity exchange too promised assured returns.

Justice Thipsay warned the investors: “If anyone makes noise in the court, I will take all of you (investors) in custody. Don’t misbehave. Just because you have lost money, it does not mean you will decide if someone should be punished or not."

FTIL owns 99.99% stake in NSEL.

The settlement crisis at NSEL came to light on 31 July when the exchange abruptly suspended trading in all but its e-series contracts. These, too, were suspended a week later. The closure of trading may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts.

NSEL was offering futures contracts, which a spot exchange is not supposed to do. It tried to implement the change, but because its appeal was to investors and members who were not interested in spot trades, it had to suspend all trading.

It later emerged that all trading on NSEL happened in paired contracts, with investors, through brokers, buying a spot contract and selling a futures one for the same commodity.

The entities selling spot and buying futures were planters or processors and members of the exchange. It turned out there were only 24 of them, and they used the paired contracts as a way to raise easy money. When the trading was suspended, the investors were left holding contracts that the members couldn’t buy because they didn’t have the money to do so.

EoW has formed a special investigation team to look into the case.

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