Mumbai: The Enforcement Directorate (ED) is planning to seize assets worth 1,000 crore belonging to National Spot Exchange Ltd (NSEL)’s promoters and defaulting members as it probes a three-year-old fraud at the defunct exchange, two people directly familiar with the development said.

“Assets over 1,000 crore have been identified. ED will proceed with the attachment proceedings soon," said one of the people, requesting anonymity.

The NSEL fraud surfaced in July 2013 after the spot exchange was found offering futures contracts. Trading at the exchange was halted, leading to a default of 5,574 crore and losses to about 13,000 investors. The Mumbai police’s Economic Offences Wing (EOW) is also investigating the case.

“While attaching the assets, ED will try to avoid an overlap of attachment between those being done by ED and those done by EOW," said the second of the two people cited above, also declining to be named.

In an emailed response, a spokesperson for Financial Technologies of India Ltd (FTIL), which was renamed 63 Moons Ltd, said the company is not aware of the development. The Jignesh Shah-led 63 Moons holds a 99.9% stake in NSEL.

An email send to an ED spokesperson requesting a comment did not elicit a response.

ED, which works under the Union finance ministry, has over the past three years attached properties worth 600 crore belonging to defaulters such as N.K. Proteins, PD Agroprocessors Pvt. Ltd, Spincot Textile and Mohan India Pvt. Ltd.

“Technically, the same property can be attached by two different agencies. However, the claim on the attached property would need to be proved in court," said R.S. Loona, a partner at law firm Dhaval Vussonji Alliance. “It is possible to avoid duplication of asset attachment but considering that so many assets are already seized, it may be difficult to do so."

The investigative agency filed charges against NSEL and 67 others in a Mumbai court in March 2015. It claimed NSEL funds were laundered and “illegally ploughed into the purchase of private properties". The chargesheet detailed a money trail amounting to 3,721.22 crore.

ED registered a criminal case under the Prevention of Money Laundering Act (PMLA) in 2013 to probe the case, along with EOW. On 12 July, ED arrested FTIL founder Shah on charges of money laundering and for allegedly not cooperating with investigations. He has been remanded to judicial custody till 1 August, and his bail plea will be heard by a PMLA court on 25 July.

Meanwhile, EOW on 20 July seized 2,000 crore of assets belonging to FTIL under the Maharashtra Protection of Interest of Depositors (MPID) Act. EOW in 2014 seized assets worth 5,200 crore belonging to suspected defaulters such as Mohan India, Loil Group firms, N.K. Proteins, PD Agroprocessors and Tavishi Enterprises Pvt. Ltd.

The total assets attached in the NSEL case is likely to rise to as much as 9,000 crore, almost double the 5,574 crore default amount. “In the case of attachment under the MPID Act, proceeds of the assets after their auction would be released to the investors or depositors. The proceeds of cases that are under prosecution by ED may, however, go to the government if a loss to the exchequer is proven," added Loona.

Currently, the EOW case is in the MPID court and the ED case in the PMLA court. ED is now planning to present a united front with EOW in the case.

“The investigative agency plans to approach the high court to club the proceedings under the two acts to be heard by the same judges. This would help expedite the matters," said the first person cited earlier.

“The high court would need to be convinced that clubbing the proceedings in the NSEL scam would help speed up the trial and legal proceedings. It indeed would help if the same judge and bench who is aware of the matters is hearing the proceedings under both Acts. This would ensure that all matters are heard by one judge without the unnecessary delay that ensues when there are multiple proceedings," said Loona.

At a review meeting on 19 July, the department of economic affairs outlined the need to have a designated judge for the NSEL proceedings.

“A designated judge of the city civil court and additional sessions judge, Greater Bombay, has been nominated to try various cases arising out of the NSEL payment crisis, in addition to the other assigned matters, by giving priority to NSEL-related cases. Meanwhile, efforts are being made to set up an independent court to hear NSEL-related cases on exclusive basis," a government statement said.

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