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Home / Companies / News /  NSEL crisis: Jignesh Shah to remain in police custody till 15 May

Mumbai: A Mumbai court on Thursday sent Jignesh Shah, chairman and group chief executive of Financial Technologies (India) Ltd (FTIL), and Shreekant Javalgekar, former chief executive of Multi Commodity Exchange of India Ltd (MCX), to police custody till 15 May in connection with the 5,574.34-crore payments fraud at the National Spot Exchange Ltd (NSEL).

The Mumbai Police’s Economic Offences Wing (EOW) had arrested Shah and Javalgekar on Wednesday, taking the number of arrests so far in the case to 11. FTIL owns 99.9% of NSEL, and 26% in MCX.

On Thursday, the shares of Financial Technologies slumped by its daily trading limit. The stock fell 5% to 276.70 on BSE. MCX declined 7% to 496.35.

The public prosecutor alleged Shah, Javalgekar and Joseph Massey, former chief executive of MCX Stock Exchange Ltd (MCX-SX), were the “main brains" behind the NSEL scam, but Shah and Javalgekar shifted the entire blame on Anjani Sinha, former managing director and chief executive of NSEL.

Sinha was arrested on 17 October.

No spot trading was carried out by NSEL and it was, in fact, running as a financial organization, according to EOW. The spot exchange’s board had misrepresented facts to investors by suggesting that trading on NSEL was safe, the agency said.

“His (Shah’s) stand of being unaware of irregularities at NSEL does not exonerate him," said the public prosecutor.

On the other hand, Mahesh Jethmalani, the lawyer representing Shah, argued there was no case for forgery against his client. He argued the charges against Shah are related to criminal breach of trust, which is a bailable offence.

Shah’s lawyer further argued Shah had been called 21 times for questioning by EOW and was fully co-operating in the investigation.

The lost money of the investors has not been traced to the coffers of Shah or Javalgekar, argued Jethmalani, adding that Shah had only been negligent in the NSEL crisis.

Abad H. Ponda, the lawyer for Javalgekar, termed the arrest as illegal, and said his client had appeared before EOW every time he was called, and never disobeyed any summons from the agency.

Meanwhile, Financial Technologies said its board has named Venkat Chary, independent non-executive director of the firm, as the non-executive chairman.

“The company is distressed at the arrest of its CMD (chairman and managing director), Mr. Jignesh Shah by the Mumbai Police, despite Mr. Shah co-operating fully not only with Mumbai Police but also with all other authorities, ever since the NSEL crisis surfaced in August 2013." FTIL said in a release on Thursday. “Company has full faith in the judicial system and is confident that justice will be done in the case of Mr. Shah," it added.

In the interim, the two whole-time directors of the company shall be in charge of the day-to-day affairs, the statement said.

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