EOW attaches assets worth `4,041 crore in NSEL case
2 min read . Updated: 10 Dec 2013, 12:11 AM IST
PremiumEOW has attached 212 immovable properties of people accused in the NSEL case
Mumbai: The economic offences wing (EOW) of Mumbai police on Monday said it has attached assets worth ₹ 4,041.45 crore in connection with the payment crisis at National Spot Exchange Ltd (NSEL). The commodity spot exchange is engulfed in a ₹ 5,575.34 crore payment crisis.
The EOW said it has frozen 327 bank accounts and recovered ₹ 172.11 crore. It has attached 212 immovable properties of people accused in the NSEL case. The total amount of shares and investment frozen by the agency so far is ₹ 251.76 crore.
“We have roughly recovered 80% of the money. Last week Jignesh Shah and Joseph Massey discussed with us plans to make up for the shortfall," said Rajvardhan Sinha, additional commissioner of police, EOW.
Shah is chairman and managing director of Financial Technologies (India) Ltd (FTIL), which has 99.99% stake in NSEL. Massey is former chief executive officer of MCX Stock Exchange Ltd (MCX-SX), a group firm.
Sinha said since the inception of the payment crisis at NSEL, its defaulting borrowers have deposited ₹ 265.52 crore in the escrow account. The highest payment so far has been made by Topworth Steel and Power Ltd— ₹ 152.5 crore. The company owes ₹ 178.5 crore to NSEL.
In a related development, FTIL—which is facing three recovery suits in the Bombay high court—said it has total assets of over ₹ 600 crore, which includes its Mumbai office, shares of Shah and the profit generated by FTIL. The court was hearing a case MMTC Ltd filed to recover ₹ 268 crore from NSEL and promoters.
FTIL said the court should not grant an ad-interim relief to MMTC as the allegations of “financial misappropriation" by the government-owned firm requires greater examination. Janak Dwarkadas, a lawyer representing Shah-led FTIL, said, “Shah will not dispose of his holdings in FTIL till the outcome of the case."
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. A spot exchange isn’t supposed to do so, but NSEL was doing that.
NSEL tried to implement the change but because its appeal was to investors and members who were not interested in spot trades, it eventually had to suspend 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 on 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. On 14 August, NSEL proposed a payout plan, but it has been unable to stick to schedule and has not made a single successful payout ever since.
