Maharashtra to set up special court to hear NSEL matters | Mint
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Business News/ Politics / Policy/  Maharashtra to set up special court to hear NSEL matters

Maharashtra to set up special court to hear NSEL matters

Two officials have been appointed to auction the assets that have been attached by the investigating agencies

Devendra Fadnavis, chief minister of Maharashtra. Photo: S. Kumar/MintPremium
Devendra Fadnavis, chief minister of Maharashtra. Photo: S. Kumar/Mint

Mumbai: Nearly two years after the 5,574 crore settlement crisis at the National Spot Exchange Ltd (NSEL) became public, the Maharashtra government is creating a special court to hear matters related to what eventually turned out to be a fraud and to speed up the process of recovering investors’ money.

Two dedicated officials have been appointed—each with the rank of additional district collector and deputy collector—to auction the assets that have been attached by the investigating agencies.

“We have sent a proposal to the law and judiciary department to appoint a special court to try cases related to NSEL scam and we have also appointed two officers... to coordinate efforts of all government departments to ensure effective prosecution of the accused under the case," said Maharashtra principal secretary (home) B.K. Upadhyay.

Setting up a special court and appointment of dedicated officials were two of the many demands made by investors who lost money in the scam which came to light on 31 July 2013.

Led by Bharatiya Janata Party member of Parliament Kirit Somaiya, a group of investors under the aegis of NSEL Aggrieved and Recovery Association (NAARA) met Maharashtra chief minister Devendra Fadnavis and top bureaucrats on 9 June to submit their demands.

According to a person who was part of the meeting, a dedicated court was demanded since some of the orders related to the sale of properties have been challenged in various courts across the country and the police and regulatory agencies find it difficult to counter such appeals across different forums.

The special court will be set up under the MPID court. MPID refers to the Maharashtra Protection of Interests of Depositors Act, under which the economic offences wing (EOW) of the Mumbai Police has charged all the accused entities in the NSEL scam. The EOW has attached assets worth nearly 6,000 crore and arrested 24 suspects, including NSEL officials, directors, defaulters and brokers. None of the assets have been sold yet.

“It cannot be lost sight of...that despite all good intentions which may be there, in nearly a year after favourable orders in MPID court ordering sale of assets of consenting defaulters, there has not been a single sale and thereby not a penny realized in the interest of investors," says a NAARA submission made to the chief minister and bureaucrats. Mint has a copy of the submission.

Investors have demanded assessment of the attached assets so that they can be correctly valued, identification of unencumbered assets and their notification in the state gazette. Legally, the assets can be sold only after a gazette notification. According to NAARA, out of the 6,000 crore of attached assets, only 2,500 crore of assets have been notified so far.

Referring to the proposed special court and appointment of two senior officials, Madhu Desai, one of the trustees of NAARA, said it will help expedite the process of recovery.

“It is a positive sign. A dedicated court can hear the cases on a daily basis and delaying tactics by any of the parties can be effectively dealt (with). Senior officers will also be in a better position to carry out the work related to assessment and auction of attached assets," Desai said.

While these efforts are solely aimed at the recovery of money, there are separate cases dealing with the merger of NSEL with Financial Technologies (India) Ltd (FTIL), which owns 99.99% of the spot exchange.

The government on 21 October issued a draft order for the merger of the two entities. In the order, the government said it proposed to do so in public interest, forcing FTIL to assume all the liabilities of the commodities bourse and also make it a party to all the contracts and agreements entered into by NSEL.

After the scam surfaced, NSEL suspended trading in all but its e-series contracts. These, too, were suspended a week later. It proposed a payment plan on 14 August 2013, but it was unable to make a single successful payout.

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Published: 30 Jul 2015, 12:50 AM IST
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