Government on Sunday decided to set up a special court to hear all NSEL related cases on a priority basis while also asked the Enforcement Directorate to expedite action to recover Rs 3,721 crore from defaulters, and regulator Sebi to complete probe of brokers at the earliest.
The Ministry of Corporate Affairs (MCA) has also been directed to pursue the court case expeditiously for effecting the merger of now-defunct National Spot Exchange Ltd (NSEL) with its parent FTIL at the earliest.
A decision in this regard was taken in a recent meeting under the chairmanship of Economic Affairs Secretary Shaktikanta Das that reviewed the action taken by multiple investigating agencies on NSEL payment scam of Rs 5,600 crore.
As per the official statement, the key decisions taken in the meeting are: “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,” it said. That apart, the government has asked the Economic Offences Wing (EOW) of Mumbai Police to “expedite realisation of value of attached assets, as per the procedure, quickly.”
So far, the EOW has attached 831 properties worth Rs 7,063 crore under MPID Act, of which, attachment of 711 properties worth Rs 6,115 crore have been notified in the Gazette of the Government of Maharashtra.
“The Government of Maharashtra was requested to expedite these measures so that the defaulters could be brought to book quickly; money could be realised from the sale of attached assets and consequently be returned to investors of NSEL, who have suffered losses in the payment crisis,” it added. The nearly Rs 5,600-crore payment and settlement crisis at NSEL came to light late 2013 and since then the matter has come under the scanner of multiple agencies. ED has arrested FTIL promoter Jignesh Shah and has been remanded to judicial custody till August 1, 2016.
On the NSEL-FTIL merger case, the government said, “In the review meeting, MCA was advised to pursue the case expeditiously for effecting the merger at the earliest.”
“Further, MCA was also advised to strongly defend the efforts of the government to introduce management and governance changes in FTIL, which are under legal challenge in National Company Law Tribunal (NCLT) and Madras High Court.”
MCA had issued a draft order for the merger/amalgamation of NSEL with Financial Technologies (India) Limited (FTIL) in public interest. Bombay High Court had granted extension of time up to February 15, 2016 to MCA for taking final view on the draft order. MCA later issued the final Order on February 12, 2016 for the merger of NSEL with FTIL. Bombay High Court, however, has restrained the Government from notifying the final Order in the official gazette.
Reviewing the actions taken by the capital market regulator Sebi in the NSEL matter, the government said it conducted detailed inspection of books of five brokers of the erstwhile Forward Markets Commission, whose names figure in the list of offenders received from EOW, Mumbai Police.
“The audit has since been completed and Sebi is examining the report. Sebi was advised to complete the examination quickly and thereafter initiate necessary action against violation / offences, if any,” it said.
The Centre said the prosecution complaint filed by the ED, a specialized financial investigation agency under the Finance Ministry, against NSEL and 67 other accused persons under PMLA details money trail amounting to Rs 3,721.22 crore.
“It was advised that the ED would expedite action for completing all the procedural formalities necessary for recovery of the investment and conviction of the offenders concerned,” it said.
The ED had filed prosecution complaint before the City Civil Court and Additional Sessions Judge, Greater Bombay against NSEL and 67 other accused persons under the Prevention of Money Laundering Act (PMLA), 2002.
The government also said the Financial Intelligence Unit - India (FIU-IND) has also issued show-cause notices to Directors of NSEL for violation of PMLA.
FIU-IND had passed an order in 2015 and imposed a penalty of Rs 1.66 crore on NSEL for non-compliance of PMLA provisions, which the spot exchange has challenged in the court.