A court here on Wednesday remanded FTIL founder Jignesh Shah, arrested in the Rs 5,600-crore National Spot Exchange Limited scam, in the custody of Enforcement Directorate till July 18. ED yesterday arrested Shah under Prevention of Money Laundering Act (PMLA), saying that he was not cooperating with the investigation.
Shah has been named in the first charge-sheet filed by ED in the case last year. ED's lawyer Hiten Venegaonkar argued that new material had come to light indicating that Shah indulged in money laundering. Therefore, ED intended to file a fresh complaint of money laundering for which it needed his custody for eight days, he said.
Advocate Abad Ponda, Shah's lawyer, opposed the plea for ED custody saying Shah had been earlier arrested in the NSEL case and later granted bail. The investigation was over and the facts which may have come to light are not new.
Shah had spent more than 100 days in custody and was granted bail by the High Court, Ponda pointed out. However, the ED lawyer said that Shah did not answer several questions during the interrogation and the investigation officer stopped questioning him. For further probe, his custodial interrogation was necessary.
Ponda cited a Supreme Court judgement saying that a suspect cannot be compelled to answer questions which may incriminate him/her. The ED had recently informed the Union Finance Ministry that it was going to initiate fresh action for attachment of assets against the accused in the NSEL case and would also question many of them.
The agency registered a case in the NSEL scam under PMLA in 2013 along with the Economic Offences Wing of Mumbai police.
The agency filed a 20,000-page charge-sheet against NSEL and 67 others in the court here in March 2015. According to the charge-sheet, NSEL funds were laundered and "illegally ploughed into purchase of private properties". It traces a money trail of Rs 3,721.22 crore. After a high-level meeting chaired by the Economic Affairs Secretary Shaktikanta Das last month, the Centre directed Maharashtra government to expedite the resolution of the case by quickly auctioning assets worth Rs 6,116 crore attached so far and refund investors at the earliest.
NSEL's payment troubles started after it was ordered by the Forward Markets Commission in July 2013 to suspend the spot trade in most of its contracts due to suspected trading violations.
The exchange could not settle the outstanding trades, sparking an investigation as to whether the exchange had defrauded traders by not enforcing rules requiring sufficient collateral. Financial Technologies India Ltd blamed NSEL executives and the trading parties for the default. There were 24 members who defaulted payment to about 13,000 investors.
FTIL shares plummet by 6%
Shares of Financial Technologies (India) Ltd ended 6 per cent lower on Wednesday after the Enforcement Directorate arrested its founder Jignesh Shah in connection with the Rs 5,600-crore National Spot Exchange Limited (NSEL) money laundering scam. After plunging 8.45 per cent to Rs 83.40 in intra-day trade, shares of the company finally ended at Rs 85.60, down 6.04 per cent on the Bombay Stock Exchange (BSE). On the National Stock Exchange (NSE), shares of the company settled 6 per cent lower at Rs 85.85.
The company's market valuation fell by Rs 24.57 crore to Rs 394.43 crore. On the volume front, 4 lakh shares of the company were traded on BSE and more than 14 lakh shares changed hands at NSE during the day. Officials said Shah was arrested yesterday under the provisions of the Prevention of Money Laundering Act (PMLA) as "he was not cooperating in the investigation".
Reacting to the development, FTIL had said in a statement, "We fail to understand why such a coercive step was taken against by the ED when Shah has been fully cooperating with the investigation."