Tuesday, October 22, 2013

HC wants to know who has power to regulate NSEL

Swati Deshpande TNN

Mumbai: The Bombay high court on Monday directed the Forward Markets Commission (FMC), the Centre and the ministry of consumer affairs to clarify if they have powers to not only supervise the functioning of National Spot Exchange (NSEL), but also to regulate and take remedial actions, if necessary.
    The high court bench of Justices Shiavax Vazifdar and K R Shriram said, “We had raised this query earlier too. It forms a crucial aspect of the matter.” The judges were hearing a clutch of petitions filed by and on behalf of thousands of investors in public interest. One PIL was filed by BJP leader Kirit Somaiya seeking a “special investigation” into the NSEL crisis. Investors say collectively they are yet to receive Rs 7,000 crore from NSEL which have been siphoned off due to the alleged embezzlement and laundering of funds by the company’s directors and others. 

    The judges repeatedly asked the additional solicitor general Kevic Setalvad, who represented the Centre as well as the FMC, to state who had regulatory powers over the forward market transactions. Setalvad sought time, saying he had no instruction as yet and could only give an update of the steps taken so far, including the issuance of show-cause notices to recover funds. The judges said, ‘’this clearly means nothing.’’
Setalvad said the FMC has no power of enforcement unlike other authorities. “The FMC can effectively only supervise, not regulate,’’ Setalvad said. The judges said, “They are trying to wash their hands off.’’ The bench, addressing Setalvad, added, “It is impossible to say there is no regulatory power. Who has the power to regulate? You are also representing the government of India.’’ Setalvad said he would take instructions from the consumer affairs ministry and the court adjourned the matter to Friday for the “government to make its stand clear,’’ as a last opportunity, else it would pass orders. 

    The HC also directed NSEL to supply it with a sealed copy of a likely supplementary re
port by Grant Thornton which was appointed to verify the quantity of goods lying in its borrowers’ warehouses. 

    The report also has to be given to the centre and the investors have to be informed when it is filed.
    Gaurav Joshi, counsel for the investors, pointed out that new developments keep shaping up in the case and that the investors wish to amend their plea to seek attachment of properties to secure their interest. 

OCT 2008 | NSEL commences live trading, launches delivery-based spot trading in 52 commodities
JUL 31, 2013 | NSEL suspends trading after a ministerial directive on contract structures affected volumes and leads to a payment crisis
AUG 14 | NSEL seeks eight months to settle dues
AUG 20 | NSEL defaults on dues; top brass, including the CEO, is sacked
SEP 27 | CBI starts probing NSEL fi asco
SEP 18 | Several regulators,
secretaries from ministries meet to discuss NSEL crisis
SEP 25 | EOW, Mumbai police start investigating NSEL crisis
OCT 9-18 | EOW of Mumbai Police arrest 3 top NSEL executives: Amit Mukherjee, Jai Bahukhandi & Anjani Sinha
OCT 10 | ED fi les money laundering case against NSEL, promoter Jignesh Shah
OCT 14 | Jignesh Shah and Joseph Massey resign from NSEL sister concerns MCX & MCX-SX
OCT 19 | MCX MD Shreekant Javalgekar quits


EOW identifies properties for attachment

Mumbai: The economic offences wing (EOW), probing he Rs 5,600-crore NSEL cheating case, has started identifying the immovable assets of the accused in a bid to attach them.
    Several police teams are going through the documents of NSEL and the other accused to identify the properties. “We will soon start attaching the properties,” said an EOW officer. The police have so far arrested three people including former NSEL managing director and chief executive Anjani Sinha in this case.
    They are likely to make the fourth arrest on Tuesday. The EOW had invoked the Maharashtra Protection of Interest of Depositors Act in this connection. — Mateen Hafeez 
The Times of India, October 22, 2013

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