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Can NSEL investors recover their money?

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[dropcap]M[/dropcap]emories of NSEL scam is fading with time, the culprits are enjoying support from power-corridor and went scot-free. However, the investors are suffering with ferocious challenges day by day as they lost their hard earned money in this scam. Over the issue, government is not taking any action against the accused, police is mum, authorities are ideal and investigations are put in cold storage. No one is here to address the concerns of stockholders who had invested in this firm. Investors and individuals that lent money to trade on the now defunct National Spot Exchange (NSEL) are facing heat from tax authorities also.

Some of the 13,000 investors have received notices from the income-tax department seeking details, among others, sources of fund, bad debt claimed during assessment years 2014-15 and 2015-16 and of investments made in NSEL. Though, the investors claimed that when they purchased contracts on NSEL, they took delivery of goods in NSEL approved warehouses. The money they paid for the goods was used by defaulters and returned after 25-36 days with 14-16% return. Payouts were stopped after July 2013; the principal amount invested was stuck. Consequently, investors sought to adjust this loss against business gain in ensuing fiscal years, which was being allowed by the tax department.

[inlinetweet prefix=”” tweeter=”” suffix=””]Over 200 angry investors of the stressed NSEL demanded that the Mumbai Police arrest Jignesh Shah and other key accused[/inlinetweet], besides speeding up recovery from borrowers and defaulters within a specified time period. The ED had arrested Shah on July 12 under section 19 of Prevention of Money Laundering Act (PMLA). However, soon after the arrest a special PMLA court granted bail to Shah at the surety bond of Rs. 2 lakh. The agency had filed a 20,000-page charge sheet against NSEL and 67 others in a Mumbai court in March-2015, explaining NSEL funds were laundered but nothing seriously happened against Jignesh Shah due to his political connections and other strong influences. He is one of the election fund financers to various political parties. The corridors of power are open for him. He walked out of the jail ‘laughing at law’ without being made accountable for the scam.

Members of the NSEL Investors’ Forum even met then Crime Branch Chief of Mumbai Police, Himanshu Roy at the police headquarters in South Mumbai, who had assured them of speedy progress in the case and bankruptcy of assets, so that the investors could get their money back. Even, Roy went on news camera issuing statements that many investors were satisfied with the probe so far. And he assured more action in the next few days; however his assurance was just a media statement. Then, Roy appealed to investors to ignore any rumours and said that 80 per cent of the money in the Rs. 5,600 crore scam had been recovered after attaching properties of the accused and they are in the safe custody of the concerned court. Later, he was transferred to ATS.

Mumbai police had filed a 9,100-page chargesheet against the five accused, including the spot exchange’s former CEO Anjani Sinha.

Four others named in the chargesheet are Amit Mukherjee, former NSEL Vice-President (Business Development); Jay Bahukhundi, another ex-assistant vice-president; Nilesh Patel, managing director of NK Proteins Ltd; as well as Arun Sharma, Lotus Refineries’ CMD, who is also a film financier.
The FIR was lodged on September 30, 2013 by the Economic Offences Wing (EOW) against NSEL directors Shah, Massey and others, charging them with cheating, forgery, breach of trust and criminal conspiracy, among other offences.

The spot commodity bourse, promoted by the Shah-led Financial Technologies (FTIL), has been facing problems in settling Rs. 5,600 crore dues of over 200 member brokers, representing 13,000 investor clients. The Enforcement Directorate had quizzed all these officers involved in scam. Among the broking firms, which had high exposure in NSEL, were: Anand Rathi (Rs. 629 crore), India Infoline Commodities (Rs. 326 crore), Motilal Oswal Commodities (Rs. 263 crore), Phillip Commodities (Rs. 140 crore) and JM Financial (Rs. 90 crore).

The police suspect that an equal role of brokers in the scam, since many of them sold NSEL commodities despite knowing about fraudulent practices in the spot exchange. The EOW has invoked the Maharashtra Protection of Interest of Depositors Act, which empowers the police to attach immovable assets of the accused. The capital and commodity markets regulator SEBI has also launched a probe into alleged mis-selling of products by some brokers with the promise of assured returns from commodities traded on the NSEL. SEBI is looking into various complaints against brokers, including false assurances, inducements and misrepresentation, trading without appropriate authority from clients, misuse or unauthorised modification of unique client code, funding by NBFCs related to the brokers and non-receipt of payout.

The ED is investigating the role of 14 defaulters, officials from NSEL, its parent FTIL and brokers under the Prevention of Money Laundering Act, 2002.

The probe is going on with its own speed, the accused and culprits are having a good time. Police department and Enforcement Directorate too are busy rendering assurances. Maharashtra CM and his government lacks willpower to address the issue. They should act intensely to deliver justice to the investors. After waiting for three years, the investors hit by the scam are asking the government to grant them permission for Euthanasia. I hope that government will act strictly against the accused and will save these heartbroken investors who are preparing to eliminate themselves.

 (Any suggestions, comments or dispute with regards to this article send us on

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Vaidehi Taman
Vaidehi Taman
Vaidehi Taman an Accredited Journalist from Maharashtra is bestowed with three Honourary Doctorate in Journalism. Vaidehi has been an active journalist for the past 21 years, and is also the founding editor of an English daily tabloid – Afternoon Voice, a Marathi web portal – Mumbai Manoos, and The Democracy digital video news portal is her brain child. Vaidehi has three books in her name, "Sikhism vs Sickism", "Life Beyond Complications" and "Vedanti". She is an EC Council Certified Ethical Hacker, OSCP offensive securities, Certified Security Analyst and Licensed Penetration Tester that caters to her freelance jobs.
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