Bombay High Court has dismissed a petition filed by National Spot Exchange Ltd (NSEL), embroiled in an alleged Rs. 5,600 crore scam, seeking quashing of invocation of provisions of Maharashtra Protection of Interest of Depositors In Financial Establishments (MPID) Act against it.
A division bench headed by Justice Ranjit More last month dismissed NSEL’s petition after observing that prima facie investigations by the city police’s Economic Offences Wing (EOW) reveal violation of the provisions of the MPID Act by the company.
“The material collected by the EOW during probe reveals that the petitioner did not carry out its operations as per the bye-laws and permission granted to it by the Government of India,” the court said.
The bench noted that a chargesheet has already been filed and further probe is also underway, and the petitioner has an alternate efficacious remedy to apply for discharge before the trial court.
In September 2013, a complaint was filed by Pankaj Saraf against NSEL with the police. Initially, FIR was lodged under various sections of the Indian Penal Code for cheating and criminal conspiracy. Subsequently, provisions of the MPID Act were invoked and a chargesheet was also filed in January 2014 against the accused persons.
NSEL’s counsel Aspi Chinoy contended that the company’s Commodity Spot Exchange only provided an electronic/ online trading for the purchase and sale of commodities. He argued that NSEL never received or accepted any deposit as defined in section 2(c) of the MPID Act.
Chinoy argued that the application of MPID Act against NSEL and its directors is “ex-facie illegal and without jurisdiction”.
The court, however, refused to accept this.
“From the statements recorded by the investigating agency, copies of which were placed before us for our perusal, it would prima facie reveal that NSEL represented to its traders and suppliers of the goods that they would be provided security free loan. The petitioner had assured its clients fixed returns at 14 to 16 per cent per annum,” the court said.