A Mumbai court on Thursday extended police custody of Jignesh Shah, chairman and group chief executive of Financial Technologies (India) Ltd (FTIL), and Shreekant Javalgekar, former chief executive of Multi Commodity Exchange of India Ltd (MCX), till 19 May in connection with theRs.5,574.34 crore payment fraud at National Spot Exchange Ltd (NSEL).
The economic offences wing (EOW) of Mumbai police arrested Shah and Javalgekar on 7 May. They were later remanded to police custody for interrogation.
The public prosecutor representing EOW on Thursday said the agency needs more time to question Shah and Javalgekar on financial transactions involving Indian Bullion Markets Association Ltd (IBMA).
“Several incriminating documents have been found during the investigation and the two accused (Shah and Javalgekar) need to be confronted with information. We believe both are fully involved in the NSEL crisis,” he said.
NSEL holds 60.88% stake in IBMA.
Mahesh Jethmalani, the lawyer representing Shah, argued against the police continuing to hold Shah in custody, saying Shah and Javalgekar were not involved in the day-to-day running of NSEL. “There was a China wall between the board of directors and the management,” he said.
Jethmalani shifted the entire blame of the NSEL crisis on former chief executive officer Anjani Sinha, saying he was responsible for running daily operations at the commodity spot exchange. “The EOW charge sheet in fact has identified Sinha as the mastermind of the crisis,” said Jethmalani.
According to Jethmalani, a May 2012 compliance report written by Sinha and sent to the NSEL auditors claimed no fraud or lapse had occurred in the internal controls of the company. “Shah and Javalgekar relied on this statement of Sinha,” Jethmalani said.
Shah and his family hold around 45.5% in FTIL. FTIL holds 26% in MCX and 99.99% in NSEL.
The settlement crisis at NSEL came to light on 31 July when the exchange suspended trading in all but its e-series contracts. These, too, were suspended a week later. The suspension may have been prompted by an instruction from the ministry of consumer affairs to the exchange asking it not to offer futures contracts.
On 14 August, NSEL proposed a payout plan, but it has been unable to stick to the schedule and has not made a single successful payout ever since.