The Centre has accorded sanction for the prosecution of former chairman cum managing director (CMD) of Project and Equipment Corporation (PEC) A K Mirchandani in the National Spot Exchange Limited scam case. It is alleged that Mirchandani was heading the public sector undertaking when it was trading on the NSEL. The agency has filed a charge sheet in the case related to the investments of the PEC in the NSEL which resulted in the loss of Rs 120 crore of public money. It had sought sanction to prosecute Mirchandani, the then CMD, PEC (now retired) on May 24, 2016 but it was only after a year that the sanction was granted paving way for the charges to be framed against him. The CBI has alleged that PEC was trading in paired contracts, which were allegedly in violation of Forward Contracts Regulation Act and involved a two-staged process. A seller deposits stocks in a warehouse and gets a receipt.
The seller puts the stock in the market for sale. The investor purchases the stock and puts it on sale for 25 days later at the same time. It is alleged that the PEC was trading in paired transactions where it was buying the stocks and contracting to sell them after 25 days at the same time. The CBI has alleged that during this period, the PEC neither had any document or titles of the goods nor did it have physical custody of the stocks. The PEC did not conduct any stock verifications through the NSEL and offered such verification, it said. The CBI alleged that the prices of commodities were always increasing in defiance of general market fluctuations. The public sector undertaking under Mirchandani continued to invest increasing amounts on the NSEL despite Forward Market Commission raising doubts about the presence of stocks and even issuing notices to the NSEL, the agency alleged. It further alleged that actions of PEC under the chairmanship of Mirchandani caused a loss of Rs 120 crore of public funds.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)