Bombay HC allows collecting info on outstanding from NSEL investors

Court has set up 3-member committee to recommend recovery of outstanding amount from NSEL defalulters

The high court here on Wednesday ruled the functions of a committee set up to recover money from National Spot Exchange Ltd (NSEL) defaulters included collection and verification of information on amounts payable by NSEL to its non-defaulting members, as well as amounts payable by non-defaulting members to their clients on account of transactions on NSEL.

In September 2014, the court had set up a three-member committee, headed by former judge Daga, to recommend recovery of the amount due from defalulters of the now-defunct NSEL. The exchange, a subsidiary of Financial Technologies (India) Ltd, or FTIL, had seen a default of Rs 5,600 crore in July 2013.

In January, the committee had asked NSEL to seek information from trading members and their clients with legitimate and genuine claims. Following this, NSEL had sought information on the money invested, as well as on other issues. However, three associations of trading clients said NSEL couldn’t seek such details from them.

While some investors have responded to the NSEL request to provide information, members and investor forums haven’t provided the information yet.

There is apprehension NSEL investors, now called trading clients, had borrowed money to invest in NSEL products. Their authenticity, too, has been questioned. Following Wednesday’s order, brokers and clients have no other option but to provide relevant information. The ruling is also significant because FTIL has proposed a settlement plan to repay investors; the plan includes payments by brokers, too.

Settlement plan is proposed to ensure quick payment to the investors while recovery process to recover money from defaulters is going on.