FMC permits NSEL to repay e-series investors

FMC has said the auditor agency, Choksy and Choksy, had found no defaults, and stocks of commodities matched those in demat form under e-series contracts

The Forward Markets Commission (FMC), the commodities market regulator, has permitted remat/closure of applications of e-series investors on the scam-hit National Spot Exchange (NSEL).

Around 33,000 investors of NSEL will now be able to get the commodity back in physical form, being able to sell and encash the money with this permission. FMC has said the auditor agency, Choksy and Choksy, had found no defaults, and stocks of commodities matched those in demat form under the e-series contracts.

Metals in demat form include 910 kg of gold, 46 tonnes of silver, 19 kg of platinum, 62 tonnes of copper, 61 tonnes of zinc, 49 tonnes of lead and 17 tonnes of nickel.

In a related development, which could be good news for NSEL investors, in a class action suit filed by one of them, the high court here has agreed that borrowers of the exchange should be asked first to make payments. As a first step, before their attached properties are auctioned, they should come to court and declare their intention of doing so and by which date.

This was observed by the court on Wednesday while hearing a case filed by Modern India, an investor in NSEL. The court said all borrowers should be present in court with their plan on April 21, the next hearing date.

There are 16 groups of borrowers who still have to pay Rs 5,281 crore to NSEL investors. Some had entered into a settlement agreement with NSEL. Mohan India, one such entity, had then defaulted on that, too; NSEL has moved court for auctioning the company’s properties, which had been attached by the economic offenses wing of the city police.

The NSEL investors forum had written to the exchange last week, seeking information on what the latter was doing to recover money from defaulters, and when investors would be paid. Legal experts say these borrowers will first be asked by court to pay and failure will mean permission to NSEL to proceed with getting the attached properties auctioned. So far, the borrowers were not on the HC’s radar; the cases were mostly involving the promoters.

In another case, which would help investors of Indian Bullion Market Association Ltd (Ibma), an NSEL subsidiary, an assistant excise and taxation commissioner at Ludhiana has directed HDFC Bank to the company’s bank accounts, frozen since August 2013. The bank has complied and a Rs 98.8 lakh payment from NSEL was released on Thursday by Ibma to its trading members and clients.

The forum also wrote a separate letter to chairman, FTIL in this regards. It said,

Ravi Sheth, promoter of Great Eastern Shipping, Godrej Foods etc., Mr. Bharat Sheth, Great eastern Shipping, Blackstone Capital can not alienate, FTIL from the NSEL scam which has destroyed 13000 families. The Forum also warned that any attempt by FT shareholders to vitiate the recovery process for NSEL investors would be met with stiff and consistent resistance from these investors and any bid to takeover or merge FTIL with other big business houses cannot be fructified without taking these 13000 families on board