NSEL scam: Shah in judicial custody, court seeks ED reply on his bail plea

ED arrested Shah on July 12 under PMLA on fresh findings related to Rs 3,721 cr money trail

A trial court in the National Spot Exchange (NSEL) payments scam case has sent Jignesh Shah, its former promoter, to judicial custody till August 1. The Enforcement Directorate (ED) had sought further custody, to interrogate him on what it said were new leads, but the court wouldn't agree. It also told the ED to reply on Tuesday next week to his application for bail. It has directed the other 38 accused to be present in court on August 23 and 24 for formal framing of charges.

Shah has been sent to a jail in Kalyan on his request that he should not be sent to a jail at Thane. His counsel contended that Shah faced a life threat from the Ravi Pujari gang when he was arrested earlier and kept in custody for 108 days.

The ED had arrested Shah on July 12 under the Prevention of Money Laundering Act (PMLA), for ‘non-cooperation’ and on the basis of 'fresh findings' on the Rs 3,721-crore money trail in the case. The agency had filed a chargesheet in the court against NSEL and 67 others in March last year, under PMLA.

"We have found some (further) incriminating evidence against Shah," said ED counsel Hiten Venegaonkar during the hearing on Monday. "These show how the entire scam's taken place and its direct connection with Shah. Hence, enforcement sleuths need more time to probe the matter."

Its remand plea last week had said: "He (Shah) was one of the main architects involved in money laundering activities. Shah has used its (Financial Technologies or FTIL, the parent entity) subsidiary companies like Ibma (Indian Bullion Markets Association) and NBHC (National Bulk Handling Corporation, since sold by FTIL ) for bogus trades and money laundering,” said the ED counsel. He added the ‘ultimate beneficiary’ of business activities of all the FTIL group companies was Shah, the majority shareholder of FTIL.

Shah's counsel, Abad Ponda, strongly opposed the prosecution's demand for more custody. He said the ED was reproducing the charges already levelled by the city police in their chargesheet of the year 2014. There were no new findings. And, where was the question of arrest when the court had already taken cognisance of the matter, he asked.

The scam came to light in end-July 2013, when NSEL failed to pay its 13,000 investors in commodity-pair contracts. Due to this, investors lost Rs 5,600 crore, as it was found NSEL had neither the money nor the stock to repay them.