Bombay HC hears four cases against exchange

Directs FMC, EOW to submit a written reply by Friday, asks NSEL to maintain status quo, appoints receiver in Lotus Refinery case

Four cases filed by different sets of investors of National Spot Exchange Ltd (NSEL) came for hearing in the Bombay High Court on Thursday.

Clubbing two cases together with the common prayer, the court directed the Forward Markets Commission (FMC) and the Economic Offence Wing (EOW) of the Mumbai Police to file their respective statements in the court before 11am on Friday. The court also asked NSEL not to execute delivery of precious metals nor disburse proceeds of sold underlying goods under e-series to investors until the decree as scheduled on Friday.

The court clubbed hearing of two cases filed by different set of investors. The one filed by Gaurav Joshi and the other one jointly by Tarun Amarchand Jain HUF and Ashish Seth HUF had common prayers in the writ petition. Both cases urged the court to stop distinction between common and e-series investors and halt delivery of commodities to e-series investors as planned by NSEL earlier.

According to a circular dated September 27, NSEL was scheduled to commence delivery of gold and silver under e-series contracts beginning October 3 on a first-cum-first-served basis. The delivery was scheduled to be concluded on October 9. An audit report uploaded on the NSEL website showed 46.16 tonnes of silver and 910 kg of gold lying in warehouses. “The FMC has been asked to file a written reply on its intention with regard to e-series contracts by Friday morning,” a person in the know said on Thursday.

Meanwhile, NSEL has been asked not to proceed with the delivery of goods until the final verdict is out. NSEL can sell underlying goods but the court restricted the exchange to use its proceeds for disbursing among investors under either common or e-series.

Efforts to reach FMC officials did not elicit any response. EOW could not be contacted immediately for comments.

In a separate hearing, the court granted relief to Lotus Refineries (LR), the complainant who filed a Rs 2,773.29 crore claim suit against NSEL which declared LR a defaulter.

Upon hearing the counsels on both sides, the court granted the ad-interim reliefs sought by LR. The court passed an order appointing a receiver to inspect the goods lying at the warehouses managed by NSEL and submit a report before the court within two weeks from the date of hearing.

The court has also directed NSEL to maintain status quo as regards the goods which are the subject matter of the dispute. This case is scheduled for hearing again on October 18.

Another case filed by NSEL Investors’ Forum also came up for hearing today. The court adjourned the case and scheduled October 17 as the next hearing date.