FTIL gets interim asset-freezing order

FTIL has challenged ED's order and sought stay from Bombay High Court

The Enforcement Directorate (ED) has issued a provisional attachment order for Rs 500 crore worth of assets against Financial Technologies India Limited (FTIL) as part of the National Spot Exchange (NSEL) money laundering probe, said a source in the know.

This is the first big attachment order against FTIL in the Rs 5,600-crore NSEL scam. Last year, FTIL was renamed 63 Moons Technologies.

FTIL has challenged the order and sought a stay from the Bombay High Court on Monday. But the court referred the matter to another division bench, which heard a case relating to the Economic Offences Wing (EOW) attachment order of Rs 2,000 crore in a related issue.

The nearly 60-page order includes details of all shares and assets belonging to FTIL and NSEL promoters, said the source.

Confirming the development, a senior ED officer told Business Standard that under Section 5 of the Prevention Of Money Laundering Act, 2002 (PMLA), the director has discretionary power to provisionally attach the property of a person believed to be in possession of proceeds of a crime. Such proceeds are likely to be concealed or transferred and may result in frustrating proceedings relating to confiscation of such proceeds under the Act, the officer said.

After the provisional attachment of the property, the officer has to forward the complaint to the adjudicating authority, the officer added.

The assets can be provisionally attached for a period not exceeding 180 days from the date of the order. A 63 Moons Technologies spokesperson said, “We would like to clarify that FTIL has not received any attachment notice from the ED. However, in view of reports in a section of the media of a possible move by the ED to attach the assets of 63 moons, the company has, in anticipation, filed a writ petition in the Bombay High Court.” The company said: “The earlier court order had noted that there was no money trail [linking] NSEL, FTIL and its promoters. The ED charge-sheet filed in the PMLA court confirms this. In such a scenario, there is no case for attachment of our assets.”

The company hoped to be given an opportunity to be heard by ED before making any attachment. It said the exercise would only create multiplicity of proceedings and litigations.

FTIL said that such action may affect the company’s shareholders. “Since the entire money trail in the NSEL crisis has been established to the 22 defaulters, concentrated actions, such as illegal arrest of our chairman emeritus Jignesh Shah – as noted by the PMLA court – and possible attachment of 63 moons’ assets by ED, comes across as clear case of targeting and victimisation. There is no legal propriety on the part of the ED to attach the assets, as this would lead to nothing but throttling of 63 moons’ business and our legal defence. In fact, any potential action on the part of the ED, will adversely affect over 63,000 shareholders and over 1,000 employees of 63 moons.”

The ED had registered a criminal case under the PMLA in 2013 to probe the case, along with the EOW of the Mumbai police. EOW in July secured Rs 2,000 crore worth of assets of FTIL, including FT Tower, its headquarters in Andheri, and some bank deposits. The assets were secured under the Maharashtra Protection of Interest of Depositors (MPID) Act.