HC orders FMC to verify Brinks Arya's bullion ledger

Perhaps, court wanted an authenticated report on physical holding of gold and silver

Raising doubts over the claim made by National Spot Exchange Ltd (NSEL) over physical quantity holdings of underlying commodities under e-series contracts, the Bombay High Court on Monday ordered the Forward Markets Commission (FMC) to verify the ledger of Brinks Arya, the custodian of precious metals of the spot exchange.

While hearing the case filed by Tarun Amarchand Jain HUF and Ashish Seth HUF for immediate halt of settlement of e-series contracts, the court observed physical verification of stock with the custodian was necessary.

“The inward and outward movement of gold and silver will be reflected in the ledger of Brinks Arya, the custodian. So, the court perhaps felt the need to check the ledger of the custodian of physical goods instead of directing the FMC for physical inspection in the safe deposit vault,” said a person in the know.

Claims made in terms of stocks in agri commodities proved wrong. Perhaps, the court wanted an authenticated report on the physical holding of gold and silver. A Sharp and Tannan Associates audit report dated September 3 said gold, silver and platinum stocks to the tune of 910.65 kg, 46,167.71 kg and 19 kg, respectively, were in the vaults of Brinks Arya India for delivery to small investors in e-series contracts.

The court ordered FMC to give its report before the next hearing.

NSEL on September 27 opened an exit window for e-series investors under which they were allowed to redeem their units between October 3 and 9. Through an interim order, the court directed NSEL to abstain from disbursal of money to e-series investors until it passed the final order. The next date for hearing was scheduled on October 21.

Now, e-series investors, who gave their redemption forms about two months ago, would have to wait for the final order from the Bombay High Court at least by October 21.