NSEL SCAM: Mumbai EOW files chargesheet against Jignesh Shah

This is the second chargesheet filed in relation to the NSEL payments scam

The economic offences wing (EOW) of the city police on Monday filed a 9,360-page chargesheet against Jignesh Shah (pictured), chairman of Financial Technologies India Ltd (FTIL), in the Rs 5,574-crore default scam case at National Spot Exchange Ltd (NSEL). The chargesheet is the third in the NSEL case.

“We have recorded the statements of borrowers and brokers in this case,” said Rajvardhan Sinha, assistant commissioner of police (EOW). There are 270 witnesses cited, including borrowers and brokers.

Shah has been charged under sections 409, 465, 467, 468, 471, 474, 477 and 120 B of the Indian Penal Code, and sections 3 and 4 of the Maharashtra Protection of Interest of Depositors in Financial Establishments (MPID) Act. These charges include cheating, criminal conspiracy, forgery of documents and inducement for cheating.

Responding to the charges, an FTIL spokesperson said, “We will examine the charges and appropriately defend it legally. We have full confidence in the Indian judiciary…justice will be done.”

EOW is also likely to shortly file a chargesheet against Shreekant Javalgekar, earlier a director on the NSEL board. On July 31, 2013, NSEL had suspended trading, at a time when investors held warehouse receipts of the stock against which they had lent money to 25 borrowers, through the NSEL platform.

Though then NSEL managing director Anjani Sinha said the investors’ money would be recovered by selling stocks from warehouses, it was found borrowers hadn’t kept any stock; false warehouse receipts had been issued.

“The payment default at NSEL had arisen due to complicity between certain erstwhile officials of NSEL and defaulting members. We understand investigating agencies have traced funds to defaulters. NSEL has initiated civil and criminal proceedings against these defaulters, as detailed on our website. NSEL will pursue vigorously to ensure the settlement obligations are honoured by the defaulting members,” said the FTIL spokesperson.

Shah and Javalgekar were arrested by EOW on May 7 this year; both applied a sessions court for bail. While the court granted bail to Javalgekar, it refused to grant one to Shah on grounds that he might tamper evidence. Shah has  moved the city high court for bail, and judge Abhay Tipsay has deferred a judgment till EOW presents a chargesheet. So far, EOW has attached Rs 4,902.18 crore of assets and Rs 357 crore has been deposited in an escrow account. The agency has sent half the borrowers’ and Shah’s secured assets to the authority appointed by an MPID court.

It is expected in the coming weeks, EOW will continue to investigate the role of brokers in the NSEL scam. Earlier, it had interrogated several large brokers in the case and received interim reports in this regard from forensic auditors.