IEM owners face arrest over steel delivery default

IEM was an approved warehouse of the National Commodity & Derivatives Exchange in Ghaziabad

The city police’s economic offences wing (EOW) is on the lookout for two directors of Indian Exchange of Metal (IEM), J K Arora and Sahil Arora, absconding after failing to deliver steel to traders who traded in steel futures on NCDEX. IEM was an approved warehouse of the National Commodity & Derivatives Exchange (NCDEX) in Ghaziabad.

NCDEX had first filed a complaint with EOW on behalf of traders who had said they have not received delivery of steel from IEM. The traders had approached the Forward Markets Commission (FMC), which in turn asked the exchange to settle the issue.

So far, IEM has to give NCDEX traders a delivery of 1,185 tonnes of steel. While the deal is not so big value-wise, the case could set a precedent for settling exchange-traded contracts.

IEM reportedly denied delivery saying traders were not paying CNF (cost net freight) and VAT (value-added tax) charges.

EOW officials said that NCDEX had made the payment to the warehouse but IEM still did not deliver steel to the traders. Following the First Information Report (FIR) filed by the EOW in December 2012, the three directors of IEM — the third director is Mohinderlal Arora — filed for an anticipatory bail plea in a sessions court, which was rejected. The directors then approached the high court here, which gave interim bail to Mohinderlal Arora considering his advanced age (he is above 80 years).

In the past two months, a team of Mumbai Police have gone to Ghaziabad twice to arrest the other two directors, but have not been able to locate them. "We have filed an FIR beyond that we cannot comment," said the NCDEX spokesperson. The anticipatory bail plea application of Arora is to come up for hearing in the high court on Thursday.