New forensic audit of NSEL brokers likely

The police have arrested Kamal Dewan, a borrower from NSEL who defaulted; this is the second arrest in a week after Nimish Patel, the largest NSEL defaulter

The economic offences wing of the Mumbai police might seek another forensic audit to investigate the role of brokers in the Rs 5,600-crore payment crisis at National Spot Exchange Ltd (NSEL).

Confirming the possibility, a senior official involved in the investigation of the case, said, “The forensic audit conducted earlier was incomplete.”

A second forensic audit is significant because the Forward Markets Commission had sought a copy of the findings of the previous one, which the police declined to hand over. The Securities and Exchange Board of India (Sebi), too, had sought a copy and was turned down as well.

Dhananjay Kamlakar, joint commissioner of police, economic offences wing, neither confirmed nor denied the possibility of another forensic audit. “This is a big case. We cannot reveal future actions,” he said.

On the repeated complaints by Rajasthan-based investor Aachal Agarwal, a senior police official said, “Action against brokers will be taken once the forensic audit is complete.”

Agarwal has alleged his broker, Geojit Comtrade (now Geofin), had traded on his behalf by borrowing funds from a non-banking finance company (NBFC). Agarwal claimed to have invested just Rs 97,50,000 in NSEL while his account showed an investment in crores of rupees.

“Agarwal did not raise objections for over two years when he was benefiting from trading on the additional amount. Now, after the crisis, he is raising objections. This does not call for action,” a police official said.

Geojit chief executive officer Girish Dev said, “Agarwal has filed a case in a court in Udaipur. Geojit and the NBFC concerned have also filed suits in their jurisdictions. The matter sub-judice.”

In a separate development, the police have arrested Kamal Dewan, director of White Water Foods Pvt Ltd, a Chandigarh-based borrower from NSEL that defaulted. This is the second such arrest in a week after Nimish Patel, chairman of NK Proteins, the largest NSEL defaulter, was arrested.

Dewan, son-in-law of Balbir Singh Uppal, promoter of the LOIL Group, yet another defaulter with a Rs 757 crore payment obligation, was arrested on Monday for owing NSEL Rs 84.82 crore.

FTIL and Motilal Oswal Limited have filed separate defamation cases against a self-proclaimed leader of trading clients — Ketan Shah. The complaint is regarding defamatory posts online where he has been accused of targeting the judiciary, investigating agencies, government officials and journalists on social media, with motives of diverting attention from the recovery efforts.

In yet another development, NSEL promoter Financial Technologies (FTIL) has filed a defamation suit against Ketan Shah, member, NSEL Investors Action Group, in a lower court here. Shah said, "I came to know about this suit through media. But, truth can never be defamatory. I shall keep fighting till this battle reaches a logical conclusion."