Punjab govt tells state police to help NSEL with 5 defaulters

The five defaulters have an exposure of Rs 1,525 cr, or 30% of NSEL's total outstanding

With a majority of the defaulting borrowers of the scam-hit National Spot Exchange (NSEL) based in Punjab, the government there has directed its police’s economic offences wing to assist their Mumbai counterparts in the recovery of dues.

A letter is this regard went at the end of last week from the finance department of the Punjab government to the police; it was at NSEL’s request. Earlier, in March, NSEL had sought the state government’s help in recovery of Rs 1,524 crore from five companies there — three of Laxmi Overseas Industries (LOIL), ARK Imports and White Water Foods. The state’s finance secretary’s letter stated, “NSEL has approached these entities for settlement but they are not coming forward.” The secretary has asked the director general of police to co-ordinate with NSEL.

ACTION ELSEWHERE

• A team of 100 from NSEL coordinating with multiple investigating agencies
• FTIL group CEO Jignesh Shah visited EOW 14 times voluntarily, apart from being summoned seven times
• A server has been installed at EOW for data analysis, and firms appointed for tracking property of defaulting members
• Bombay high court has directed all defaulters to remain present in court, saying, "it prima facie appears that the only persons responsible for the entire fiasco are these defaulters"
• Hearing of the case expected to begin in early June when the court opens after summer break

The biggest defaulter is Punjab’s rice king, Balbir Singh Uppal of LOIL, with around Rs 720 crore of dues. The Mumbai EOW investigations found LOIL Continental Foods and LOIL Health Foods did not exist at the addresses they had furnished with NSEL.

These entities and the other two had borrowed money from NSEL investors against goods supposedly in warehouses; these were never produced or the money repaid. Sources say NSEL wrote to the chief minister of Punjab in April, explaining their efforts at recovery and how these five Punjab-based borrowers were not cooperating.

An NSEL Investors Forum spokesperson said recovery of money through the judiciary would be time-consuming and the police could be of help.

The high court here has already said, “It, prima facie, appears the only persons responsible for the entire fiasco are these defaulters.” The next hearing of the case is expected in early June, when it opens after a vacation. All defaulters have been summoned.