Rajasthan HC grants stay on police investigation against NCDEX officials

The Rajasthan high court granted a stay on investigations by the Jodhpur police against four officials of the National Commodity & Derivatives Exchange Ltd in a case filed by a group of traders, alleging their role in the recent price rally in coriander.

Early this month, a group of coriander traders had filed a complaint in the  Sriganganagar police station against Samir Shah, managing director of NCDEX, and  three other officials. The police registered the First Information Report (FIR) under sections 420 and 406 of the Indian Penal Code (IPC), and started investigation.

The NCDEX counsel argued that the spot prices are disseminated as per the stringent process put in place and participants take trading decisions based on their own independent enquiries, appraisals, judgement, wisdom and risks.

Following the argument, the court held that there was no case for the offence as alleged in the impugned FIR made against the NCDEX officials.

“The exchange has built a robust market structure whilst upholding strong values of integrity. This has earned us the long-standing trust of the market participants. Our stringent norms and regulations reinforce our commitment to providing a fair and transparent price discovery platform which maintains market integrity,” said Shah.

With coriander (dhaniya) prices trading higher than the expected level, there were complaints of unhealthy trading activities causing market distortion. While the divergence between futures and physical market prices has been a reality, detailed analysis by the exchange revealed it to be a result of combined impact of inferior quality coriander produced during the current season and tightening of quality parameters by the exchange to adhere to the Food Safety Standard Authority of India norms rather than only speculative sentiments.

In July, the difference in the spot and future prices went as high as 10.6 per cent, as the futures price of dhaniya was at Rs 11,936 per tonne while the spot price of the commodity was Rs 10,791.65 per tonne.

The difference current exists at seven per cent with spot and future prices are quoted at Rs 11,980 a quintal and Rs 12,806 a quintal respectively. Coriander price has jumped over 30 per cent since June when the commodity was traded at Rs 9,200 a quintal in spot market.