Bombay HC rejects NSEL borrower's plea

Regulator forward markets commission had asked exchange to start legal proceedings against defaulter

The Bombay High Court has rejected to “stay” default proceedings against Tavishi Enterprises Pvt Ltd (TEPL), one of the 19 members of the beleaguered National Spot Exchange Ltd (NSEL) after the exchange declared it as defaulters two weeks back.

The regulator forward markets commission had asked the exchange to start legal proceedings against the defaulter.

The New Delhi based member of NSEL which according to NSEL’s August 16 “obligation of the members’ unsettled position” circular, is the seventh largest borrower with a total pay-out obligations of Rs 333.01 crore.

TEPL had filed a suit in the Bombay High Court earlier seeking a removal of its name from the list of defaulter and “stay” on the legal proceedings from the NSEL against the company as a defaulter. The hearing which began on Wednesday and continued early Thursday resulted in the court denying to stay legal proceedings against TEPL as a defaulter.

However, the further hearing regarding the dispute on outstanding of TEPL is scheduled for September 19.

NSEL meanwhile filed an affidavit in its defense against the TEPL’s claim that “NSEL has all the records of informing TEPL about trade and payment obligations.”

According to NSEL’s third settlement receipt released on September 3, TEPL has not paid any amount so far since the default of members issue started at NSEL.

Meanwhile the public interest litigation (PIL) filed by the leader of Bharatiya Janta Party (BJP) leader Kirit Somaiya against the NSEL is scheduled for hearing on Friday.

Somaiya has made respondents as Jignesh Shah, promoter of NSEL, Ministry of Consumer Affairs, Ministry of Finance, NSEL, Forward Markets Commission (FMC), Economic Offence Wing (Mumbai police), Central Vigilance Commission and a host of other government agencies including the Securities and Exchange Board of India (Sebi).

According to informed sources, Jignesh Shah will submit an affidavit Friday morning in his defence.