NSEL investors seek halt of delivery under e-series contract

Files writ petition in the Bombay HC seeking monetisation of commodities and distribution among all investors, ask why prioritise e-series investors

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A small group of investors of the beleaguered National Spot Exchange Ltd (NSEL) have filed a petition in the Bombay High Court on Monday, seeking an immediate halt of delivery of precious metals and monetisation of underlying commodities under e-series contracts and even disbursal among all investors.

Filed in the court of chief justice Mohit Shah, the writ is now scheduled for hearing on Thursday.

The complaint was filed by Tarun Amarchand Jain HUF and Ashish Seth HUF, making the Forward Markets Commission, the ministry of consumer affairs, the ministry of finance, NSEL, Financial Technologies (India) Ltd and the Indian Bullion Markets Association as respondents.

The crisis-ridden spot exchange of the Financial Technologies group is already facing one public interest suit, filed by Bharatiya Janata Party leader Kirit Somaiya.

The petition, a copy of which is in the possession of Business Standard, seeks an immediate halt of distribution of precious metals under e-series contracts, which the exchange claimed to have been steadily delivering to small investors.

A Sharp & Tannan Associates audit report dated September 3 said gold, silver and platinum stocks to the tune of 910.65 kg, 46,167.71 kg and 19 kg, respectively, lying in the vaults of Brinks Arya India for delivery to small investors in e-series contracts.     

The petition seeks direction from the court for the government superseding the management of NSEL and taking charge of its business, including the recovery of defaulting creditors and implementation of the settlement plan.

Acting at the behest of complainant, Ketan Shah, who availed of a copy of the petition, said NSEL distributed only two per cent of the defaulted money of Rs 5,600 crore through borrowings from the promoter company. Shah alleged an amount of Rs 177 crore was distributed to pare down the number of investors, who were making hue and cry. Thus, through a small payment of Rs 177 crore, NSEL attempted to reduce voices. Hence, a similar amount should be distributed proportionately among all investors instead of distributing into a select class of investors.

The petition also seeks to restrain NSEL and any connected parties of it to settle payment obligations or deliver commodities independently of e-series investors.

The petition also seeks underlying commodities under e-series contracts be monetised and the proceeds be used for clearing dues of all investors instead of just e-series investors currently.