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Mumbai Police to investigate NSEL payment crisis

EOW's move comes close on heels of investigations launched by I-T Department into companies associated with NSEL

Sanjay Jog  |  Mumbai 

Ongoing payment crisis engulfing National Spot Exchange Ltd (NSEL) has taken a new twist as the Economic Offence Wing (EOW) of the Mumbai police will soon launch a probe. Nearly 21 entities owe nearly Rs 5,600 crore to 13,000 investors, with the maximum liability of Rs 929 crore from N K Proteins.

EOW's move comes close on the heels of investigations launched by the Income-Tax Department into the companies associated with NSEL and an inquiry by two groups constituted by the central government.

I-T Department had launched a survey action against the companies. A number of teams have been sent to the offices and warehouses for probing the accounts.

EOW's senior officer, who is associated with the case but did not want to be named, told Business Standard, ''We have received complaints from the spot exchange and also from the investors and a couple of individuals. Right now we are ascertaining the fact and will initiate a full fledged investigation as prima facie it looks to be a scam. All aspects will be looked into during the proposed probe.''

The officer clarified that EOW was not drawing parallels with any other scams as it would be too premature. He however, added that EOW was regularly keeping an eye on day to day developments on the NSEL front and also in the midst of collection of required data.

"The entire modus operandi will be investigated. Protection of investors is quite crucial. Our team will also take the help of Forward Markets Commission during the probe,"the official said.

Further, the official informed that NSEL has filed complaints against five defaulters with the EOW after the exchange found they did not have adequate commodities in the warehouses as required under the circulars and rules.

The list of five defaulters without stocks also include N K Proteins. NSEL in its complaint said that non-delivery of commodities or its withdrawal was a breach of faith and breach of contractual arrangements.

On the other hand, investors in their complaints against NSEL have alleged cheating, fraud and forgery. Some investors have pleaded that the action needs to be taken against the concerned persons and agencies under the provisions of Indian Penal Code and the Maharashtra Protection of Interest of Depositors Act.

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First Published: Wed, August 28 2013. 22:16 IST