Brief Summary Of NSEL’s Legal Efforts

The NSEL Crisis came to light more than a year ago when the present Defaulters of the Exchange failed to honour their pay-in obligations and Trading Members who traded on behalf of their clients could not receive their dues. The Bombay High Court has set up a special Committee to dispose off these assets and repay monies owed. In the representative suit namely Suit No. 173 of 2014, the Hon’ble Bombay Court vide its order dated 2nd September, 2014 has constituted a Committee of the following persons:

  • Justice V. C. Daga (Retd.) [Chairman]
  • J. S. Solomon, Solicitor
  • Yogesh Thar, Partner of M/s. Bansi S. Mehta & Co. Chartered Accountants

The said order dated 2nd September, 2014 interalia states as follows: “It is obvious that the Committee to be appointed by these Minutes of Orders has a dual function to perform. In the first place, it is supposed to conduct itself as a commissioner for investigating and examination of accounts and render assistance to the Court in facilitating mutual settlements between the parties. Once these settlements have been arrived at and assets are collected in pursuance of these settlements, the Committee in effect acts as receiver appointed by the Court in the matter of preservation, custody and management of the assets so collected.”

Pursuant to the aforesaid constitution of the Committee, several hearings have taken place before the Hon’ble Committee appointed by the Hon’ble Court. The Hon’ble Committee has also passed several directions to the defaulters for rendition of accounts, disclosures of their assets, including the personal assets of its key managerial personnel. The Hon’ble Committee has also passed directions to the Competent Authority under the Maharashtra Protection of  Interest of  Depositors ( In Financial Establishments ) Act, 1999 as well as he Economic Offences Wing to appear before the Hon’ble Committee. The Hon’ble Committee has made several recommendations such as:

a) For appointment of court receiver with respect of assets.

b) Cancellation of bail of key managerial personnel of certain defaulters.

c) For sale of assets.

Certain defaulters have challenged the above order dated 2nd September, 2014 before the Hon’ble Bombay High Court and the said appeals are pending adjudication. In addition to the above, NSEL has obtained decrees against certain defaulters, particulars of which are as follows:

Sr. No. DEFAULTERS

Amount Of Decree

( In Crores )

1 Aastha Minmet India Pvt. Ltd. and Ors. Rs. 12.50 with interest
2 Juggernaut Projects Limited and Ors. Rs. 145 with interest
3 Swastik Overseas Corporation Rs. 91.19 with interest
4 Yathuri Associates Rs. 264.96 with interest

NSEL has also obtained order injuncting the following defaulters, interalia, from disposing or dealing with certain assets set out in the respective Third Party Notices (TPN) proceedings / other proceedings initiated by NSEL in the Hon’ble Bombay High Court.

SR. NO. THIRD PARTY NOTICEE NAME / DEFAULTER
1 Mohan India Pvt. Ltd.
2 Tavishi Enterprises Pvt. Ltd.
3 ARK Imports Pvt. Ltd.
4 Yathuri Associates
5 Swastik Overseas Corporation Ltd.
6 Vimladevi Agrotech Ltd.
7 Shree Radhey Trading Company
8 Namdhari Food International Pvt. Ltd.
9 Namdhari Rice and General Mills
10 PD Agro Processors Pvt. Ltd.
11 NCS Sugars Ltd.

NSEL is also in the process of initiating suits and other proceedings against the defaulters other than the ones mentioned above. Apart from the above, NSEL has filed several proceedings under Section 138 of the Negotiable Instruments Act, 1881 against the defaulters before different courts in India. Similarly, proceedings are also pending before the specially constituted court under the Maharashtra Protection of Interest of  Depositors ( In Financial Establishments ) Act, 1999.

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