NSEL files complaints with Economic Offences Wing against five defaulters

Close on the heels of the resignation of its chairman Shankarlal Guru, the National Spot Exchange (NSEL) has filed complaints against five defaulters with the Economic Offences Wing (EOW) of the Mumbai police 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 NK Proteins, which owes Rs 969 crore to various investors. Guru is the father-in-law of NK Proteins MD Nilesh Patel. "Non-delivery of commodities or its withdrawal is a breach of faith and breach of contractual arrangements. The exchange will also take similar recourse for other defaulting members who are not cooperating," NSEL said.

Last Week, NSEL had declared nine members as defaulters as they failed to make payment within the stipulated day — August 20 — as directed by the Forward Market Commission (FMC).

According to an official source, these members have no stocks in the warehouses and no purchases were made, a fact which was confirmed by the Income Tax Department, which had conducted surveys on all the warehouses of 24 borrowers. IT officials and Investors Grievances Forum president Kirit Somaiya who visited the warehouses did not find stocks in the warehouses.

The defaulters against which NSEL has filed complained are: Ark Imports, Lotus Refineries, NK Proteins, Vimladevi Agrotech and Yathuri Associates. Their total dues amount to Rs 2,380 crore. The exchange, which had appointed SGS to carry out quality and quantity inspection of the commodities lying in the warehouses on Monday, said, "their reports are being received in stages based on the inspection being done".

With the resignation of Guru and BD Pawar, the 5-member board of NSEL is now left with just Jignesh Shah, who runs FTIL, which is the single largest promoter of NSEL, and Joseph Massey, MD and CEO of MCX Stock Exchange, also promoted by FTIL. Another director Ramanathan Devarajan had quit last week. "We will get new directors soon," said an NSEL official.

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