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Lotus Refineries Pvt Ltd, the only contesting member among the 24 borrowers of the National Spot Exchange Ltd’s (NSEL) claim of pay-in obligation, has decided to file a defamation suit against the exchange for calling it a defaulter, which it says has caused “serious damage” to its reputation.
“We will file a defamation suit within two days as NSEL has not withdrawn our name from the defaulter’s list despite our legal notice,” said Viren Thakkar, spokesperson of Lotus Refineries. The exact amount of the claim of damages is, however, yet to be worked out, Thakkar added.
NSEL had on August 22 declared Lotus Refineries a defaulter along with eight others.
The exchange’s spokesperson said, “Lotus Refineries has a net outstanding pay-in of Rs 252.56 crore. The Exchange has already shared details of the transactions with the regulators and will follow its rule and take all necessary legal steps to recover the money from Lotus Refineries. The Exchange has already filed a complaint against Lotus with the Mumbai Police.”
In a letter dated August 13, LR agreed it has undertaken trade worth Rs 2,600 crore since the commencement of trading on March 5, 2012 and adhered to all exchange guidelines..
Highlighting the differences in the statement generated by the exchange, the letter said, 'There is no clarity with regards to the claims raised by the exchange. The company has received various inconsistent statements of accounts from the exchange and its auditors at different points of time. A statement of exchange’s auditor dated April 30 points out the outstanding amount of Rs 0.41 crore is due and payable by the company as on March 31. Again in an e-mail statement on July 29, the exchange claimed payment dues of Rs 205 crore as pay-in obligations.'
'NSEL has not issued a consolidated final claim statement as on date with adequate supporting documents and explanation. In absence of such claim, we are unable to reconcile our statements and verify the same.'
Owing to non-transparent practices followed by the exchange, there have been several disputes between the company and the exchange on account of various claims in respect of warehouse charges, levy or penalty, value added tax, transaction charges, refund of margin and warehouse management charges. As per initial calculations, the company has suffered a loss of approx Rs 84 crore on account of transactions done through the exchange’s platform.
NSEL in a stock declaration statement said that the exchange holds 44586 tonnes of RBD palm olein stock in the warehouse of Sarda Agro Oils Ltd, Andhra Pradesh.
A bank account statement of LR’s account with the HDFC bank available with to Business Standard for the period between April 1, 2012 and August 23, 2013 showed a debit amount of Rs 454.82 crore against the credit amount of Rs 455.82 crore. This means, the exchange is liable to pay over Rs 1.01 crore to LR, the spokesperson explained.
An NSEL circular dated August 16 showed a total pay-in obligation from LR at Rs 252.56 crore which Thakkar refutes.
NSEL is facing pay-out obligation of its 24 members of Rs 5600 crore. With the third pay-out obligation scheduled for September 3, NSEL has collected just Rs 10.32 crore (as on August 31) against its pay-out commitment of Rs 174.72 crore. Thus, the exchange is heading for the third straight default.
