The Calcutta High Court today passed an order restraining four defaulting stock brokers of Calcutta Stock Exchange (CSE) from transferring and alienating their assets kept with banks and depository participants as well as immovable properties.
The order has come as a shot in arm for CSE, which is trying to recover outstanding dues from the four brokers, namely Dinesh Kumar Singhania, Harish Chandra Biyani, Ashok Kumar Poddar and Ratan Lal Poddar.
These brokers were responsible for the payment crisis which brought the bourse to its knees in March.
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A copy of the ex-parte order, given by justice Bhaskar Bhattacharya, was served to the city branches of a handful of banks where at least eight accounts of these brokers are maintaining "healthy" assets. The case will come up for hearing as a listed matter on Thursday.
Harish Chandra Biyani, a defaulter, said he had already assured the bourse authorities of his intention to pay back his outstanding dues. " A large quantity of my shares are kept with CSE, " he said.
However, Biyani did not spell out whether he would appeal against the order. Other defaulters could not be contacted. These four entities along with their 6 stock broking outfits owe over Rs 90 crore to the exchange. Of this, outstanding of their directly owned firms covered by today's order stand at over Rs 45 crore.
CSE sources said similar legal action would also be taken against the balance six defaulting firms shortly. However, no timeframe for this has been determined now, they said.
CSE members, especially small ones who were hit worst by the payment crisis, continued to be sceptical on whether these defaulters would cough up their outstanding. "They may buy more time by dragging the case to higher legal authorities," said a senior CSE member.
Members of the bourse were also critical about the delay on CSE's part to take legal recourse against the defaulters. CSE authorities, however, supported their delayed move saying that they wanted to recover the amount by other possible means before taking the help of the judiciary as the last resort.
Unable to meet the shortfall, the CSE authorities took recourse to the settlement guarantee fund and general reserves to keep the show running at the bourse.
The payment crisis, it can be mentioned, had forced elected members of the CSE board relinquish their position, which followed by constitution of a management sub-committee to monitor day-to-day functioning of the bourse.
The management sub-committee was constituted under the direct supervision of the markets regulator, Securities and Exchange Board of India.