 "Investors' forum petitions HC")
Filed by six individual investors including the renowned brokerage firm Motilal Oswal Securities, and NIIF as a representative firm, the petition seeks an independent court-appointed investigation, fast court trial and which should be completed with a stipulated time of 90 days.
The writ was filed by individual investors including Johnny Ishwardas Kirpalani, Harish Devidas Thawani, Nikhil Khandelwal and companies like Watermark Systems (India), Goldcrest Capital Markets, Motilal Oswal Securities and NSEL Investors Forum (NIFF). The companies also acted as individual investors.
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The writ makes respondents as Ministry of Consumer Affairs, Enforcement Directorate, Forward Markets Commission (FMC), Warehousing Development and Regulatory Authority (WDRA), Serious Fraud Investigation Office (SFIO), EOW, NSEL, Financial Technologies (India), National Agricultural Cooperative Marketing Federation of India Ltd (Nafed), Jignesh Shah, Anjani Sinha and a host of other officials of FT group companies.
“During the last over 60 days since the NSEL crisis broke out we gathered information, met with end of government machineries and officials with an earnest request to look into the fraud. But, we got only one response from every places – did not you aware of that it (NSEL) was an unregulated exchange ?” said Sharad Kumar Saraf, chairman, NIIF.
NIIF filed a complaint with the economic offence wing (EOW) of the Mumbai Police last week. But, the complaint has not been converted into a first information report (FIR) until now. Therefore, this is the first official legal recourse sought by the NIIF since the NSEL crisis broke out mid-July.
Two separate PILs filed on the same issue in various courts in addition to another writ seeking monetizing of commodities underlying separately under e-series contracts for physical delivery by a group of investors filed in the Bombay High Court.
While, the cases filed earlier are scheduled for hearing on different dates the NIIF writ is scheduled for hearing next week.
The petition reads that 99% of the business of NSEL is fraudulent gives rise to a necessary inference that the entire company was set up to undertake fraudulent business and deliberately no processes were put in place by the management to ensure that no legitimate business is undertaken.
The minor legitimate business that is undertaken is only to create false confidence in the minds of the public to induce them to come and trade on NSEL so that they too can be duped.
“NSEL had misled the investors by falsely representing in unambiguous terms that it is NSEL which is the counterparty to the trades and the exchange monitors and supervises the quality and quantity of underlying commodities and further that the settlement and guarantee fund (SGF) is maintained by NSEL for the purpose of ensuring settlement of trades even where the counterparty has defaulted,” the writ said.
NIIF being an unregistered body has filed for its registration as NSEL Investors’ Association with around 600 members. Arun Dalmia, secretary of NIIF called for contributions as legal fees at 0.2% of investment from individual members and 0.8% from brokerages. Small investors with an investment below Rs 10 lakhs have been exempted from any legal fees.
With this, around 7,000 out of the total 13,000 NSEL investors will be free from any legal charges. A number of members, however, objected to legal fees which a group of others were ready to contrite more.