MCX takes Mumbai police to court

Complains about alleged inaction and mala fide closure ofcases it filed

The Multi Commodity Exchange of India (MCX) has moved the Bombay High Court against alleged inaction by the Mumbai police on various complaints related to its erstwhile business partners and service providers.

Nearly eight months after transferring the complaints from one arm to another, the police has closed most of these cases without proper investigation, the bourse has alleged.

It wants the court to issue directions to the police's economic offences wing (EOW), one of the respondents, for a detailed and time-bound probe.

FUTILE COMPLAINT

• July 2013: NSEL payment crisis breaks out
   
• October 2013: FMC orders special audit into affairs of MCX by PwC
   
• April 2014: PwC gives report
   
• April 2014: MCX files complaints against various entities to CBI and EOW, Mumbai
   
• May 2014: CBI transfers complaints to EOW
   
• June 2014: EOW transfers complaints to local police station
   
• August 2014-Jan 2015: MCX executives assist cops in investigation
   
• February-March 2015: Closure letter filed in all complaints except one
   
• April-July 2015: Exchange writes to EOW and MIDC police, seeking reopening of probe
   
• July 2015: Moves high court

Source: MCX’s petition

In a petition filed in late July, the bourse has alleged it was a victim of various offences that caused a loss of Rs 77 crore. It had named 10 different entities and insiders in these complaints and alleged “large sums were misappropriated from the petitioner’s accounts and siphoned off through various entities under the garb of commercial contracts”.

Further, the writ alleged the petitioner was defrauded into making payments for bogus services, never provided; transactions were executed with and payments were made to non-existent entities; transactions were recorded in the books of account of the petitioner in the absence of underlying transactions; contracts having little or no business rationale for the petitioner were entered into for the economic benefit of the counter parties.

Since these offences were complex, these needed to be investigated by a competent agency such as the EOW. However, the latter had transferred it to the local area police station, MCX said in the petition.

The new management of the exchange came to know about the irregularities from the findings of PricewaterhouseCoopers (PwC), the forensic auditor appointed by Forward Markets Commission to probe the affairs of the commodity exchange, following a payment crisis in its then sister concern, National Spot Exchange. PwC came up with details about the exchange’s dealings with various entities.

The exchange, which got a new management after the crisis, filed complaints against these entities with the Central Bureau of Investigation (CBI) and the EOW in April 2014. Since EOW was already probing the NSEL matter, CBI transferred the complaints it received to the EOW in May that year. A month later, EOW further passed these on to Mumbai’s MIDC police station, the one with jurisdiction of the area where the bourse is located.

Over the next few months, the exchange officials had cooperated with the investigations at MIDC. However, in February and March this year, the MIDC police filed closure reports on all complaints except one, saying there was “no truth in the complaints and that the allegations were civil in nature”. The exchange said none of these closure letters gave details of any enquiry made and wondered how a common conclusion was arrived at in multiple complaints of a different nature.