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Noida-based IGL Finance, a large investor in National Spot Exchange Ltd (NSEL), has issued a notice to the bourse to wind up, creating fresh legal trouble for the beleaguered exchange that is fighting a plethora of law suits.
IGL Finance is a wholly owned subsidiary of India Glycols, a listed petrochemicals firm promoted by Uma Shankar Bhartia, and had invested in the paired contracts of the exchange in commodities such as sugar, raw wool and palm oil. The firm said so far, it had received only Rs 6.48 crore through NSEL’s 14 weekly settlements since the Rs 5,600-crore payment crisis broke out in July.
IGL said the exchange still owed Rs 148.2 crore. “This notice should be treated as statutory winding up under section 434 (1) (a) of the Companies Act, 1956,” said the notice, dated November 26.
In response to an email seeking comment, an NSEL spokesperson said, “NSEL has not received any notice from India Glycols. Hence, we cannot comment.”
“I hereby call upon the company, within three weeks from the date of receipt of this notice, to pay my member an amount of Rs 14,819.86 lakh, against my outstanding contracts…If the outstanding amounts are paid to my member within three weeks from the date of receipt of this notice, I am willing to waive interest payable on the value of contracts,” the company’s director said in the notice.
“A suit will be filed tomorrow,” a senior company executive told Business Standard.
Explaining the rationale behind the notice, IGL said NSEL acted as counterparty to the transactions executed on its platform and stood guarantor for the settlement of all contracts on its platform. “It is the legal obligation of the company (NSEL) to settle the contracts…It is precisely for this reason that it has undertaken to settle the pending contracts through scheduled payouts,” the notice said.
In August, NSEL had proposed a weekly payout cycle, spread across several months. But not much has resulted from this, as payments from borrowers have been erratic and mired in legal disputes. Some borrowers are behind bars and some are being interrogated by the Economic Offences Wing of the Mumbai Police.
IGL said NSEL had failed to pay the dues under the contracts to its broker, AUM Commodity Services, “due to which the broker has not paid the outstanding amounts to me”.
