MPID Court directs EOW to investigate former FMC chairman Ramesh Abhishek's role in NSEL case

Maharashtra Protection of Interest of Depositors (MPID) Court has directed the Economic Offences Wing, Mumbai, to investigate the involvement of former Forward Markets Commission chairman Ramesh Abhishek in the Rs 5,600-crore National Spot Exchange Ltd (NSEL) payment default crisis, the bourse said on Tuesday. EOW Mumbai has been asked to submit the report within 40 days in this regard.

An application was filed by NSEL on the backdrop that the EOW filed its final charge sheet in December 2022 but had not investigated the role of FMC and more so that of Abhishek in the NSEL case.

In its detailed representation to the EOW in 2020, NSEL highlighted several instances of negligence and failures on the part of Abhishek, which the agency did not investigate.

"We are hopeful that the investigation on the role of Abhishek will be fair and impartial and will unearth the motive behind the inactions," Neeraj Sharma, MD and CEO of NSEL, said in a statement.

The crisis was engineered by the ill advice of the former Forward Markets Commission (FMC) chairman to the Department of Consumer Affairs (DCA) that NSEL had violated certain conditions of exemption granted to it under FCRA, the statement claimed.

This resulted in the DCA issuing Show Cause Notice (SCN) to the exchange in April 2012. Despite a detailed reply to the SCN and a subsequent follow up, there was no decision on the SCN until July 2013, when the exchange was abruptly told to stop functioning, resulting in the payment default crisis.

The SCN till date remains unadjudicated, NSEL said.

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In August 2013, the Government gave power to FMC and in turn to Abhishek by way of Gazette Notification to solve and settle the crisis.

"However, none of the actions taken by Abhishek were towards resolving the crisis. In fact, the laidback attitude of Abhishek towards recovery resulted in siphoning off the monies by defaulters, making the recoveries from them difficult to repay the genuine claimants who are still awaiting for their legitimate dues even after nearly adecade," NSEL said.

Despite the EOW-Mumbai report on wrongdoings of brokers, Abhishek chose not to act against brokers, the bourse claimed.

"Ramesh Abhishek created, fuelled, and aggravated the NSEL crisis and did not solve it when it was solvable, thereby abdicating his regulatory duty leading to omissions of criminal nature on his part that caused wrongful loss to the investors and wrongful gains to the defaulters," NSEL said.

Earlier this month, the Special MPID court made seven entities, including certain directors of Anand Rathi Commodities, Geojit Comtrade and India Infoline Commodities, as accused in NSEL case. All the accused persons will face trial in the NSEL case.

The tally of the total accused so far in the case is 220 in 11 chargesheets have been filed by the EOW.