2017.pdf

1. The le meeting to review the action taken on the recommendations of the Special
Team of Secretaries, which had been set up to examine the violation of laws and
regulations by NSEL or any associated company or any of the participants, was held at
3:00 PM on 05.04.2017 in the Committee Room No. 131A, North Block, New Delhi
under the Chairmanship of Secretary (Economic Affairs). The list of participants is
annexed.
Summary Record of Discussion
The Sixteenth meeting to review the action taken on the recommendations of the
Special Team of Secretaries, which had been set up to examine the violation of laws and
regulations by NSEL or any associated company or any of the participants, was held at 3:00
PM on 05.04.2017 in the Committee Room No. 131A, North Block, New Delhi under the
Chairmanship of Secretary (Economic Affairs). The list of participants is annexed.
2. Initiating the dikussion, Secretary (Economic Affairs) desired the updated status
from the Ministry of Corporate Affairs (MCA). Shri Pritam Singh, Addl. Secretary, MCA
informed in brief about the case of the merger of NSEL with FTIL is pending in the Bombay
High Court. The next date of hearing is 18th April, 2017. The interest of the Government is
being defended through Mr. Khambata, ASG and other counsels. The Chairman suggested
MCA to consider requesting Bombay High Court for hearing of the case on day-to-day basis
until the conclusion. Shri Singh informed that MCA has been petitioning on the same line,
however, without any success.
3. With regard to the case of the change in the management of FTIL, Shri Singh
informed that the main petition in the National Company Law Tribunal (NCLT) is ready for
final hearing as the pleadings have been completed. In the meanwhile, FTIL has moved an
appeal before the National Company Law Appellate Tribunal (NCLAT). NCLAT has
allowed the appeal, set aside the order dated 6.12.2016 (whose order and contents of the
order?) and has directed that the matter be transferred to the Chennai Bench of NCLAT. The
date for hearing is yet to be fixed. The Chairman desired to know who is defending the
interest of the Government. Shri Singh replied that Addl. Solicitor General Chennai is
defending the case.
4. The Chairman desired that the MCA should have a team of two or three officers
dedicated for dealing with the two above mentioned cases relating to NSEL/FTIL. who may
be instructed to deal with the case expeditiously as a special assignment.
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2. 5. The Chairman desire to know if the MCA has taken steps for correcting the imbalance"
in the composition of the five member committee consisting of two independent dierectors and
Managing Director of FTIL, one ex-Supreme Court Judge (with Veto power) and one Central
Government Nominee ( with Veto power) to decide upon the matters relating to the disposal
of the assets of FTIL for the purpose of compliance of the orders of any of the regulators. The
reason being that the inclusion of three directors of FTIL, by virtue of their being interested
parties, prima-facia, does not appear to be in the interest of the NSEL investors. In this regard
a decision had been taken earlier (in the review meeting held on 19.07.2016). He expressed
that by now MCA may have taken steps for setting right the seemingly irregularity in the
composition of the said committee.
6. Shri Nilimesh Baruah, Director, informed that Serious Fraud Investigation Office
(SFIO), in compliance of the observations of the three Members' Committee of the Bombay
High Court, has initiated the process of verification of genuineness of NSEL investors. Out of
13000 NSEL investors from whom their confirmation had been sought, 8000 investors have
been replied so far. In this regard, SFIO has sought relevant information from other agencies
investigating in to the matter. However, except SEBI, it is yet to receive information from the
other agencies. The Chairman directed that a letter may be addressed to the Department of
Revenue to part with the requisite information and other agencies being represented in the
meeting may also share the requisite information at the earliest.
7. As desired by the Chairman, Shri Baruah explained about the paired contracts on
NSEL. He said that out of the six types of contracts on NSEL only paired contract was most
popular, in which, any client would buy on T+2 basis and sell the same commodities on T+25
basis. The NSEL crisis occurred because of the forward lag, i.e., T+25 failed to deliver on its
promise in terms of commodity or money. These contracts were designed in such a manner
that investors will always gain and sellers will always loose. It is under this background,
investments of 13000 NSEL investors were lost. No VAT was paid by any of the investor.
Primarily electronic warehouse receipts were being traded and all warehouses were owned by
traders. Shri Baruah expressed hope that SFIO will be able to complete the process of
verification of bonafide on the NSEL investors within three months.
8. Shri Parag Basu, CGM informed that, on the basis of auditors' report, Securities and
Exchange Board .of India (SEBI) has initiated enquiry proceedings against five commodity
derivatives brokers, who have reportedly defaulted in the NSEL case. SEBI had appointed a
bench of Designated Authorities (DA) and DA have issued Show Cause Notice in the matter.
The reply of the same has been received, it is being examined and enquiry reports are likely
to be finalized and submitted very soon, on the basis of which final order shall be passed by
the Whole-Time Member, SEBI.
9. Shri Karnal Singh, Director has informed that on the issue of overlapping jurisdiction
of Economic Offence Wing (EOW). Mumbai Police under the Maharashtra Protection of
Interests of Depositors (in Financial Establishments) Act, 1999 (MPID Act) and the
Enforcement Directorate under Prevention of Money Laundering Act, 2002 (PMLA) and also
with regard to attachment of properties. a meeting was convened by the Ministry of Law and
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3. offenders. SFIO was agreed to take initiative of coordinate the task of cloning three copies of
the hard disk of the NSEL server within one week positively.
15. Shri Salunke has informed that three chargesheets have already been filed and final
chargesheet is in the advance stage of being finalized and it is hoped that the same shall be
filed within a period of three months. The Chairman, however, desired that EOW may efforts
to file the same in a period of preferably two months instead.
16. On being asked as to whether all the accused have been arrested, Shri Salunke
informed that seven persons are yet to be arrested. Out of these five have taken anticipatory
bail and two (of Punjab) are absconding. The Chairman desired that the process for vacating
the anticipatory bail may be expedited and efforts may be made to trace out the remaining
two absconders. Shri Salunke added that two full time competent authorities have been
appointed and two forensic auditors have been engaged. He also informed that a separate
Court has been designated with additional responsibility of some civil matters. TheiChairman
expressed dismay over this because he underlined that the decision for Government of
Maharashtra setting up a court for hearing exclusively NSEL related cases is yet to be
addressed.
17. Shri Sanjay Bansal, Additional Director informed that penalty of Rs. 1.66 Crores has
been imposed on NSEL, which has been challenged in the Tribunal. FIU has engaged the
services of Shri Niraj Krishan Kaul, Additional Solicitor General (ASG) to defend the interest
of FIU. The next date of hearing of the case was earlier scheduled to be 06.4.2017. However
on account of ASG being preoccupied with the assignment of defending the interest of
Government in Babri Masjid Case on the same date, he would appeal to the Tribunal to hear
the case on 12.04.2017 instead.
18. As regards actions against key officials of NSEL, Shri Bansal informed that extent of
the responsibility of these officials is being determined and when concluded, further action
will be initiated. The Chairman directed that the process may be concluded at the earliest.
19. Shri Jasbir Singh, Superintended has informed that CBI is still waiting prosecution
sanctions in respect of two officers from the Ministry of Corporate Affairs and one officer
from DoPT.
20. As regards pending issues related to the Department of Revenue / CBDT, Shri Karnal
Singh informed that he will inform the Department. of Revenue to report to. the. Committee,
about the extent of income tax ,eyasIpil or action taken to realize the same in, the NSEL case.
As regards income tax evasion either in the process of client code modifications or
transactions at NSEL platform, as already decided the action will be taken once a cloned copy
of hard disk is obtained EOW. Mumbai Police.
21. The meeting ended with the thanks to the Chairman.
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5. Ministry of Finance
Department of Economic Affairs
(Commodity Derivatives Markets Division)
MINUTES OF THE REVIEW MEETING ON THE IMPLEMENTATION OF THE
RECOMMENDATIONS OF THE SPECIAL TEAM OF SECRETARIES ON THE
NATIONAL SPOT EXCHANGE LIMITED PAYMENT CRISIS RELATED ISSUES
HELD AT 330 PM ON 21sTAPRIL, 2017 IN ROOM NO. 41, NORTH BLOCK,
NEW DELHI UNDER THE CHAIRMANSHIP OF HON'BLE MINISTER OF
STATE(FINANCE AND CORPORATE AFFAIRS)
The 17th meeting to review the action taken on the recommendations of the
Special Team of Secretaries, which had been set up to examine the violation of laws
and regulations by the National Spot Exchange Limited (NSEL) or any associated
company or any of the participants, was held at 3.30 PM on 21.04.2017 in Room
No.41, North Block, New Delhi under the Chairmanship of Hon'ble Minister of State
(Finance and Corporate Affairs). The list of participants is annexed.
2. After welcoming the participants, Dr. Shashank Saksena, Adviser (Capital
Markets) informed that two review meetings have been held under the Chairmanship
of Hon'ble Minister of State (Finance and Corporate Affairs), on 25.10.2016 and
15.11.2016. He then proposed that actions taken by the agencies concerned may be
reviewed. The Chairman while agreeing to it, informed that he has discussed the
matter with Hon'ble Chief Minister of Maharashtra in Bhubaneshwar, where his
attention was drawn to the slow progress made in the NSEL related matter. He
expressed concern that despite several meetings organised so far, no significant
progress has been noticed in the matter of bringing any major relief to the NSEL
investors.
3. Shri S. Jayakumar, Dy. Commissioner of Police, Economic Offence
Wing(EoW), Mumbai Police informed that so far, EOW has attached 822 properties
worth Rs. 4353 crores. He furnished details of the auctioning of the two properties—
one at Delhi and another at Bikaner measuring 500 acres of land, with a reserve
price of Rs. 280 crores and Rs. 45 crores respectively, which could not be sold
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6. despite being put on auction twice. It is expected that about Rs. 45 crores could be
realised by way of the sale of the property at Bikaner. As decided in the earlier
review meeting held on 15.11.2016, the offer of the property at Bikaner has been
made to the Urban Improvement Trust (UIT), Bikaner and most probably within ten
days, papers of land ownership shall also be made over to the Trust. In the
meanwhile, their response is awaited.
4. The Chairman, however, expressed apprehension about the possibility of the
sale of the property at Bikaner, because it has separately been brought to his notice
that the land at Bikaner is perhaps disputed one and as per the law of the land, the
Government is likely to take it over without granting any compensation because the
title of the land held by its present owner does not appear to be in accordance with
the provision of the Urban Land Ceiling Act on account of its being beyond the
permissible ceiling of the land holding' under the Act. He desired that before
proceeding further in the matter of selling the property to UIT, EoW should first
verify the facts about the title of the land.
5. Shri Jayakumar informed that the property at Delhi has been allowed by the
Court under the Maharashtra Protection of Interest of Depositors (in Financial
Establishment) Act, 1999 (MPID Act) to be developed by its present owner so that
the developed property could fetch the sum which could be utilised for refunding to
the NSEL investors. However, as already decided earlier, the EoW may instead
consider petitioning to the Court that the property be handed over to DDA and not
allowed to be in possession of the present owner, who has violated the provisions of
the MPID Act.
6. Shri Jayakumar added that the Court under the MPID Act has ordered to
auction properties worth Rs. 347 crores - two properties of Mohan India Pvt. Ltd.
and 7 properties of Swastik Overseas Corporation and 5 properties of NCS Sugars
Pvt. Ltd. The Chairman desired that the said properties may be auctioned in an
expeditious manner.
7. Shri Jayakumar further added that so far, attachment of 12 more properties
has been made absolute by the Court under the MPID Act, which are owned by two
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7. defaulters — M/s Mohan India Private Ltd. and M/s. Swastik Overseas Corporation.
Besides, shares of LOIL, Swastik Overseas Corporation, FTIL and MIs N K Protein
Ltd. have also been attached, which can be auctioned.
8. The Chairman emphasised that the Government of Maharashtra needs to take
all possible steps to auction the attached properties after completing the procedural
formalities on priority so that it may give a message to the public that the
Government is serious...about recovering the lost investment and repaying to the
investors. As of now, it appears that effective steps are not being taken to avoid the
delay in auctioning the attached properties, which is evident from the fact that
attachment of even those properties which was made way back vide the initial
Notifications of the Government of Maharashtra, are yet to be made absolute, let
alone selling it right away. He expressed concern that even though considerable time
has passed since the organisation of the Joint Review Meeting under the Co-
Chairmanship of Hon'ble Chief Minister, Maharashtra and himself at Mumbai in
November, 2016, no significant progress appears to have been witnessed in the
sense that EOW/Government of Maharashtra is yet to take the requisite steps to
recover/refund the lost investments in the NSEL case.
9. Shri Jayakumar further added that as of now, there are two Competent
Authorities in position under the MPID Act. However, they are also looking after
other civil cases in addition. He informed that in consultation with the Finance
Division, Government of Maharashtra is actively considering creation of two posts of
Competent Authorities on a full-time basis. The Chairman remarked that since a long
time has already elapsed in the consideration itself, it would be highly desirable if
instead, a decision in the matter is taken immediately, preferably within a period of
ten days so that the long pending appointments could be made without further delay
and cases of attachment/auction of the attached properties could be processed
smoothly and efficiently.
10. As regards creation of a designated MPID Court for hearing NSEL payment
crisis related cases exclusively, Shri Jayakumar informed that Bombay High Court
has been requested thorugh a letter in this regard and the Government is awaiting
their response. The Chairman suggested that the Chief Secretary, Government of
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8. Maharashtra may consider seeking an appointment with Hon'ble Chief Justice of
Bombay High Court for meeting him personally within 15 days for explaining the
gravity of the situation and request him to help setting up of a designated MPID
Court exclusively for NSEL related cases to expedite the process of recovery and
restitution of lost money to investors. This appears important in the face of the fact
that the credibility of the Government is at stake, which is facing a lot of criticism at
various fora due to persistent delay in the matter.
11. As regards filing of final charge sheet in this case, Shri Jayakumar informed
that EoW is already working on it and it is hoped that they would be able to file the
final charge sheet in this case within the next three months. He brought to the
notice of the Chairman that avoidable delay in filing the charge sheet has been
encountered in the past because of a few accused persons still remaining at large or
on anticipatory bail. Efforts put in by EoW against granting of such bail has not met
with any success so far because of the direction of Hon'ble Supreme Court, which
provides for not stopping the right of citizens to seek bail. However, EoW will
attempt further to get bails of these accused persons cancelled by the Court.
Besides, for those who are still to be rounded up, EoW will dispatch a team of police
personnel to nab those accused persons presumably located in Punjab, who have
been evading arrest so far. The Chairman desired that some tangible outcomes may
be achieved expeditiously.
12. Shri Jayakumar added that so far money trail of 18 defaulters has come to
the light. Two forensic auditors have already been engaged, who are carrying out
forensic audit on a day-to-day basis. It has already completed audit of 13 accused
companies and now it is auditing NSEL, FTIL and IBMA. It is hoped that they would
be able to complete their task within a period of two months.
13. In so far as having a realistic valuation of the attached property is concerned,
Shri Jayakumar informed that a letter has been sent to the ACS Home, Government
of Maharashtra for appointing HDFC Realty Company for valuation of attached
properites, decision on which is still awaited.
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9. 14. The question of establishing an institutional framevvork for facilitating
expeditious auction of the attached properties already made absolute was raised. It
was also discussed if this work would also be done in-house by the Government. Shri
Jayakumar responded that it would be explored if such work could be outsourced to
any external agency of repute through an objective and transparent procurement
process.
15. Shri Jayakumar.sidted that the Government of Maharashtra has constituted a
three Member Special Task Force under the Chairmanship of the Commissioner
(Sales Tax) with the Commissioner(Transport) and the Joint Commissioner of Police
(Shri Praveen Salunke), EoW as Members to review the actions taken by EoW and to
prepare a time-bound action plan for the repayment to the investors. He said that so
far, two meetings of the Task Force have already taken place and the 3rd meeting is
scheduled to be held on 27.04.2017. The Chairman desired that he may be apprised
of the developments promptly after the third meeting.
16. Dr. Shashank Saksena, Adviser (Capital Markets) invited attention of the
Chairman about the decision taken place in the 16th Review Meting in accordance
with which, the Department of Revenue/CBDT as well as other agencies concerned
were to share the requisite information, which has been sought from them by the
Serious Fraud Investigation Office (SFIO). Shri Nilimesh Baruah, Director, SFIO
added that as decided in the last meeting, he was to receive an image of the hard
disk of the server of the NSEL from EoW, which was also required to be shared with
the Department of Revenue, ED and SEBI. However, he is yet to obtain the same
from EoW. The Chairman desired that the requisite information may be made over
to SFIO within a period of seven days. Shri Jayakumar assured Shri Baruah that he
would extend prompt help in the replication of the Hard Disk, whenever SFIO
approaches EOW for the purpose.
17. Shri Pritam Singh, Additional Secretary, Ministry of Corporate Affairs informed
that the Ministry has engaged reputed lawyers to defend the interest of the
Government in the cases relating to the merger issues and governance reforms of
NSEL. The case against the merger of NSEL with FTIL was slated to be heard in the
Court on 18.04.2017. However, due to sudden demise of one of the relatives of the
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10. Judge concerned, the hearing could not take place. No fresh date for the next
hearing has been fixed. Therefore, the Ministry of Corporate Affairs has no option,
but to wait for fixation of the next date of hearing in the Court. In view of the fact
that no significant progress has been observed on this front during the last 3 - 4
months, the Chairman desired that Ministry of Corporate Affairs should take requisite
steps to make the merger a reality' without further delay, which, in turn, would
facilitate requisite relief to the investors, whose monies ,are stuck up owing to the
NSEL payment and settlement crisis.
18. Shri Parag Basu, Chief General Manager, SEBI informed that the enquiry
proceedings against those five brokers, whose names figure in the report of EoW,
Mumbai Police have been completed by the Designated Authorities and they have
submitted Enquiry Reports with recommendations to the Competent: Authority, with
whose approval further action shall be taken as per the process laid down for the
purpose under law.
19. Shri Karnal Singh, Director, Enforcement Directorate (ED) informed that ED
has been taking action in the matter with due diligence. Out of 25 defaulting
brokers, action against 21 has already been initiated. The Chairman desired to know
whether money from the attachments made by ED can be paid to the NSEL investors
directly. Shri Singh stated that as per the existing law, money realised from the
disposal of the properties attached by ED cannot be refunded to the investors
directly, but has to wait till the conviction under the Prevention of Money-laundering
Act, 2002 (PMLA) takes place. However, amendments to PMLA are under
consideration to make this happen. Shri B. N. Sharma, Additional Secretary,
Department of Revenue informed that amendment in this regard is proposed to be
taken up for approval in the following Budget Session of the Parliament. The
proposed amendment shall be a part of the Finance Bill and it would be possible to
give effect to the amendments from a retrospective date. The amendment shall
enable direct and speedier refund of the proceeds out of the attached properties of
defaulters, to the NSEL investors, even without waiting for final conviction under
PM LA.
20. Shri Karnal Singh added that the issue of overlapping actions of attachments
of properties by ED as well as EoW, Mumbai Police wa considered in a meeting
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11. taken by the Law Secretary. On the basis of the opinion of the Ministry of Law that
ED would be well within its right to attach property and that the provisions of PMLA
will prevail over the MPID Act, the Department of Revenue has directed that ED may
go ahead with the attachment of properties of defaulters. Accordingly, properties
worth Rs. 2505 Crores [including property worth Rs.414 cr. of LOIL attached after
receiving the clarification from the Secretary(Revenue)] have so far been attached.
He also expressed satisfaction over the fact that the Chandigarh High Court has
given a decision in favour of the attachments being made by ED, which has now
paved the way for further action in the matter. ED had 76 court cases against it in
the past, however, the number has now gone down considerably in the recent past.
He further added that so far, attached properties worth Rs. 1985 crores has been
made absolute by the Court under PMLA.
21. The Chairman reiterated that a lot of time has already elaspsed in the
investigation/examination. Therefore, now all the agencies need to conclude their
action at the earliest to bring about the much needed relief to the NSEL investors
and persons responsible for the NSEL payment and settlement crisis may be
convicted without further loss of time.
22. The meeting ended with the vote of thanks to the Chair.
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12. Annex
LIST OF PARTICIPANTS
Shri Arjun P.rn Meghwal,
Minister of State for Finance and Corporate Affairs Chairman
Ministry of Finance, Department of Economic Affairs
1. Shri Dinesh Sharma, SS (EA)
2. Dr. Shashank Saksena, Adviser(Capital Markets)
3. Shri K. Ni. Mishra, Deputy Secretary (Commodity Derivatives Markets)
Ministry of Finance, Department of Revenue
Shri B.N. Sharma, Additional Secretary (Revenue)
Ministry of Corporate Affairs
1. Shri Pritam Singh, Additional Secretary
2. Shri Narender Kumar Bhola, Director General
3. Shri Sanjay Shorey, Jt. Director
4. Shri E. Nagachandran, Deputy Director
Serious Fraud Investigation Office.
Shri Nilimesh Baurah, Director
Financial Intelligence Unit, India
Shri P.K. Mishra, Director
Securities and Exchange Board of India
1. Shri Parag Basu, Chief General Manager
2. Shri D. Rajesh Kumar, Deputy General Manager
Mumbai Police
1. Shri Praveen Salunke, Joint Commisioner of Police, EoW
2. Shri Jayakumar, Deputy Commisioner of Police, EoW
Enforcement Directorate
1. Shri Karnal Singh, Director
2. Shri Vineet Agarwal, Special Director
3. Shri Satyabrata Kumar, Joint Director
Central Bureau of Investigation
Shri Jasbir Singh, Superintendent of Police
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14. ***
EIGHTEENTH REVIEW MEETING ON THE IMPLEMENTATION OF THE
RECOMMENDATIONS OF THE SPECIAL TEAM OF SECRETARIES ON NATIONAL
SPOT EXCHANGE LIMITED RELATED CASES HELD AT 5.00 PM ON 08.09.2017 IN
ROOM NO. 131-A, NORTH BLOCK, NEW DELHI UNDER THE CHAIRMANSHIP OF
SECRETARY (ECONOMIC AFFAIRS)
The 18th meeting to review the action taken on the recommendations of the Special
Team of Secretaries, which had been set up to examine the violation of laws and regulations
by National Spot Exchange Limited (NSEL) or any associated company or any five
participants, was held at 05.00 PM on 08.09.2017 in R. No. 131-A, North Block, New Delhi
under the chairmanship of Shri Subhash Chandra Garg, Secretary (Economic Affairs). The
list of participants is annexed.
2. After welcoming the participants, Dr. Shashank Saksena, Adviser (Capital Markets)
informed that seventeen meetings have taken place so far under the Chairmanship of
Secretary (Economic Affairs) and Hon'ble MoS (Finance) to review the action taken by the
agencies probing NSEL related matter. He requested the Chairman to review the agency-
wise progress of action taken with the Economic Offences Wing (EoW) Mumbai Police being
the first.
3. Shri Ashutosh Dumbare, Joint Commissioner of Police, EoW, Mumbai Police informed
that on the complaint of Mr. Saraf, a case was registered in 2013 under various sections of
the Maharashtra Protection of Interest of Depositors (in Financial Establishment) Act, 1999
(MPID Act) in the NSEL payment crisis case in which an amount of approximately Rs. 5647
crores of investment on the NSEL platform of about 13000 investors was lost. Out of which,
so far, Rs. 527.19 Crores have been disbursed to the investors and 608 investors have been
paid back fully. Directors, Key Management persons of NSEL, Financial Technologies (India)
Limited (FTIL), Trading Borrowers / Trading Members / Brokers of NSEL and others have
been made accused persons in the case. Total 890 properties, including cash and securities
of NSEL defaulters worth approx Rs. 8548.64 crores have so far been seized.
4. For apprising the process related to the attachment of properties of defaulters, Shri
Sudhir Shrivastava, Additional Chief Secretary (Home), Government of Maharashtra (GoM),
Home Department informed that under the provision of MPID Act, after the registration of
any case under the provision of the Act, properties of the defaulters can be attached. The
attachment could be of two types- (i) Civil attachment and (ii) Penal attachment. For the
Civil category, State Government on the recommendation of the investigating agencies
concerned, attaches the properties of the accused persons. The attached properties are then
made absolute with the approval of the MPID Court. As regards the types of assets seized
by EOW it was observed that presently the focus is on immovable property. S(EA) advised to
categorise each of the assets seized and provide an action plan for each such category.
5. Shri Ashutosh Dumbare informed that 3 chargesheets have already been filed. As
for the follow up on the decisions taken in the Review Meeting held on 15.11.2016, he
informed that the Urban Improvement Trust (urn, Bikaner has replied to EOW that a legal
1

15. dispute is pending regarding the attached property at Bikaner. Therefore, UIT has not been
able to take over the said property. For exploring the possibility of the sale of this property
at Bikaner, EOW need first to verify the title of the land. Therefore, HDFC Realty has been
appointed by GoM to evaluate, auction and sale the properties. The property at Delhi had
been allowed by the Court to be developed by its present owner (defaulter) so that the
developed property could fetch the sum, which could be utilised for refunding to the NSEL
investors. However, as already decided earlier that the property be handed over to DDA
instead and not allowed to be in possession of the present owner, who has violated the
provisions of the MPID Act, EOW had filed M.A. No. 796/17 in MPID Court on 20.06.2017
for vacating the earlier order of the Court in respect of this property. The application so filed
is still pending with the Court and the next date of hearing is 19.09.2017.
6. As regards decision taken in the last meeting for expeditiously auctioning properties
worth Rs. 347 crores namely, 2 properties of M/s. Mohan India Pvt. Ltd., 7 properties of
M/s. Swastik Overseas Corporation and 5 properties of NCS Sugar Pvt. Ltd., the said 9
properties of M/s Swastik and M/s Mohan India have been made absolute. However, M/s.
NCS Sugar Pvt. Ltd. have filed objections in respect of their 5 properties. HDFC realty has
completed valuation of these 9 properties. Application for permission to re-auction the said
properties has been filed with the competent authority. The next date of hearing is on
18.09.2017.
7. Shri Ashutosh Dumbare further added that the two accused-Daljeet Singh and Jaspal
Singh, Sirsa, Haryana (Namdhari Group) are still wanted. A team of EOW officers was to be
sent in August to Haryana but the plan was postponed due to Law and Order situation and
will be sent again in September. Other two wanted accused - Balbeer Singh Uppal and
Janakraj Singh Uppal (LOIL Group) have been granted "No Coercive Action" order by City
Civil Court of Khamanon, Fatehgarh Sahib district, Punjab. GoM has appointed Addl. District
Attorney for preferring an appeal against order of City Civil Court Khamanon. Affidavits have
already been filed and orders are expected by 18.09.2017.
8. With regard to the filing of the final chargesheet, Shri Ashutosh Dumbare added that
at present, forensic audit is in progress and expected to be completed in next two months
as mandated-by-the Spl. MPID Court and digital forensic audit-which-started in June, 2017 is
expected to be completed in next three months. After completion of these audits, tying of
loose ends thereafter, making further arrests and recording necessary statements so as to
collect sufficient evidence against the accused, final charge-sheet will be filed expeditiously.
So far, the money trail of 19 defaulter companies has already been completed. The money
trail of the remaining 2 defaulter companies and Forensic Audit of remaining 700 plus
beneficiaries are going to be completed early.
9. HDFC Realty Ltd. was appointed by the Government of Maharashtra on 19.05.2017
for valuation, auction and sale of the attached properties. As discussed in the earlier review
meetings, SFIO was provided with a soft copy of all charge-sheets and a copy of the
statement of accused persons on 14.06.2017. AD, SFIO has been advised to make available
hard disks of 40 TB capacity for copying the mirror image of the NSEL server.
10. Shri Asutosh Dumbare added that hearing of objections of borrowers started on 8th
May 2017 in the MPID Court and attachment of 9 properties have been made absolute by
the Court. Till date replies in 26 objections have been filed in the MPID Court, Mumbai.
HDFC Reality Ltd., which has been appointed for valuation and auction of properties, has
already submitted a valuation report of 9 properties in respect of which the orders of the
attachment have been made absolute. An exclusive Competent Authority has been
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16. appointed on 04.07.2017 for auction and sale of attached properties. The title verification of
attached properties has been initiated. The applications of investors for return of property
have been invited and the data are being processed. The notices in the process of making
attachment of properties absolute were issued to eight farmers from Gujarat in whose name
lands were purchased by accused Rajiv Todi (M/s. Swastik Overseas Pvt Ltd.). Prioritizing of
MPID Court applications has been done with emphasis of making attachment of as .many
properties absolute as possible. The Application has been moved in MPID Court by the
Competent Authority for re-auction of absolute properties, based on HDFC Realty Report.
11. As regards the court cases, 45 M.A.s, 130 Objections are under consideration in the
Special MPID Court, Mumbai. 11 Writ Petitions filed by by FTIL are pending for hearing. 2
appeals by borrowers and constitutional validity of MPID Act, challenged by FTIL, are before
pending before the Bombay High Court. Nine Writ Petitions and applications are pending
before Punjab and Haryana, High Court at Chandigarh. Besides, in two Civil Suits filed by
LOIL Group, Ex-parte order has been passed in August, 2014 by the Court of Civil Judge
(Senior Division), Fatehgarh Sahib district, Punjab for "No Coercive Action". Shri Suvir
Sehgal, Additional Attorney General, Chandigarh, UT has been appointed to deal with the
matters pertaining to Punjab and Haryana High Court on 08.08.2017. The hearing has been
completed on 31.08.2017 and the orders are expected on 08.09.2017. Besides, Assistant
District Attorney has been appointed to appear on behalf of the Government of Maharashtra.
The application for vacating the Ex-parte stay order has been filed in the Khamanon Court
on 31.08.2017. The order of the court is expected on 18.09.2017. In addition, Advocate
Darius Khambatta, Ex—Attorney General, Maharashta State has been appointed as a special
prosecutor in Mumbai High Court on 24.08.2017 and the Addi. Special Public Prosecutor has
been appointed for expeditious disposal in MPID Court.
12. As for the progress made after the last Review Meeting held on 21.04.17, the
Digital Forensic Auditor, M/s. Mahindra Defence System Ltd., has been appointed and digital
forensic audit has started. The Forensic Audit Team has prepared an interim report of
findings of business transactions of M/s. NSEL, M/s. FTIL, M/s. N. K. Proteins, and the
accused persons - Anjani Sinha and Jignesh Shah. The Forensic Audit concerning money trail
of 16 accused borrowers / companies is complete. Based on interim reports of Forensic
Auditors, furtherinvestigation pertaining to beneficiaries is in progress.Based on the report
of Forensic Auditors, 42 accounts of beneficiaries have been frozen and letters have been
issued to 22 banks for freezing accounts of beneficiaries of P.D. Agro Processors.
13. The verification and transfer of funds of attached accounts have been completed and
till date, Rs.17,30,52,231/- have been transferred to the account of the Competent
Authority. Also an amount of Rs. 4,42,54,221/- has been transferred to the NSEL Escrow
account.
14. As regards the proposed plan of investigation, the EoW, Mumbai Police intend to
take the following further actions:-
(i) To complete Forensic Audit and Digital Forensic Audit by October, 2017 as mandated
by MPID Court;
(ii) To make attachment of 25 more properties of M/s. MSR Food Processing, M/s.
Mohan India Ltd. and M/s. Swastik Overseas Corporation absolute within two
months;
(iii) To complete the title verification of all properties expeditiously;
3

17. (iv) To investigate the role of brokers;
(v) To complete money trail of M/s. Vimladevi Agrotech and M/s. Namdhari Rice and
General Mills;
(vi) To identify the assets of the beneficiaries and start the process of attachment;
(vii) To submit at least 20 replies per month in objections filed by accused in MPID Court;
(viii) To recover the proceeds of crime of M/s. Mohan India Pvt. Ltd. from the Income Tax
Department, New Delhi, to verify actual investors with the help of the Serious Fraud
Investigation Office;
(ix) To complete the investigation as early as possible and submit charge sheet and to
reimburse money to the investors through refund cell of EoW, Mumbai Police.
15. With regard to the challenges ahead, Shri Asutosh Dumbare informed that several
banks have created the security interest under the SARFAESI Act, 2002 in respect of many
properties attached under MPID Act. The hurdles are created by the accused persons by
abusing legal means like Writ Petitions, e.g., the accused persons have filed various Writ
Petitions in various High Courts against the decisions, investigation, provision and
jurisdiction of the Special MPID Court. In addition, challenges lie ahead in making the
attachment of the properties absolute and auction thereof, as the accused persons have
been raising objections to the attachment of the properties and hearing of the objections is
time-consuming.
16. Shri Asutosh Dumbare further informed that Dy. Commissioner (Investigation),
Income Tax, New Delhi has seized crime proceeds of Rs. 59 crores of M/s. Mohan India Ltd.
The MPID Court has ordered in 2013 the Dy. Commissioner (Investigation), Income Tax,
New Delhi to deposit the said amount to NSEL Escrow Account in Axis bank, which is still
pending. Besides, the NSEL Escrow account carrying Rs. 18 Crores of crime proceeds has
been frozen by EoW, New Delhi -A-request letter to de-freeze the account has been sent-and
being followed up with EoW, New Delhi. There is an overlapping of properties of EoW,
Mumbai Police and the Enforcement Directorate (ED) as the ED also attached a total 67
properties which had been attached by EoW, Mumbai Police. Lastly, the disbursement of
the money to investors need be done after proper verification of their documents.
17. While taking note of the progress made in the recent past, the Chairman hoped that
the auction of the properties and filing of the final charge sheet in this case would be
ensured by the Government of Maharashtra and EoW, Mumbai Police in a definite time
period. The Government of Maharashtra also need to consider fixing a definite timeline for
auctioning the attached properties (immovable properties, cash, securities, physical
commodities, etc.) in whatever best manner they could, including strategising inter-se
priority in the matter of the disposal of such properties, based on the ease of disposal (from
category 1 to category 5) as intimated by Shri Asutosh Dumbare. Besides, they may make
concerted effort to tide over any legal hurdle coming in the way of the expeditious relief to
the investors. He asked the Government of Maharashtra and EoW, Mumbai Police to provide
the complete details of the properties, category-wise (immovable property, securities and
cash), and the strategy of utilizing that to repay to the investors.
4

18. 18. Shri Karnal Singh, Director, Enforcement Directorate, informed that 26 searches and
10 survey operations have been carried out under the provisions of the Prevention of Money
Laundering Act, 2002 (PMLA) till date. 24 provisional attachments orders against 18
defaulting members and M/s 63 Moons Technologies India Limited (formerly FTIL) have
been issued till date in respect of the proceeds of crime identified under PMLA involving a
total value of the assets to the tune of Rs. 2700/- crore and out of these, attachment orders
having value of Rs. 2091 crores have already been confirmed by the Hon'ble Adjudicating
Authority, PMLA, New Delhi. ED has attached proceeds of crime totalling to Rs. 1254 crore
pertaining to FTIL and NSEL. Further identification of proceeds of crime in respect of NSEL,
FTIL and other defaulters is in progress. A Prosecution Complaint is filed before the Hon'ble
Judge, City Civil Court and Additional Sessions Judge, Greater Bombay on 30.03.2015
against NSEL and 67 other accused persons under PMLA. The prosecution complaint
provides details of money trail amounting to Rs. 3721.22 crore. As per the discussion in the
Review Meetings, ED has requested the Principal Judge, Sessions Court, Mumbai to transfer
the PMLA case bearing 'number Special PMLA Case No. 04/2015 to the Designated Court
under MPID Act, which is also a Sessions Court, so that trial of offences under MPID Act and
PMLA could be filed in the same court. The same has been allowed by the Sessions Court,
Mumbai and the Special PMLA Case No. 04/2015 has now been transferred to the
designated Court under MPID Act. However, the trial in the matter could yet not be started
as six (6) accused have not surrendered in the Special PMLA Court.
19. For addressing the issue of the overlap of investigative jurisdictions between the ED
and the EoW, Mumbai Police, it was decided that the matter may be taken up with the
Ministry of Law for clarification. Accordingly, the matter was referred by ED to the Ministry
of Law. A meeting in this regard, was held on 12.01.2017 in the office of the Law Secretary.
The Ministry of Law later opined vide letter dated 19.01.2017 that since the scope and ambit
of PMLA is wider than that of MPID Act and being later legislation, in case of conflict
between the two, the provisions of PMLA will prevail over those of the MPID Act. The ACS,
Government of Maharashtra and Shri Asutosh Dumbare did not agree to this position and
requested that MPID Court process should be allowed to go through as it has best chances
of recovering the misappropriated money through the use of properties seized.
20. There are legal hurdles in respect_of_the action taken by ED against the defaulters,
especially due to the Ex-parte orders and the order, questioning the sanctity and legal
validity of the provisions of PMLA, passed by the Hon'ble Punjab and Haryana High Court.
These orders appear to be restricting the investigation process and lawful action to be taken
by ED and the Special Court. These Ex-parte orders will also have impact on other PMLA
cases.
21. Shri Pritam Singh, Additional Secretary, Ministry of Corporate Affairs informed that
FTIL filed a Writ Petition before the Hon'ble High Court of Bombay challenging the vires of
and Draft Order dated 21.10.2014 for amalgamating NSEL with FTIL. After complying with
the procedure prescribed, the final Order dated 12.02.2016 for the merger of NSEL with
FTIL was issued. The Hon'ble High Court has restrained the Ministry from notifying the final
Order dated 12.02.2016 in the Gazette. A batch of seven more writ Petitions was filed
challenging the final order dated 12.02.2016 as well as Assessment Order dated 01.04.2015.
During one of the hearings in February, 2017, Shri D.J. Khambata, Senior Advocate for the
Union of India, has disclosed that one of the defences would be that the Order dated
12.02.2016 is a piece of delegated / subordinate legislation. The Senior Advocate for the
NSEL, being the third Respondent in FTIL's petition addressed the Court arguing that as the
Assessment Order, which is integral to the merger Order, holds that the recoveries would be
fully effected and NSEL would not be liable, there was no need to destroy the corporate
5

19. existence of NSEL and its merger with FTIL. Shri D.J. Khambata, Senior Advocate for Union
of India commenced arguments on 03.08.2017. The Next date of hearing is 08.09.2017,
when Shri D.J. Khambata will continue his arguments.
22. As for the proceedings before the National Company Law Tribunal (NCLT), the
interim order dated 30.06.2015 passed by the Company Law Board (CLB) restraining the
FTIL from dealing with the assets of the Company was partially modified by the Hon'ble
High Court of Madras. The Order of the High Court of Madras has been set aside by the
Hon'ble Supreme Court vide Order dated 18.04.2016 in the SLP filed by UOI. This has
resulted in the Order dated 24.06.2016 of the Hon'ble National Company Law Tribunal
(NCLT), whereby a Committee comprising of a retired Supreme Court Judge nominated by
the NCLT, a Government nominee, both with individual veto powers, and three members
from FTIL, have been constituted and the Committee has been empowered to utilise the
resources of FTIL. The FTIL had moved an application to stay the hearing of the CP No. 1 of
2015 before the CLB, pending other civil suits / writ petitions. The said Application was
dismissed vide Order dated 05.04.2016. The appeal filed by FTIL before the Hon'ble High
Court of Madras was heard on 19.09.2016 and dismissed as withdrawn. The Application of
FTIL to transfer the proceedings to Chennai Bench, was rejected by the NCLT, but finally
allowed by the NCLAT. The matter was heard on 20.04.2017 and 31.05.2017.
23. Shri Parag Basu, Chief General Manager, Securities and Exchange Board of India
(SEBI) informed that the auditors appointed by SEBI to conduct audit of the books of the
five Commodity Derivatives brokers, whose name appear in the interim report of the EoW,
Mumbai Police, have completed the audit and submitted their report. The key findings in the
report have been shared with the EoW, Mumbai Police, Department of Revenue, RBI, ED
and Department of Consumer Affairs. SEBI has appointed a bench of Designated Authorities
(DA) for conducting enquiry against these five brokers. Thereafter, show cause notices were
issued to these brokers on 24.04.2017. In May, 2017, all the five brokers sought extension
of time for submitting their reply to the show cause notice. Inspection of documents by four
brokers has been concluded. The inspection by only one broker is yet to be completed. None
of the five brokers have submitted their reply to the show cause notice. The Chairman
remarked that if enough time has been granted to them for submitting their reply, there is a
--need-ta-eensider obviating further delay in concluding-the-enquiry proceedings and taking
action as permissible in law. Therefore, there is a need to take a decision with due diligence.
24. The Central Bureau of Investigation (CBI) had reported that they have registered
two cases in the issue of NSEL. In one case, after completion of investigation, charge sheet
was filed on 30.09.2016 before the Court of Special Judge, CBI Greater Mumbai against
eighteen persons / organisations including NSEL and FTIL and its certain key officials. In the
2nd case, in which loss of Rs. 222.49 crores caused to MMTC Ltd. was involved, the
investigation has been completed and charge sheet was filed before special Judge for CBI
cases, Mumbai on 30.09.2016 against 29 accused companies/firms/persons including NSEL
and FTIL and its certain key officials. During the investigation, the role of senior officials of
MMTC came to light. Therefore, CBI had sought sanction for prosecution from the
competent authorities against five accused persons / officers, out of which, the sanction for
prosecution against Shri D.S. Dhesi, IAS, the then CMD, MMTC, is still awaited from DoPT.
CBI has appointed a CA firnifoldiKducting forensic audit in respect of the fund received by
four beneficiary counter parties by trading on exchange platform. The forensic audit is
underway. After receipt of the forensic audit report, a call would be taken for further
evaluation of the evidence.
6

20. 25. The Financial Intelligence Unit of India (FIUI) had reported that a penalty of Rs. 1.66
crore was imposed on NSEL on 04.11.2015. However, an appeal has been filed by NSEL
against this order in PML Tribunal. On 27.06.2017 final order was issued by the Tribunal in
which it stated that there is no ground for interference of the impugned order. The Tribunal
also upheld the rationale of NSEL being the reporting entity within the meaning of Section
12 of PMLA. However, the quantum of penalty has been reduced from one lakh to Rs. 15000
per failure, thus reducing the penalty from Rs. 1.66 crore to Rs. 24.90 lakhs. It has been
decided by FIUI to appeal against this order in the Delhi High Court.
26. Shri Sanjay Rai, Additional Director (Inv.), Serious Fraud Investigation Office (SFIO)
informed that they are still awaiting necessary inputs from other Investigating Agencies
including 40 TB data of mirror image of the server of NSEL from EOW, Mumbai Police. It
would be possible for SFIO to proceed further only after receipt of the same. The Chairman
expressed the view that there should not be any ground for delaying it further and by
overcoming any technical / legal hurdle, if any, all the investigating agencies from which
SFIO has requisitioned the requisite information, necessary for further investigation by the
SFIO, may be made available to it without any further delay.
27. The meeting ended with the vote of thanks to the Chair.

21. ANNEX
LIST OF PARTICIPANTS
Ministry of Finance, Department of Economic Affairs
1. Shri Subhash Chandra Garg, Secretary (Economic Affairs) Chairman
2. Shri Dinesh Sharma, Special Secretary (Economic Affairs)
3. Dr. Shashank Saksena, Adviser (Capital Markets)
4. Shri K. N. Mishra, Deputy Secretary (CD)
Ministry of Corporate Affairs
1. Shri Pritam Singh, Additional Secretary
2. Shri Narrender Kumar Bhola, DGCoA
Ministry of Finance, Department of Revenue
Shri S.K. Singh, CIT (OSD) (Inv.), CBDT
Government of Maharashtra, Home Department
Shri Sudhir Shrivastava, Additional Chief Secretary (Home)
Enforcement Directorate
1. Shri Karnal Singh, Director
2. Shri Satyabrata Kumar, JD(ED)
Financial Intelligence Unit, India
Shri Manoj Kaushik, Addl. Director
Serious Fraud Investigation Office
Shri Sanjay Rai, Additional Director (Inv.)
Securities and Exchange Board of India
1. Shri Parag Basu, Chief General Manager, SEBI
2. Shri D. Rajesh Kumar, General Manager, SEBI
Mumbai Police, EOW
1. Shri Ashutosh Dumbare, Joint Commissioner of Police
2. Shri Akbar Pathan, Deputy Commissiner of Police
Central Bureau of Investigation
Shri C. Nagaraju, DIG, BSFC, Mumbai