Review Meeting on NSEL Payment Crisis

REVIEW MEETING ON THE IMPLEMENTATION OF THE RECOMMENDATIONS OF THE
SPECIAL TEAM OF SECRETARIES ON NATIONAL SPOT EXCHANGE LIMiTED(NSEL)
Summary Record of Discussion
Tenth meeting to review the action taken on the recommendations of the
Speciaffeam of Secretaries (STS) 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 04.30 pm on 11.02.2016 in the Committee Room No. 131-A, North Block, New Delhi
under the chairmanship of Secretary(Economic Affairs). The list of- participants is
annexed.
2. After welcoming the participants, the Chairman requested for updated Action
Taken Report by the Departments/Agencies represented in the meeting.
3. Dr. Navrang Saini, Director(Inspectlon & Investigation), Ministry of Corporate
Affairs informed that Hon'ble High Court of Bombay vide the Order dated 30.10.2015
had granted time up to 15.2.2016 to take a final view on the draft order. The
Department is presently in the process of concluding consideration of all the
representations received from various stakeholders and the Ministry is about to take a
final view in the matter within the time stipulated by Hon'ble Court. Besides, in respect
of the matter before CLB, in· the last hearing on 13.1.2016, pleadings could not be
concluded. The case has been posted for hearing on 24.02.2016. In addition, Madras
High Court--has-directed CLB to dispose of the case by 11.03.2016. The Ministry is in the
1

process of filing an SLP before the Hon'ble Supreme Court for quashing the order in
terms of delay in filing of SLP. While expressing concern over the delay of five months,
Secretary(EA) advised that necessary action may be·expedited to obviate further delay in
the matter.
4. Shri Mohanty informed that SEBI is to take action against five brokers, for which it
needs forensic audit report from EoW, Mumbai Police and other material evidence.
Additional Secretary(Investment) pointed out that nothing is known nor any status report
from SEBI has been received indicating what action is being taken by the Board in this
regard and at what stage are the investigations at present. The Chairman ·desired that
SEBI may inquire into the role of brokers as per the law, against those about whom
complaints in the context of NSEL payment crisis are pending for inquiry in SEBI and
Action Taken Report thereon may be sent to the Department of Economic Affairs within
a fortnight.
5. With regard to the actions to be taken by the Mumbai Police, Additional
Secretary(!) pointed out that no significant progress in the matter of finally auctioning
the notified properties has come to the notice of the Government. Shri Pravin Padwal,
Deputy Commissioner, EOW, Mumbai Police informed that four notifications have been
issued so far in the Gazette about the attachment of moveable and immovable assets
worth Rs. 5757 crores approximately of the accused and proposal has been submitted to
the Maharashtra Government for publishing notification in respect of a few more
properties attached recently, the value of which is Rs. 300 crores approximately. The
MPID Court· has issued notices to all those accused persons / property owners whose
assets have been attached to file their objections, if any, against the attachment. The
next date of the hearing is 04.03.2016
6. Shri Padwal informed further that the MPID Court has ordered for the auction of
two sets of notified properties of Mohan India Pvt. Ltd. situated at Civil Lines Delhi and
2
... Mr'rffteti:J
=::.•,.,....,,
,.. ti �·n $ft T

Bikaner at the reserve price of Rs. 288 crores and Rs. 50 crores respectively.
Advertisement in respect of the auction of these two properties were published in the
leading national as _well as local newspapers on 09.02.16. The Competent Authority has
initiated the process of auctioning and has fixed the date of inspection of properties as
24th
February, 2016. The auction is slated to take place on 15.03.2016. Besides, on
17.12.2015, the MPID Court had ordered to auction five properties of accused defaulter -
M/s Swastik Overseas Corpora_tion that will fetch Rs. 8 Crores approximately and five
properties of accused borrower � M/s NCS Sugar. AS(I) pointed out that in comparison
to the huge amount that is required to be recovered, the estimated worth of the
properties to be auctioned is not really significant.
7. The chairman desired to know whether EoW, Mumbai has engaged senior counsel
to facilitate the disposal of various cases in the matter afld whether for monitoring the
progress in the matter, periodical review by the Home Secretary of the Government of
Maharashtra is being done. Shri Padwal replied that ACS(Hoi:ne) reviews the progress of
NSEL related cases on - regular basis. Besides, efforts are on to appoint _dedicated
competent authority and the State has appointed Adv. Avinash Avhad as a Special Public
Prosecutor for effective representation in Courts in all the matters arising out of this
case. The chairman expressed concern over the inordinate delay in the matter of
returning the money to the NSEL investors and he urged that action may be taken
without further delay to auction the remaining properties also which do not have any
encumbrance/have approval of the Court and also, actively pursue with the MPID court
to obtain early orders for auctioning the remaining attached properties.
8 The Additional Secretary(Inv.) underlined the need for addressing the issue of
overlap_ of investigative actions between the Enforcement Directorate and the EoW,
Mumbai Police in respect of the same set of properties. He expressed hope that in the
joint meeting held recently, the two might have reached a consensus in this regard.
3

9. Shri Anil Ramteke, Joint Director, Enforcement Directorate (ED) stated that a
meeting to overcome the overlapping actions was held with EoW, Mumbai Police on
. . . . . . . .
02.02.2016, when a list of attached assets, common to both ED and EOW, was handed
over to EOW officials. Till date, both ED as well as EoW have attached 32 common
properties valued at Rs. 740.80 crore by ED and at Rs. 1222.89 crore by EOW. In view
of the EoW having attached other properties also of relatively very high value, it was
agreed that EoW would initiate action to auction properties other than what is commonly
attached by both agencies.
10. The chairman stressed the need to form a consensus on all the issues concerning
· the problem of overlapping. He as well as the Secretary(Revenue) expressed tha� the
counsels of both the agencies need to come forward to resolve the issue. It was
emphasized that refund of the lost investment of NSEL investors should be the first
priority of the Government. Between the said two agencies, EoW is comparatively in a
better position to realize this objective in a speedier way in view of the provisions under
the MPID Act. It was decided that the matter of overlap of jurisdiction may be
forwarded to the Ministry of Law and Justice by ED for obtaining legal opinion.
11. Shri Padwal said that all cases being investigated by EoW are not of the nature of
scheduled offences under PMLA. However, it was noted that if some cases are
registered under IPC alongwith MPID, such cases may fall in scheduled offences under
PMLA. Even on this issue, opinion of Ministry of Law and Justice may be taken by ED.
12. Smt. Deepika Mittal, Additional Director, FIU-India informed that Order under
Section 13 of the Prevention- of Money Laundering Act, 2002 was passed on 04.11.15
imposing a penalty of Rs. 1,66 crores on NSEL for non-compliance of various provisions
of PMLA. .. - -- ·---------------
13. Shri Jasbir Singh, S.P, CBI ·informed that in respect of the two ongoing inquiries
being made by CBI, charge sheet is likely to be filed by April, 2016.
4

•.
14 While concluding the meeting, below mentioned actions were decided to be taken
expeditiously by the respective agencies:
i). the Economic Offence Wing of Mumbai Police shall auction two such notified
properties of the defaulters in respect of which MPID Court has already
accorded approval;
ii Ministry of Corporate Affairs may consider taking final view on the draft order
of the merger/amalgamation of NSEL with Financial Technologies (India)
Limited, within the time stipulated by the Bombay High Court i.e., latest by
! 15.02.2016 and the Company Law Board may be moved to decide the case ·
relating to FrIL by 11.03.2016. Besides, filing an SLP in Supreme Court against
the decision of Madras High Court may also be expedited;
. I
iii). 1
Enforcement Directorate may seek legal opinion of the Ministry of Law and
'·
Justice for (i) addressing the issue arising out of the overlap ·of its jurisdiction
with EoW, Mumbai Police in the NSEL related cases and (ii) for deciding as to
whether cases registered under IPC along with MPID may be considered as
.l scheduled offences under PMLA;
iv). Government of Maharashtra may take immediate action for (i) auctioning the
properties which do not have any encumbrance/have approval of the Court;
(ii) actively pursue with the MPID court to obtain early orders for a1,1ctioning of
the remaining attached properties; (iii) to appoint a Senior Advocate for this
purpose; and (iv) to have the progress of the cases reviewed by the Home
Secretary, Government of Maharashtra on fortnightly basis; and
v). Securities and Exchange Board of India may examine and take necessary
. action against defaulting brokers--as-per·law;-- --· ·
15. The meeting ended with the vote of thanks to the chair.
*****
5
___________________,.__,

ANNEXURE
LIST OF PARTICIPANTS
Ministry of Finance, Department of Economic Affairs
1. Shri Shaktikanta Das, Secretary(EA)
2. Shri Ajay Tyagi, Additional Secretary(Investment)
3. Dr. C.K.G. Nair, Adviser(CM)
4_. Shri K. N. Mishra , Deputy Secretary(CD)
4. Shri Parveen Kumar, Under Secretary (CD)
Department of Revenue
Shri Hasmukh Adhia, Secretary(Revenue)
Ministry of Corporate Affairs
Dr. Navrang Saini, Director (Inspection & Investigation)
Financial Intelligence Unil-India
Smt. Deepika Mittal, Additional Director
Securities and Exchange Board of India
Shri S.K Mohanty, Executive Director
Economic Offence Wing, Mumbai Police
Shri f'ravin Padwal, DCP
Enforcement Directorate
Shri Anil Ramteke, Joint Director
Central Bureau of Investigation
Shri Jasbir Singh, S.P
****
6
Chairman

REVIEW MEETING ON THE IMPLEMENTATION OF THE RECQMMENDATIONS
OF THE SPECIAL TEAM OF SECRETARIES ON NATIONAL SPOT EXCHANGE
LIMITED (NSEL)
Eleventh meeting to review the action taken on the recommendations of the_
Special Team of Secretaries (STS) 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 04.30 pm on 06.06.2016 in the Committee Room No. 131-A, North Block, New
Delhi under the chairmanship of Secretary(Economic Affairs). The list of participants is
annexed.
2. The meeting commenced with the Chairman welcoming the participants. He
requested Additional Secretary(Investment) in DEA to brief about the action taken by the
Department of Economic Affairs(DE.A) in the matter. Additional Secretary (Inv.)
informed that as of now no action is pending on the part of DEA, other than to convene
periodical meetings to review the progress of recoveries of lost investment on NSEL
platform and ensuring punishment of the persons responsible for the crisis. He added
that Hon'ble Chief Minister and the Chief Secretary, Maharashtra have been requested by
Hon'ble MOS and Secretary(EA) respectively, inter-alia, to strengthen the dedicated team
of the EOW, Mumbai Police, to appoint additional competent authority on full time basis
to constitute additional designated courts under the Maharashtra Protection of interest of
Depositors (in Financial Establishments) Act, 1999 and to engage valuation and
auctioning agencies to facilitate early liquidation of attached properties. However, in this
regard, favourable· action from the Government of Maharashtra is still awaited. The
1

Chairman asked the Principal Secretary (Home), Govt. of Maharashtra to apprise qbou_t
the action taken in respor.se.
3. Shri Rajneesh Seth, Principal Secretary (Home), Maharashtra informed that they
have received proposal for additional manpower for EoW, Mumbai Police which is being
processed. Their Finance Division has raised certain queries which are being clarified.
For instance, the EoW, Mumbai Police has already been sanctioned as many as 70 posts.
However, a number of such sanctioned posts are yet to be filled. Therefore, justification
would be needed for the additional posts. The matter shall be taken up with the
Commissioner of Mumbai Police. The requirement of providing additional competent
authorities is also bein�J looked into. (Action; Home Department, Government 1
Marashatra - GoM)
4; The Chairman suggested that keeping in view the avoidable delay b g
experienced in absence of adequate number of competent authority, the Government of
Maharashtra need to provide at least two full time competent authorities for dealing
_exclusively with NSEL related work. Shri Seth agreed that the present system of giving
additional responsibility of competent authority to a single officer in addition to core
responsibility does not give sufficient time to attend to the responsibilities of a
competent authority and responded that a request would be sent to the Revenue
Department of Government of Marashatra in this regard to- assign exclusive responsibility
under MPID. (Action; GoM)
5. . Additional Secretary (Inv.) suggested that keeping in view the necessity of
clearing the mounting backlog of the NSEL related pending work with the EOW, ther" is
an urgent need for the Govt. of Maharashtra to consider designating an additional court
as MPID Court. Shri Seth· that the matter shall have to be taken up with the Hon'ble
Bombay High Court. The Chairman suggested that the Chief Justice, Bombay High Court
may be requested for the purpose by Gove_rnment of Marashatra. (Action; GoM)
2

6. The Chairman desired to know about the issue of evaluation of the properties ·
'
attached under the provision of MPID. Shri Seth informed that interview has already
been conducted for engaging evaluators and auctioneers. He hoped that final decision in
this regard shall be taken shortly after the requisite concurrence of all other line
Departments become available. He hoped that they would be able to finalise one panel
within one month. The Chairman emphasized that the role of the Govt. of Maharashtra in
this direction needs to be visibly proactive, for which effective steps are required on
priority basis. He advised that necessary action may be taken immediately to accomplish
the said tasks in a time bound manner and a report thereon may be sent to Department
of Economic Affairs, Gol, by the end of June, 2016. (Action; GoM)
7. Shri Praveen Padwal, DCP, EOW, Mumbai Police informed that there is a proposal .
under consideration whether 20/ci amount of the auction may be paid to the agencies
engaged for the evaluation, auction and forensic reporting. The Chairman stressed that
the legality, desirability and reasonableness of such payment arrangement may be
examined by Government of Marashatra. Shri Praveen informed that they have already
addressed a letter to the Court for the purpose. He hoped that the proposal shall find
favour w
_
ith the court on the face of the fact that depositors have themselves come up
with this kind of idea. He added that as of now, Rs.17.56 crores are lying with the
competent authority, 2% of which is proposed to be utilized for the aforementioned
purpose. (Action; GoM)
8. On the query of the Chairman about the refund of the amount lying with the
compete,:it authority, Shri Padwal informed that the same has to be done on the
direction of the Court. Chairman and AS (Inv.) expressed concern over the fact that even
though EOW has so far attached properties worth more than Rs.6115 er., actual
realization by way of sale of assets is yet to be done. Shri Padwal informed that they
have already initiated a:ction to auction such properties which have been allowed to be
3

auctioned. Advertisement had been issued inviting bids for auctioning two prope�ies -
one each at Delhi and Bikaner. However, no bidder responded. Now, with the approval
of the court, the basic price of these two properties at Delhi and Bikaner have been
reduced to Rs.250 er. and Rs.45 er. and the Earnest Money deposit to Rs.3 er. and
Rs.SO lakh respectively. Besides, the time for bidding has also now been increased to
two months. (Action; GoM)
9. Shri Padwal added that EOW is also now working on a case for cancellation of the
bail of the offenders because they have apparently flouted the terms of bail. (Action;
GoM)
10. Shri Satyabrata Kumar, Joint Director, ED then informed that 5 prosecutior
complaints were registered in the month of March, 2015. PMLA court has to be moved to
speed up the issue. Secretary (Revenue) wondered as to how the offenders are- -ut
when they have committed such a serious offense Linder PMLA. Shri Kumar said 'that ·
arresting of the offenders could not become possible earlier because they have been
arrested by the Economic Offense of Mumbai Police. On being told by Shri Padwal that
all those who had been arrested are already out on bail, Secretary (Revenue) desired to
know how it could not become possible for the ED to arrest these persons despite nearly
1½ years having already lapsed since the prosecution complaints were lodged by the
ED. He emphasized that the action in the matter may be completed immediately and a
report thereon to this effect may be sent to this Ministry without further delay. He
stressed that breach of the provision of PMLA is a serious offence and therefore, the ED
may be more proactive in getting the offenders arrested. The Chairman pointed out that
action under PMLA has to be effective and quick. (Action; ED)
11. Secretary(Revenue) was not satisfied with the response of ED and
stressed that ED may provide the detailed chronology of events of the case to
him. He also desired to know as to why the addressing of the issue of
4
iiitJIH!i 11.1f:i?e: ,

overlap of investigative jurisdictions between the Enforcement Directorate
and the EoW , Mumbai Police has not been taken up with Ministry of Law for
clarification though it was decided to refer this matter to Law Ministry in the
last meeting. Shri Kumar informed that the case has been taken up with M/o
Law in the month of January, 2016. The chairman directed that the matter
may be followed up with the Ministry of Law and Justice on priority basis.
(Action; ED)
12. Dr. Navrang _ Saini, Director (Inspection & Investigation), Ministry of Corporate
Affairs informed that the final amalgamation Order for the merger of FfIL and
NSEL was issued on 12.02.2016. However, Bombay High Court restrained the
Ministry from notifying the said order in the Gazette. FfIL has amended its
writ petition and it has also challenged the final order dated 12.2.2016. With
the help of a senior Counsel - Shri Khambata, the Ministry is in the process of
preparing the counter reply. The matter is listed for hearing on 16th
June,
2016. The Chairman desired that a senior officer should visit Mumbai for
ensuring that the case is handled on priority and not postponed any further.
(Action; Ministry of Corporate Affairs-MCA}
13. With regard to the case against FrIL before CLB, under the Companies Act, Dr.
Saini informed that CLB had granted an interim order on 30.06.2015 restraining the mL
from creating encumbrance on the assets of the Company. This order was partially
modified by the High Court of Madras which has been set aside by a Supreme Court
order on 18.4.2016 in the SLP filed by the Govt. of India. The matter was listed for final
hearing by CLB on 02.06.2016. However, slnce NCLT has been constituted on
01.06.2016, the CLB did not assemble on 02.06.2016 as all cases pending before
CLB have been transferred to NCLT. The Chairman desired that Ministry of
Corporate Affairs may now move NCLT for taking up the matter at the earliest.
Meanwhile, mL has moved an application to stay the hearing of the Company petition
5

before the Madras High Court where the case is listed for hearing on 22.06.2016
.
-· The.
Ministry is in the process of finalizing counter reply for the purpose. The Chairman
desired that MCA should take necessary action at the earliest. (Action; MCA)
14. Shri S.K Mohanty, Executive Director, Securities & Exchange Board of India (SEBI)
informed that SEBI has already appointed empanelled auditors to conduct detailed
inspection of books of five brokers of the erstwhile FMC whose names figure in the list of
offenders received from EOW,. Mumbai Police. Auditing is being done of the records of
the period from 2008-09 to 2013-14 which is expected to be completed by the Month of
July, 2016. The Chairman desired that the process may be expedited to complete the
auditing latest by 15th
July, 2016. When it was brought to his notice that SEBI has been
demanding from EOW, Mumbai Police to share forensic report in respect of these
brokers, but the latter is not sharing it on the ground of the same is case property, Shri
Padwal clarified that EOW does not have forensic report in respect of these brok
Neither it is contemplating to undertake their forensic audit. The Chairman, therefore,
desired that SEBI may get the audit of the brokers' books carried out in such a
comprehensive manner that the necessity of any separate forensic audit may not arise
additionally as any decision to carry out forensic audit now will have the effect of
consuming additional time which would not be desirable in view of the urgency in the
matter. EoW, Mumbai may provide the assistance required to SEBI in this regard.
(Action; SEBI & EoW of Mumbai Police)
15. Shri Sanjay Bansal, Additional Director, Financial Intelligence Unit-India (FIU)
informed that Rs.1.66 er. fine has already been imposed on NSEL. However, NSEL had
gone into appeal in the PMLA Tribunal against the order, where it is pending. Further ·,,::,
added that 13 show-cause notices have been issued to certain officials and Directors of
NSEL. However, three Directors _have approached Delhi High Court for dismissal of
notice. On 11.05.2016, the High Court, however, dismissed the petitions of these
Directors, with the direction to file replies to show-cause notices within 4 weeks. Shri
--------· · . ·· •·· · ···
6

,,,,
r
Satish Aggarwal is the Lawyer of AU in this case. The Chai�man directed that efforts
may be made to ensure realization of the fine of Rs.1.66 crores at the earliest. Shri
Bansal assured that FIU is committed to expedite the same. (Action; AU)
16. Ms. Harshita Attaluri, S.P, Central Bureau of Investigation informed that the
· Agency is working on two cases. In one case, 20 persons (including 2 public servants)
have been charged. Further action in the matter shall become possible when prosecution
sanction becomes available from the Ministry of Commerc_e and Projects & Equipment
Corporation Limited(PEC) to which 2 officers belong. In the second <:ase, final .derision js ·
about to be taken. The Chairman advised that the Agency may take up the matter with
the Ministry of Commerce and PEC for expediting the prosecution sanction without
further delay and a report in the matter may be sent to this Department. (Action; CBI)
17. The Chairman advised the Principal Secretary (Home), Government of
Maharashtra that the State Government may closely monitor the progress of the
investigation/ prosecution by the EOW, Mumbai Police with a view to expediting the
· refund of the lost investment of public. The auction of attached properties may be
expedited and the money realized returned to the investors at the earliest following the
due proGedure. A report on progress in this regard may be sent to DEA by June 30,
2016; (Action; GoM)
18. In his concluding remarks, the Chairman emphasized that effective and visible
action should be taken by all agencies expeditiously.
The meeting ended with the vote of thanks to the Chair.
*****
7

I
Ministry of Finance, Department of Econ·omic Affairs
1. Shri Shaktikanta Das, Secretary(EA)
3. Dr. Shashank Saksena, Adviser(CD) ·
4, Shri K. N. Mishra , Deputy Setretary(CD)
4. Shri Parveen Kumar, Under Secretary (CD) '·
Department of,Revenue
Shri Hasmukh Adhia, Secretary(Revenue)
Dr. Navrang-Saini, Director (Inspection & Investigation)
Government of Maharashtra
Shri Rajnish Seth( Principal Secretary(Home)
financial Intelligence Unit-India
· Shri Sanjay Bansal, Additional Director
1.. Shri S.K Mohanty, Executive Director
2. Shri D. Rajesh, DGM
Economic Offence Winq, Mumbai Police
Shri Pravin Padwal, DCP
Enforcement Dfredorate
Shri Satyabrata Kumar, Joint Director
Smt. Harshita Attaluri, S.P
****
8
ANNEXURE
Chairman

Government of India
Mlnlatry of Finance
Depanrn.nt of economic Affairs
commodity oe,tvattves Martcets Division
•••••
MEn'ING E IMPLEMENTATION OF THE R!COMMENOATIONS
THE SPECIAL ff.AM OP SECRETARIES (STS) ON NATIONAL SPOT
NGe UMmD (NSEL)
� Twelfth meeting to re-,,1ew the ac:tton taken on the recommendations of the Special
Team of secretar1es, whlef had been set up to examine the vtolatlon of laws and
regulations by Nsa or any assodated company or many of the partidpants, was held at
10.00 A.M. on 19.07.2016 In the Committee Room No. 131-A, North Block, New Dethl
ur,der the chairmanship of Seaetary (Economic Affairs). The Ust of participants s
IMexed.
2. After we!comlng the parttdpant'S, the Oalrman requested that In the llght of the
dedsfons taken In earlier meetings and In partk:ular In the Beventti review meeting,
updated Action Taken Report by the Departments / Agende5 represented In the meeting
may be shared.
Economic Offences Wing (EOW), Mumbai Police
3. Slut Praveen Salunke, lolnt Commissioner of Pollce, EOW, Mumbai Police
Informed that wtth regard to designating an additional court as MPlO Court, Shri A)ay R.
Oinode. Judge, Oty Ovtl Court end Addltlonal Sess� Judge of Greater Bombay has
been nominated to try various cases arising out of the NSEl. payment crisis case, In
addition to·the other assighed mattm, � gMng priority to the select cases arising out
of the Nsa case. In addition, the Additional Session Judge - Shr1 Surana who has been
handling -all the NSEL related � for the last one and half year also has been
entrusted With cases under the Maharashtra Protection of Interest of Depositors (in
Rnandal fstabllshments) Act, 1999 (MPIO Act) other than NSEL case. On � query,. .
whether the posting of two Judges are a case Qf transfer or new appointment. Shri
SaJunke Informed tnat It Is a case of new appolr1h,n:1,t 11'te- former Judge shal be
dealing with the NSEL related cases, In addition to the other assigned matters, whereas
the tatter Judge shalt be dealing with MPIO M. related cases, except NSEl related

IOIUU
•
��
the rllfflllnlng 11 defaulters and the associate / affiliate compan.es of NSEL
the
Satvabrata Kumar, Joint Director then supplemented further details about
unoe,�. Shrt Kamal Sngh Informed that the case was heard In the Special Court
the Prlwntion of � La� Al:.1, 2002 (PMLA) on 16.05.2016 and
07.o,.2016 Ind ED argued for Issuance of Non-Ballable Warrants (NBW) aQalnst all
l«AJSed, extept those two, Who were �t In the Court on 7.7.2016. In response to
this, the Court directed all the accused persons to remain present In Court on
18.07.2016. Many of them have -approached Hlgh Court/ PMLA Speml Court for the
exemption from their personal appearance. He further added that during the
lnvestigatton, ED found fresh �dences of certaln dublous transactions among enttt3es
cont10lled by Shri Jignesh Shah and the defaulters. Therefore, Shri Shah was summoned
to record his statements on SUCh transactions. He was arrested by ED on 12.07.2016 for
non-cooperation and remanded to eo t1U 18.07.2016 by the PMLA Special COurt.
Thereafter, he was sent to the Judicial custody. He assured that Sincere efforts are being
made by EO In the matter of pursuing the case. On hlS expressing difficulties being
experienced by ED In the matter of staffing on account of large number of vacancies of
officers In the office of ED, Shr1 8.N. Sharma, Additional Secretdry, Department of
Revenue, assured that the·Department ot Personnel & Training shall be moved to fill up
the vacancies of ED on priority basls.
8. Shri Kamal SJngh added that ED has requested the Department or Revenue,
Ministry of Finance for seeking legal opinion from the Department of Legal Affairs,
Ministry of Law with regard to the Jurtsdlcttonal Issues between the EOW, Mumbai and
EO for trial of offences under MPIO and PM� respect,vety. They are awaiting the
response. The Oialrman desired that the Department of Revenue may active
ly pursue
the case With the Department of Legal Affairs to obtain legal darity on the lurisdictlonal
tssues of trial and attachment
9. The Olalrman desired that notWlthstandlng the constraints being faced at
present ED may make efforts to expedite the c.ase and take strict action against the
offenders In accordance with law.
10. The Olainnan desired to know about the present posltton of the case of the
merger of Nsa with FTIL, the order of which, though had been Issued by the MiniStty
of O>rporate Affairs (MCA) on 12.02.2016, but the Bombay High Court had restrained it
from publishing the same In the Official Gazette. Dr. Navrang Saini, Director (Inspection
& Investigation), Ministry or Corporate �lrs (MCA) sard that the Bombay High court
had allowed time tUI 19"' July, 2016 to file· a oounter ,.,,awtthe same would be filed
on 19m July, 2016. 'The Chairman desired that MCA may be proactive In pursuing the
case In Bombay High Court and seek appropriate reliefs, He also desired that senior
3

14, Tlle �� the - befl"'d':.m
rectM
� MC4 need to .w...........-.......-, deal "'1h the· •�1" 1n an �...._'7'!fflCI the two.,______..
cas.1r1s1r1g,..,.. -....� Manne, 90 ..._
·�-•iv1uonec, Cowt
SEBI
VV ft Nsa Pl'fmentcrtsls.
""'t Government COUid
15. Shr1 D. RaJeshOf India (5eBJ) irtonrw:dKuma
r
, Dec,uty Ger_,
whose "lnles IPPea
r In
::luc:Jlts In rtspea
::�SeanttJes and Exchange 8oaro
the report With a
£OW l'8POrt, haYe been
C0mmod1ty dertvattve brokers,
Thereafter action �to detecting any gap v.ttfch
CDmr>letecJ. Now SEsl ls examlnlng
launchlng �Udlng Clebaniog the entt� from
may be required to be pluoged.
Chairman desl
� be Initiated based
trading anc, lmJ)OSlng penally and
the
red to know the �
on the outcome of the examination. Toe
action. Shtl Kumar said that the
wtthln whidi SEBI would be able to complete
COncetJled of SEBI Ind It Is Ilk
Pn>c:ess requires Involvement of au the Departments
to determine the acuon to
eJy that they WOUid be able to complete the exarninadon
examination of aUdlt
� taken, Within a mon
th. The Chairman desired that the
action, as per law
may be completed by ls1" August, 2016 and effective
' against the offenders/ violators, may be t.aken at the eartlest.
RnandaJ bltelligence Unit-India
!��rlP. K. Mishra, Director, Rnandal Intelligence Un� India (FlU) Informed that a
.__,...._., Officer has been IPPOlnted to recover the penalty Imposed by Director, FtJ on
NSa. Some Forms needed to be modified with the help d Ministry of Law for rec.overy
of penalty under sectfon 69 of PMLA In the same manner as prescnbed In Schedute-n of
the Income-tax Act. 1961. The Chairman advised that the FIU shouto continue to pursue
the matter for reaRslng the penalty.
central Burau of Investigation
17. Shrl Jasblr Singh, SP, Central Bureau of Investigation (C81), Informed that the
Inquiry has been completed In the case lnvoMng the conduct of 2 officers of MMTC and
PEC. CBI Is strll awaiting Prosecution Sanalon In respect of the officers from the
Department of Commerce, Ministry d Commerce and lndustry. The Chairman ecMsed
CBI to follow up the matter w1th the Department of Commerce with a View ta obtaining
necessary sanction.
Conduslon
18. In his condudlng remarks, the Olalrman empha
s
ized that effective and vslbe
act,on should be taken by all agendes expedtUously so that the value of attached assets
of the defaulting entfdes could be reallsed and the ·money lost by the investors n the
Nsa payment ais1s may be refunded to them. ll1'fa.a:e&9 ended wtttl the vote of
than� to the Chair.
•••••
s

. REYIEW: MEti1".t1NClON THE I)}m.�NTATJ:ON orTHE
.
REy0:1"�$fl{)NS
OF · X!IE .SPECW:, J;EAM Q:F S�CREAIARlES. CSTS) 9N.. NATIONAL @OT
EXCllAN'GE.LIM};TE.l) ,(NSEL)
' .. .
. . - ; ·- .. -- -
S:ummaqR;£conl ofDiscus�fo!!
� ...____ --- ' -
The Thirteenth meeting to revrew the action taken on the recommendations of the
Special Team of Secretaries, which ha� b�n set up to examine the violation of laws and
regulations by NSEL or any associated ;company or any of the participants, was held at 6:00
PM on 28.09.2016 io the Committee Room
.
No. 13l�A, North Block, Ne,v Delhi under the
chairmanship ofSecre
t
ary (Economic Affairs), The list ofpartidpants is annexed.. I
2. After wel:comiog the participa�ts, the Chairman requested that in the light of the
decisions taken in earlier meetings and;in particular. in tbe twelfth �iewmeeting, updated
Action Taken Report by the Departments/Agencies represented in the m�ting may be
shared.
3. Sh. Datta Padsalgikar, Cornmis;sioner of Police (EOW; Mumbai) informed t11at one
competent authority is already in position who is partly entrusted with the additional work of
land acquisition. Besides, one more a�thority is to take charge of the post. The Chairman
desired to know as to by whe-n two co�petent authorities exclusively for only NSEL related
case·are going to be appointed. Sh. Datta informe:d that the case is atready being processed on
priority. The Chairman expressed· con�ern over the inordinate delay in the appointment of
such authorities; as a res·ult ofwhich restlessness is flaring up in the public adversely affectedI
in the NSEL payment stalemate owing to non-reimbursement oftheir money.
4. The Ch.airman desired to knowithe action taken pursuant to·the decision taken inthe------
last meeting when it had been dcci#ed that the Chief Secretary or Principal Secretary,
Government of Maharashtra would tequest the Chief Justice; Bombay High Court for
designating an additional Court as MPID Court. Sh. Datta informed- that the present Chief
Justice hasjoined r�cently i.e. three w�ks ago. He wiil be requested soon for the purpose.
1
···-·---------�-----,---------

,,,
5. As regards providing additional �anPower for strengthening EOW, Mumbai Police,
Sh. Datta informed that adequate staff i� already in position in Special investigation Team
(SIT) set up for NSEL probe and that sh6rtage of any staff is not coming in the way of SIT
discharging its duties effectively. He also:informed that two forensic auditors have since been
paid their fees with the approval of MPip Court and they have resumed unfinished auditing
assignments. Besides, digital auditprs are; <,llse in the process of being engag�d. Sixth Gazette
Notification in r�spect of properties of ff!L valued at Rs. 2275 Crore was issued on 21�
September, 2016. As regards the au�tit>n of attached properties of defaulter� Sh. Datta
informed that two defaulters have-alrea�y �onveyed their consent for auctio� of their nvo
properties-one at Delhi and the second �t Bikaner. However, in response ta ·a tender notice
issQed.by the Competent Auth<'tity, no 1rsP<?nse was received in respect of these properties.
·11ieChairman-6hsetVed that from 1he-point-ofview-of-investors,.no �ng1ble_prog:ress0�PP-�
to·hive taken:piace.-He also·poinleci•oui.tbat no progrtsS t1n.tne issues rai.sed l>y DEA wtth
" .the dovt,'.:of-Maha:rash-tia has,been.�notici.d.notwJth.slanqil}g,!�lJ�c.� ��!iili��atter·was.taken
up even at the level of Hon'ble 'FM. Y�th Hon'ble Chief Minister of Maharashtr
a
·on l lt0
August, 2016 suggesting even a meeting at the level of Chief Minister) Maharashtra where
the Cen:tral Agencies/Departments may �artieipate.
. .
6. Sh. Datta infonned that the final chargesheet ·in the NS.EL case is in the process of
being finalized soon and as for the probe into e-mail server ofNSEL tempering� mtrror image
of the server is already in the cu.stody �f EOW and the same shall be put to examination in
the forensic laboratory. When it .VRS poifited,out to·him that the investigation of.fleer has been
observed to be skipping important couri hearings, Sh. Datta agreed to the suggestion of theI
• ,
Chainnan that strict instructions shall beiissued for attending such hearings.regularly.
7. The Chairman emphasized thar the time1ines need to be laid down by the State
Government for the attachment of properties of defaulters and then making the attachment
absolute under the MPID Act for proper valuation and auction. This would ensure assets are
sold early and defaulters are brought �o book quickly and money realised from the sale
proceeds ofattached assets is conseque�tly returned to investors ofNSEL, who have suffered
losses in the payment c.tisis. Ho also suggest�d that the Advocate General or any other senior
counsel may be assigtied to pursue the cnseson priority.
Ministry ofCornorate Affairs
8. Sh. Tapan Ray, Secretary, MCA apprised about the status of amalgamation case
before the Bombay Hjgh Court and .informed that rhe pleadings from the side of the
Government have been completed anp the Bombay High Court would heat the case on
continuous basis on 24
1
25
th
and 29th November. 2016. It was also infonned that NSEL
Investors Association as well as sharehpld�rs of FTJL are parties in the case. The Chairman
advised that MCA may consider defen�ing. this case strongly so that amalgamation ofNSEL
with FTIL could be effected at the earliest..
2.

9. As regards the FTIL issuei the first meeting ofthe Committee approved by NCLT was
held on 31.08.2016. An appeal prefer.red by FTIL, seeking to suspend the hearing ofthe main
petition in the NCLT, was heard by the High Court of Madras on 19.09.2016, in which they
sought to withdraw appeal and the case was reportedly dismissed as witndrawn. As regards
the issue ofconflict ofiriterest ofthe management ofFTIL with that ofinvestor.; ofNSEL onI
the Committee, it was S't:ated by MoCA that the Committee w�s formed on the direction of
NCLT com.prising two non..FTIL memb��s. namely, a _retired Hon'�le Supreme Court Judge
and a nominee of the Government. These two nominees have veto powers while eva{llating
the proposals brought to it by the FTIL jequiring financial decisions. The veto power shall
ensure that the public interest would be a4equately protected.
.
i
Ht _
.
_in view �fthe gravity <>fth� o
;
ff�E-F, MJo Co
_
�p�ra�e �a}!-' ��- r�� to�_?��:�---·
ordenng probe mt() the matter by $�rtQUSJFraud Jnv�s:t1gat1_on Office (S.FIO)..Secretary_, MCA
suggested that a 'meetlng frrcons�dE't��J��e.woutfb� con�ened shortly.
. . . .
Scc_l1rities and Exchange Board of lndia
l l. Sh. S. Ravindran, Execqtive Dije�or, SEBl informed that the examination of the
books of the five brokers. whose name ftgu�e in the BOW repor�- has b-e�ti co.mpiet� and
enqutry • proceedings have been initiate4 against them. Appointment of Inquiry Officer is
under consideration. The show cause notices shall be issued to the of
fenders within a month.I .
The inquiry ·authority shall be assiste1 by the team of SEBI as well. The enquiry be
completed in a: time bound manner. The: findings of the examination of these brokers woutd
be sh.ared with the agencies concerned 'narriely, EOW1 RBI etc. so that they could initiate
action concerning their jurisdiction. Pur�her� he h1fonn.ed that separate enquiry procee-clings
are under way against the persons who;control the aforesaid entities and entities which are
under the same management or contro) of these persons and if such persons/entities are
registered with SEBl to consider further course ofaction.
12. As regards r.vo cases of (i) mi�se of 'Settlement Guarantee Fund' of NSEL during
the last two weeks of July, 2013 and·(ii) in.sider trading by Sh. Jignesh Shah using •Rawal
Group Comp,nies', the Chairman directed that SEBI, to whom complaints in this regard have.
already been forwarded by DEA, may be reminded to respond in the matter, at the earliest.
Enfor�emcnt Directorate
13. Sh. D.K. Gupta, Special Direc�r, Directorate of Enforcement_ (ED) informed that
assets amounting to Rs306 crore ofFI4L were attached on 14.09.2016. On a·query from the
Chainnan regarding the higher valuatiop of attached ussets, it was inf
onned that the market
value of the assets (Rs.566 crore)_ is more than the book value ofthe assets. Now, the ED is
considering the issu� of taking furtheri action in this regard; Sh. Satyabr,ata Kumar, Joint
Director; ED informed that the proseot�tion complaint details money trail amounting to Rs.
3721 ·crore. Vide its order dated 04.1�.2015, Hon'ble Special PMLA Court, Mumbai has
taken cognizance ofthe prosecution co�plaint and the same is being processed.
3

for hearing on 05.10.2016. FIU appointe-d a Recovery Officer as per PMLA provisions to
initiate recovery proceedings in cases where �covety is pending including the case of NSEL
and a notice for recovery was issued to'NSEL o.n 2nd
August, 2016. After NSEL filing an
appeal against it. vide its order dated 3 l�t
Aug�st 2016. the Tribunal has directed NSEL to
deposit an amount of Rs. 25 lakhs with ttle Director, FlU.-lND, till the disposal ofthe appeal.
Rs. 25 lakhs was accordingly received by;FIU-IND on 23.09..2016.
Central Bureau ofl:nye:stigation,
20. CBI had registered two case·s viz,t RCBSM 2014 B 0001 against NSEL and PEC on
12.02.2014 and RCBSM 2014 EOOS agi.inst NSEL and MMTC on 18.06,2014. Sh. J�bir
Singh;,-SP, CBJ.-informed that in.b<rthJ4i:,;��. proi�WP!1_��tio� J.o.!��ct (}fo_ffi�_rs-�f
MMTC, atld _}?E(;; M:'1:� . t,e�ri r:ec�iv�� f:Q!ll the Mio Comm�rce and respons� from t�
Q�P.4��en �f��.!!n.el. and Traiµing·_·i;[r�pect of one ot'the· s¢nfo.r accused officer is -still
awaited, -0n receipt ofwhich the-caseshii»°l» prooesse·<fnirther:
2 L The meeting ende(i with thanks ttj the:Ch:air.. J .
' i
..
. ,
i·I
l

*****
REVIEW MEETING ON THE IMPLEMENTATION OF THE RECOMMEDATIONS
OF THE SPECIAL TEAM OF SECREATARIES (STS) ON NATIONAL SPOT
EXCHANGE LIMITED (NSEL)
Summary Record ofDiscussion
The Fourteenth 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 11:00
AM on 25.10.2016 in the Committee Room No.41, North Block, New Delhi under the
Chairmanship of Honourable Minister of State for Finance. The list of participants is
annexed.
2. After welcoming the participants, the Chairman expressed his concern over the public
unrest owing to inaction of agencies concerned in helping them in getting back their lost
investment in NSEL case. He underlined the fact that significantnumber of Honourable
Members ofParliament have been agitating the issue before the Government including in the
Parliament. Besides, a large number of aggrieved members of public have also been
expressing their restlessness in the NSEL payment stalemate owing to non-reimbursement of
their money. They allege that Government agencies concerned are not seen as working·in
their interest. Therefore, he exhorted the agencies concerned to be focussed and outcome
oriented so that the repayment to the investors for their lost investment in NSEL payment
crisis case could be expedited. The Chairman observed that the Government of Maharashtra
need to take effective steps to demonstrate to the public that it is serious in carrying the
NSEL payment crisis case to its logical conclusion with a view to restoring the confidence of
the public in the Government'seffectiveness.
3. After preliminary remarks of the Chairman, the Additiona!Secretary(Inv.),
Department of Economic Affairs (DEA) gave an account of agency-wise action required and
action taken. It was informed by DEAthat a DO letter by Hon'ble Finance Minister (FM) was
addressed -on 11.08.16 to Hon'ble • Chief Minister, Maharashtra requesting, inter alia, to
review, in a meeting, the progress of actions taken in the matter by the Government of

Maharashtz:a and for deciding a definite action plan for the purpose, in which other related
Departments/Ministries/investigating agencies of Government .of India may also be invited
for apprising about the actions taken by them. He was also reminded in particular for actions
without further delay in connection with issues of (i) designating an additional court as MPID
Court may be taken up with the Chief Justice. Bombay High Court; (ii) the Commissioner of
Mumbai Police may be advised to provide additional manpower for the Economic Offence
Wing of Mumbai Police; (iii) the Revenue Department of Government of Maharashtra may
provide at least two full time competent authorities for dealing exclusively with NSEL related
work; (iv) a panel of evaluators and auctioneers may be finalised within one month and a
report thereon sent to the Department of Economic Affairs, Government of India, by
30.06.2016; (v) legality, desirability and reasonableness of the move to pay any amount of
the auction to the agencies engaged for the evaluation, auction and forensic reporting may be
examined; and (vi) auction of such properties which have been allowed to be auctioned may
be effected without further delay. There has been no response from the State Government on
the issues raised by FM.
4. DEA drew the attention of the Chair about the problem of overlapping jurisdiction of
the Economic Offences Wing, Mumbai Police (EOW) and Directorate of Enforcement (ED)
in the matter of confiscatingthe same properties of defaulters and repayment of the sale
proceeds to the investors under the Maharashtra Protection of Interest of Depositors (in
Financial Establishments) Act, 1999 (MPID Act)as well as the Prevention of Money
Laundering Act, 2002(PMLA). It was informed by DEA that a letter has been sent to the Law
Secretary seeking clarity on the jurisdiction. issue so that competitive and concurrent
confiscation of properties by the two agencies under the aforesaid two Acts could be avoided.
It was also informed that the repayment to investors is faster under the MPID Act in
comparison to under PMLA, as the repayment under the former is not dependent on
successful prosecution, but could be done with the approval of the court pending prosecution
of the defaulters, whereas the repayment under the PMLA is dependent on the successful
prosecution under the designated offence under that Act. However, in the absence of clarity,
no agency would like to be seen as not acting proactively in the matter of confiscating the
defaulters' properties as otherwise it would give an impression as if it is not acting in
conformity with the laws. The Chairman desired to know about the authority which is to
decide as to which agency or law take precedence over the other in respect of attaching the
properties of the defaulters in this case. The ED observed that the nature of the issue is such
which can be resolved through an executive decision. They have referred the matter to the
Ministry of Law and Justice for resolution through a meeting of all concerned. The Chairman
asked ED to pursue with Law Secretary for an early meeting.
Government of Maharashtra/Mumbai Police
5. It was informed by the EOW that 822 properties have been notified under the
Maharashtra Government in the Gazette wo1th Rs.6172 Crore. The State Government has

been pursuing with the Court to make the provisional attachment under MPID Act absolute.
The Court under MPID has ordered to auction two prope11ies of Mohan India Pvt. Ltd. , one
each situated at Civil Lines Delhi (Open Plot) and Bikaner (Farm Land) at the reserve price
of Rs. 288 Crores and Rs. 50 Crores respectively. However, it has so far not become possible
to dispose of theseassets through auction, despite making attempt to auction it twice. It was
discussed that another attempt of the auction may be made immediately after
fixingreasonable reserve price based on any objective criterion, such as the circle rate of the
area, which is likely,to,get better response ofthe bidder.
6. The gist of the further discussion and decisions taken is as follows:
(i) The letter of FM dated 11th
August, 20l 6to the CM, Maharashtra may be
immediately responded to by the Government of Maharashtra, preferably within the
next three days giving, in particular, appropriate response to the fundamental issues
raised by DEA
(ii) The Government of Maharashtra may consider setting up of a special Separate
Cell comprising officers of integrity to deal with the cases relating to NSEL payment
crisis and to ensure that the repayment to investors especially to small investors may be
expedited to give confidence to the public in the integrity and fairness of the financial
system, as the Government, at the highest level, is committed to protecting the interest
of investors, especially small investors. Further, a Nodal Officerof higher level may be
designated by the Government of Maharashtra, who would coordinate the action at their
level and with whom the Central Agencies could also coordinate, so that an effective
action may be taken through joint e.ffo11s of the State Government and the Central
Government.
(iii) A meeting may be convened at the earliest, preferably within a fortnight, at the
level of Hon'ble Chief Minister, Maharashtra to review the action takefllproposed to be
taken for refunding the lost investments to the NSEL investors as well as prosecuting
the offenders. The Central Agencies/Depa1tments/Ministries of the Central Government
would also participate in such review meeting.
(iv) The State Government of Maharashtra may expedite the realisation of
properties by conducting the auction, especially for the unencumbered properties.
(v) On expressing concern over the inordinate delay in filing the final chargesheet
in this case by the Government of Maharashtra, the Chairman desired to know the
reasons for the same. It was informed by the Government of Maharashtra that though
31 accused persons so far have already been arrested, certain accused persons,however,
are yet to be arrested, and forensic audit is still to be completed to establish the money
trail in this case. Therefore, it has not become possible so far lo finalise the chargesheet.
However, it was pointed out to him that notwithstanding the fact that certain accused
persons are yet to be arrested in this case, chargesheet can be finalised by giving the full
details to the Court, whichis likely to consider the same.
,(vi) It was observed .by DEA that the State of Maharashtra needs to appoint more
Special Public Prosecutors (SPP) at the earliest since there are matters across High

Courts and Court under MPID Act. There are matters in other High Courts incfuding
Gujarat and Punjab-Haryana where the SPP has to remain present to defend the cases
effectively.
Department ofRevenue
7. On the issue ofamending PMLA to the extent that _the seized money can be restored
to the investors directly instead ofrouting it through the Government account, as proposed by
ED, it was informed that after the amendment the necessary ·Rules have been notified in
September, 2016. It was informed by DEA that Central Board ofDirect Taxes, I)epartment of
Revenue (CBDT) was involved in unearthing any _element ofundisclosed income and it was
probing whether the money invested was disclosed to the Income Tax Authority or not. The
outcome ofthe probe is yet to be intimated. It was agreed by the Department ofRevenue that
they would inform the uptodate status about the acliull lake11.
Mi.nistry of Corporate Affairs
8. Secretary, Ministry of Corporate Affairs (MCA) apprised about the status of
amalgamation case before the Bombay High Court and informed that the pleadings from the
side ofthe Government have been completed and the Bombay High Court would hear the
case on continuous basis on 24th
, 25th
and 29th
November, 2016. The Chairman advised that
MCA may defend this case strongly so that amalgamation of NSEL with FTIL could be
effected at the earliest. MCA informed that they have engaged a Senior Counsel for this case
and he would be properly briefed so that an effective defence ofthe Government action may
be presented before the Bombay High Court.
9. As regards the FTIL issue before the Company Law Board[now the National
Company Law Tribunal (NCLT)] relating to the mismanagement ofaffairs ofthe Company,
the first meeting ofthe Committee approved by NCLT to look after the operation matters of
FTIL was held on 31.08.2016. An appeal preferred by FTILseeking to suspend the hearing of
the main petition in the NCLT, was heard by the High Court ofMadras on 19.09.2016, in
which they sought to withdraw appeal and the case was reportedly dismissed as withdrawn. It
was also informed that FTIL has filed another application, challenging the jurisdiction ofthe
New Delhi Bench of NCLT to deal with the matter. This Application is likely to be listed
before the Delhi Bench ofNCLT on 04.11.2016.
10. In view of the gravity of the offence, MCAhad been advised in the 13th
Review
meeting to consider ordering probe into the matter by Serious Fraud Investigation Office
(SFIO). Secretary, MCA informed that a proposal in this regard has already been submitted
for a decision by the Competent Autho!'ity.

11. Shri S. Ravindran, Executive Director, SEBI informed that the examination of the
books of the five brokers, whose name figure in the EOW report, has been completed and
enquiry proceedings have been initiated against them. Further Inquiry Officer has been
appointed and show cause notices shall be issued to the offenders. It was informed that the
possible action after the inquiry could include deciding on the Fit and Proper status of these
brokers and their continuance or prohibition from undertaking capital market related
activities. In this regard, EOW, Mumbai Police informed that they have arrested three brokers
for their alleged violation of provisions ofIndian Penal Code, 1860 (IPC). It was decided that
the enquiry may be completed in a time-bound manner.
12. As regards two cases of (i) misuse of 'Settlement Guarantee Fund' of NSEL during
the last two weeks of July� 2013 and (ii) insider trading by Shri Jignesh Shah using 'Rawal
Group Companies', the Chairman directed that SEBI, to whom complaints in this regard have
already been forwarded by Department of Economic Affairs (DEA), may respond in the
matter, at the earliest.
13. ED informed that assets amow1ting to Rs.306 crore of FTIL were attached on
14.09.2016. Additional attachment of assets of worth Rs.I095 Crore of FTIL has been done·.
Further attachment ofadditional properties is under consideration of ED.
Financial Intelligence Unit, India
14. Director, FIU-Ind informed that an order was passed by Director, FIU-IND on
04.11.2015 imposing a penalty of Rs. 1.66 Crores on NSEL, who preferred an appeal against
the said order in the PMLA Tribunal on 17.12.2015. FfU appointed a Recovery Officer as per
PMLA provisions to initiate recovery proceedings in cases where recovery is pending
including the case of NSEL and a notice for recovery was issued to NSEL on 2nd
August,
2016. After NSEL filing an appeal against it, vide its order dated 31st
August 2016, the
Tribunal has directed NSEL to deposit an amount of Rs. 25 lakhs with the Director, FIU
IND, till the disposal of the appeal. Rs. 25 lakhs0.-was accoi::dingly received by HU-IND on
23.09.2016.The Chairman advised FIU-Indfor effectively defending its order through an
efficient Legal Counsel in view of the fact that the basic jurisdiction of FIU-IND has been
questioned by FTlL.

. Central Bureau of Investigation
+
15. On 18.06.2014, CBI had registered two cases, viz., RCBSM 2014 E 0001 against
NSEL and PEC on 12.02.2-014 and RCBSM 2014 E005, involving, besides others, officials
of�EC and MMTC. SP, CBI informed that in both cases, prosecution sanctions in respect of
officers of MMTC and PEC is yet to be obtained from the Mio Commerce.However,
chargesheet has been filed before the court on 30th
September, 2016. He was advised to
expedite the efforts for obtaining the prosecution sanction.
16. The meeting ended with thanks to the Chair.

Ministry of Finance, Department ofEconomic Affairs
I. Shri ArjunRam Meghwal, Minister of State for Finance
3. Dr. Shashank Saksena Adviser(CM)
4. Shri K. N. Mishra , Deputy Secretary(CD)
1. ShriTapan Ray, Secretary
2. Dr. Navrang Saini, Director(Inspection & Investigation)
Department of Revenue
Shri B. N. Sharma, Additional Secretary
Financial Intelligence Unit, India
Shri P. K. Mishra, Director
1. Shri S. Ravindaran, Executive Director
2. Shri D. Rajesh, Deputy General Manager
Mumbai Police
Shri Praveen Salunke, Joint Commissioner ofPolice
1. Shri Kamal Singh, Director
2. Shri D.K. Gupta, Special Director
3. Shri Satyabrata Kumar, Joint Director
Shri Jasbir Singh, SP
*****
ANNEXURE
--- Chairman
II

I .
CONFIDENTIAL
Minutes of the 15th
meeting to review the status of Natiof'!al Spot Exchange
Ltd.(NSEL) payment crisis related issues held at 5.30 PM on 15th
November,
2016 at Sahyadri Guest House, Mumbai, under the Co-Chairmanship of Hon'ble
Chief Minister, Maharashtra and Hon'ble Minister of State (Finance and
Corporate Affairs)
The 151h
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 of the participants, was held at 5.30 PM on 15th
November, 201.6 at Sahyadri
Guest House, Mumbai, under the Co-Chairmanship of Hon'ble Chief Minister,
Maharashtra (CM) and Hon'ble Minister of State (Finance and Corporate Affairs)
(MOS). The list of participants is annexed.
2. Initiating the discussion, MOS gave a brief background of the NSEL payment
crisis. Based on the report of the then. Forward Market Commission (FMC},
Government of India vide the Department of Co'nsumer Affairs letter dated July 12,
2013 stopped NSEL from launching further / fresh contracts and directed to settle all
existing contracts on the due dates. However, as against expected receipt of Rs.
5574 crore from 24 buyers for making payout of Rs. 5380 crore, NSEL could
distribute only Rs. 304 crore on account of its 19 buyers defaulting on payment due
to nearly 13,000 investors. This resulted into a huge payment and settlement crisis.
3. In this backdrop, the Department of Economic Affairs (DEA) appointed a
Special Team of Secretaries on August 26, 2013 to suggest measures that could be
taken to ensure that there is no systemic impact of the NSEL developments. STS
made certain recommendations in the Report dated 23.9.2013, which are being
investigated into by Ministry / Oepartments/Offices concerned. So far, 14 Review
Meetings have been held in DEA to monitor the progress of action taken in the NSEL
related matters. However, no significant progress has been noticed in achieving the
primary objectives of repayment of lost money to the investors and prosecuting the
offenders effectively.
4. It was informed by the Ministry of Finance that the NSEL investors have been
repeatedly venting out their grievances, directly as well as through the public
representatives, on all kinds of avenues praying for relief without further delay.
However, it is unfortunate that investigating agencies have so far not been able_ to
------- -- · succeed in bringing abou_t any major relief to the aggrieved investors. The Additional
Chief Secretary (Home), Government of Maharashtra (ACS) informed about the
status of the repayment of money to the investors.
1

Amount of Number of Total Amount Amount yet
loss aggrieved defaulted Refunded to be
investors amount refunded
(Rs.) (Rs.) (R�.)
Less than Rs. 608 9 crore 9 crore Full amount
2Iacs refunded
Between Rs. 2 6445 345 crore 182 crore 163 crore
lacs and Rs.
10 lacs
Between Rs. 4901 1442 crore 96 crore 1346 crore
10 lacs and
Rs. 1 crore
Between Rs. 1 660 1396 crore 93 crore 1303 crore
crore and Rs.
5 crore
More than Rs. 386 1884 crore 146 crore 1738 crore
5 crore
5. It was also informed that around Rs. 1500 crore are required to be paid to
investors in the first 3 categories, which account for nearly 90% of the total investors.
If this is achieved, not only majority of the investors would be repaid, but, it would
also reduce the public outrage on account of non-repayment of lost investment of
majority investors.
6. It was informed that in case of 2 properties of Delhi and Bikaner, no objection
has been acknowledged by the court under the Maharashtra Protection of Interest of
Depositors (in Financial Establishments) Act, 1999 (MPID Act). Therefore, 2 auctions
have been conducted to dispose of these properties, however, the Government of
Maharashtra could not get a bid and that is why, no realisation of these assets was
possible. It was suggested by CM that in case of property in Delhi, the Delhi
Development Authority (DOA) may be approached to purchase this land to construct
residential houses. It was suggested by MOS if the land use is residential and if the
land is free from any encumbrance, then this alternative is viable. ACS stated that
these points would be verified and the Government of Maharashtra would make a
proposal to ODA to purchase the land. As regards the property of around 500 acre in
Bikaner, a proposal may be submitted to Rajasthan Housing Board or Urban
Improvement Trust, Bikaner to sell this land to them. The Government of
Maharashtra agreed to work on both these proposals to sell these assets so
that partial repayment to investors ·could be ensured through these sale
proceeds. As regards the valuation and auction of the attached assets, it was
informed that 5 companies have been empaneled to undertake this job. It was
suggested by CM that more valuers and auctioneers may be appointed, if
required, so as to facilitate correct assessment and quick disposal of these
assets.
7. As regards the investigation of the violations by the accused, it was informed
that a foren�ic audit was ordered by the Government of Maharashtra on 28.09.2015,
however, since the fees of the auditors of around Rs. 30 lacs could not be paid, the
auditors stopped work and this stalemate continued for almost 1 year. However, the
2

MPID Court, on the basis of the consent given by. the investors, has allowed·
payment to auditors out of the liquid assets attached under the MPID Act. CM
expressed his displeasure on the delay in resolving this matter, which also impacted
the progress of investigation.
8. It was informed by the Government of Maharashtra that the accused indulge
in forum shopping and have filed cases in different States, which pose administrc!tive
problems for the Government of Maharashtra. The request of the. Government of .
Maharashtra to centralise the cases. filed by the accused in different States and
transfer to appropriate Court in Maharashtra has not been agreed by the Supreme
Court. It was requested by the Government of Maharashtra that if a Central Agency
files this petition before the Supreme Court, there may be a possibility of centralising
all NSEL related cases before appropriate Court in Maharashtra. It was agreed by
the Enforcement Directorate (ED) that they may consider filing such transfer
petition to Supreme Court through an SLP against interim order of the Punjab
and Haryana High Court on the issue of exclusive jurisdiction of Bombay High
Court.
9. The Ministry of Finance· had earlier ·suggested designating an exclusive
Designated Court. as MPID Court, which would hear matters relating to NSEL ·
payment crisis only. However, the Bombay High Court has not agreed to a proposal
made by the Government of Maharashtra on the ground that an exclusive MPID
Court for NSEL related cases may not be fully occupied and that is why, the other
cases under MPID Court have been assigned to the Court which deals with the
NSEL related cases. To this, MOS suggested that matter may be taken up
afresh with the Bombay High Court to request them to designate a court as
exclusive court for NSEL related cases under MPID Act.
1O. As regards the strengthening of the institution of the Competent Authority by
constituting atleast 2 full-time Competent Authorities for dealing exclusively with
NSEL related cases, it was informed by the Government of Maharashtra that they
have decided to employ 7 retired Deputy Collectors to assist the Joint Secretary
(Home), Government of Maharashtra and he would deal with attachment of assets.
However, the suggestion of Ministry of Finance about providing atleast 2 fuil
time Competent Authorities for dealing exclusively with NSEL related work
needs to be addressed.
11. It was informed by the Ministry of Finance that final chargesheet is yet to be
filed. To this, the Government of Maharashtra indicated that this may be done within
the next 3 months..CM directed that the number of forensic auditors need to be
increased so that investigations are complete and it would also help in
finalising the charqesheet.
12. It was informed by Ministry of Corporate Affairs (MCA) that they are vigorously
following up the cases fired for merger of NSEL with FTIL before the Bombay High
Court and the management and governance related matters of FTIL pending before
,the National Company Law Tribunal (NCLT). 1he case of merger of NSEL with.FTIL
3

pending before the Bombay High Court has been listed for final· hearing u,,
24.11.2016, 25.11.2016. and 29.112816. MCA has briefed the Senior Government
Counsel and their officers are in constant touch with him so that the case may be
effectively defended in the High Court. MCA has also ordered investigation by the
Serious Fraud Investigation Office (SFIO) under Companies Act, 2013 against
entities involved in the NSEL matter.
13. Securities and Exchange Board of India (SEBI) informed about the progress
of action taken against the stock brokers. It was informed that show-cause notices
(SCN) have been issued by the Enqµiry Officer and. notices have. been given 21
days' time from the receipt of the notice for filing replies to the SCN. The stock
brokers have asked for inspection of the documents based on which SCN was
issued and the same is being allowed by SEBI as p.er the Regulations. It was
suggested to SEBI by CM th.at the defaulting stock brokers may begiven short
dates for inspection of records and response to SCN so . that the due
procedural formalities may be completed in an expeditious manner and final
SEBI Order could be issued quickly. Further, SEBI was advised to have a
Special Cell to investigate the stock broker cases related to NSEL to complete
the necessary action.
14. ED informed about the provisional attachment of certain assets worth around
Rs. 1955.95 crores. It was also informed that ED is in the process of attaching
additional assets. The issue of dual and overlapping jurisdiction of ED under the
Prevention of Money Laundering Act, 2002 (PMLA) and · the Government of
Maharashtra under MPID Act in the matter of attachment. of assets was discussed. It
was informed that the matter has been referred to the Ministry of Law and Justice,
Government of India for removing stalemate over the issue of overlapping of
jurisdiction and attachment of properties. It was suggested to ED by the Government
of Maharashtra that in view of the possibility of quick repayment to the investors by
realising the attached assets under the MPID Act vis-a-vis the requirement of PMLA,
where repayment is possible only after conviction of the accused, the assets may be
attached by the Government of Maharashtra only, even when the investigation and
preparatory work for attachment is done by ED. ED stated that if a decision is
taken at the Government level, ED would have no objection if the attachment
of assets is only done under MPID Act and not under PMLA. This would ensure
centralisation of attachment of properties and there will be no multiple attachment of
the same property by 2 different agencies.
15. It was informed by the Central Bureau of Investigation (CBI) that they are yet
to receive prosecution sanction in the case of official$ of PEC Ltd. and MMTC Ud.
Chargesheets. in both the cases have been filed. However, cognizance against the
public serv�mts can be taken only after receip! of prosecution sanction It was
suggested to CBI to follow. up with the administrative Ministry (Ministry of
4
., '
'

Commerce and Industry) for obtaining the necessary permission for
prosecution.
Financial lntelli�ence Unit - India
16. It was informed by the flnancial Intelligence Unit - India (FIU-IND) that the
case relating to penalty of Rs. 1.66 crore on NSEL has been listed for final
arguments before the Appellate Tribunal under PMLA on 17.11.2016.
17. In the end, the co-chairs resolved to move expeditiously on all the decisions
taken in the meeting so as to·ensure that visible progress is made in returning the
lost money to the investors. It was also agreed that on the lines of review
meetings being organised by the Central Government in the Ministry of
Finance, regular monitoring of action on all matters relating to NSEL would be
done by the Government of Maharashtra at the State level also.
18. The meeting ended with thanks to the co-chairs.
5
.. .
··�; ··■iliilll' -AM� i;;•-·••'·:¢�.ricr

1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
Pfiftre-l:¥:711§3?:ie::--·
ANNEX
Shri Devendra Fadnavis, Co-Chairman
Chief Minister, Maharashtra
Shri · Arjun Ram Meghw�I. Co-Chairman
Minister of State for Finance,
Government of India
Dr. Shashank Saksena Adviser (Capital Market), Department of
Economic Affairs, Ministry of Finance,
Government of India
Or. Navrang Saini Director(lnspection & Investigation), Ministry
of Corporate Affairs, Gove'rnment of India
Shri S; Ravihdaran Executive Director, Securities and.Exchange
Board of India
Shri D. Rajesh Kumar Deputy Gerieral Manager, Secl.lrities and
Exchanqe Board of India
Shri Karn·a1 Singh Director,· Enforcement Directorate
Shri Satyabrata Kumar Joint Director, f;nforcement Directorate_
Ms. Harshita Attaluri Superintendent of Police, Central Bureau of
Investigation
Shri K. P. Bakshi Additional Chief Secretary (Home),
Shri Manu Kumar Srivastava Principal Secretary (Revenue), Government
of Maharashtra - -
Shri. Milind Mhaiskar Secretary to Chief Minister, Maharashtra
Shri R. D. Sawant Joint Secretary, Law and Judiciary
Department, Government of Maharashtra
Shri Y.8. Ajetrao Deputy- Secretary, Home Department,
Shri Chandrakant Thorat Additional Collector and Competent
Authority, Government of Maharashtra
Shri Ajit Sakhare Deputy Collector and Competent Authority,
Shri D. D. Padsalgikar Commissioner of Police, Mumbai,
Shri Parveen Salunke Joint Commissioner of Police, Economic
Offences Wing, Mumbai Police, Government
of Maharashtra
Shri S. Jaykumar Deputy Commissioner of Police, · Economic
· Offences Wing, Mumbai Police, Government
of Maherashtra
6

Review Meeting on NSEL Payment Crisis

Recommended

Recommended

More Related Content

What's hot

What's hot (20)

Similar to Review Meeting on NSEL Payment Crisis

Similar to Review Meeting on NSEL Payment Crisis (20)

More from mrchavan143

More from mrchavan143 (20)

Recently uploaded

Recently uploaded (20)

Review Meeting on NSEL Payment Crisis