SC appoints high-level committee to enforce executive orders against NSEL defaulters
The National Spot Exchange Limited (NSEL) said on Wednesday that the Supreme Court (SC) had approved the establishment of a high-level committee headed by retired Bombay High Court Judge Pradeep Nandrajog for the recovery of defaulter funds where NSEL obtained money decrees.
The Supreme Court has exercised its powers under Article 142 of the Constitution to form the committee to execute sentences and decrees against defaulters in the Rs5,600 crore NSEL payment crisis.
Section 142 states that any decree or order passed by the SC to dispense complete justice shall be enforceable throughout the territory of India.
Notably, NSEL alone obtained decrees/arbitral awards worth Rs 3,534.46 crore against NSEL defaulters. In addition, an amount of Rs760.31 crore in defaulted liabilities has already been crystallized by the High Level Committee appointed by the Bombay High Court, which the NSEL is confident will soon result in an executive order.
Proceedings for a decree against NK Protein worth Rs964 crore are pending in the Bombay High Court. The forensic auditor appointed by the Economic Crimes Wing (EOW), Mumbai Police and Serious Fraud Investigation Bureau (SFIO) has confirmed the liability of NK Proteins to the tune of Rs964 crore. Two of the defaulters have already paid their debts amounting to Rs195.75 crore.
The recovery from the defaulters NSEL, after crediting the monies paid by them, amounts to Rs 5,454.52 crore and their seizure of assets is sufficient to cover claims made by business customers if all claims are considered authentic.
The NSEL said the claims will however be checked by the committee appointed by the SC. The SFIO said it received claims worth Rs 2,239.61 crore, of which Rs 935.09 crore appears dubious, thus confirming that the genuine claims were only Rs 1,304.61 crore.
Immediately after the emergence of the NSEL payment crisis in August 2013, NSEL had taken out a no-damage loan of Rs179 crore from 63 moons technologies limited which will also be recovered from defaulters.
This loan was used by NSEL to repay traders with receivables of up to Rs2 lakh in full and those with receivables between Rs2 lakh and Rs10 lakh up to 50%, according to a statement.
Recently, Maharashtra paid the remaining 50% to those whose claims were between Rs2 lakh and Rs10 lakh, wiping out its entire dues.
Some invested groups have consistently deviated from recovery efforts and only target NSEL. They also attempted to block payment made to those who had claims between Rs2 lakh and Rs10 lakh, but the Supreme Court rejected their plea.
NSEL said the committee will oversee and enforce the decrees against defaulters through the sale of assets which have been seized by the state of Maharashtra under the Protection of Interests of Depositors Act (MPID) of Maharashtra and the application direction across India.
The value of assets seized by Maharashtra under the MPID and Defaulters Enforcement Directorate is more than enough to cover the amount of the claim, as is the decree.
The execution of the decrees, which otherwise would have to be carried out by the district/session court and that too at the respective locations of the defaulters, will now be carried out by the committee appointed by the Supreme Court.
This will ensure faster recovery from failed NSELs. Post-recovery, this committee is empowered to proceed to an equitable distribution of the proceeds of the sale after verification of the debts.
All investigative bodies confirmed defaulters’ liability with the money trail to the last paise traced back to the defaulters, he said, adding that no money trail is established to NSEL, its administrators or promoters.
The SC order further confirms the single-handed effort of NSEL, which is working tirelessly to recover defaulters for the benefit of genuine business customers, NSEL noted.
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Posted: Friday, May 6, 2022, 12:44 PM IST