HC asks FMC to monitor paired, e-series contracts in NSEL scam
Oct 07 2013 , New Delhi
The Court was hearing a petition filed by borrowers, who urged that the settlement of e-series bullion contracts at NSEL be aggregated with that of the paired contracts being overseen by FMC.
A bench headed by Justice S F Vajifdar also restrained NSEL from disposing of property or creating third party rights without the permission of FMC.
The bench further ordered that Brinks Arya, Custodian of Bullion, will allow the petitioners, Ketan Shah and others, inspection of the Bullion Register unless it is objected by the Economic Offences Wing of Mumbai Police which is probing the multi-crore scam that has rocked NSEL.
The Judges said that every request or complaint of financial settlement of e-series contracts should be forwarded to FMC and EOW.
The bench further directed FMC to reply in details what steps it had taken by it after the scam broke out in NSEL. The orders passed today were ad-interim and the next hearing in the case has been posted on October 21.
The e-series contracts is a unique market segment, which functions like the cash segment in equities, but offers commodities in the demat form in smaller denominations. NSEL was offering spot as well as E-series contracts, which were subsequently banned by the government.
Paired contracts are those where borrowers sell commodities on the exchange to investors while simultaneously agreeing to buy them back after a stipulated period.