» Business » NSEL declares 9 members as 'defaulters' for not making payment

NSEL declares 9 members as 'defaulters' for not making payment

Source: PTI
August 23, 2013 14:33 IST
Get Rediff News in your Inbox:

Crisis-hit National Spot Exchange Ltd (NSEL) on Friday declared nine members (buyers) who failed to pay their dues on the first day of settlement on August 20 as 'defaulters', following directives from the commodity market regulator FMC.

"Following Members have been declared as Defaulters as per the rules of the exchange - (a) ARK Imports Pvt Ltd (b) Loil Overseas Foods Ltd (c) Lotus Refineries Pvt Ltd (d) N K Proteins Ltd (e) NCS Sugars Ltd (f) Spin Cot Textiles Pvt Ltd (g) Tavishi Enterprises Pvt Ltd (h) Vimladevi Agrotech Ltd (i) Yathuri Associates," NSEL said in a circular.

NSEL, promoted by Jignesh Shah-led Financial Technologies (India) Ltd, is facing the problem of settling Rs 5,500 crore (Rs 55 billion) dues to 148 members/brokers, representing 13,000 investor clients, after it suspended trade on July 31 on the government direction.

The spot exchange announced a seven month plan to settle these dues. However, NSEL was able to pay only Rs 92 crore (Rs 920 million) on August 20, the first day for pay-out to investors, out of the scheduled Rs 174.72 crore (Rs 1.74 billion).

The exchange had informed that these nine members (buyers)

did not pay their instalments.

After this, FMC had directed NSEL to declare members, who have failed in making payments, as 'defaulters' and liquidate all their realisable assets.

The regulator also asked NSEL to auction defaulters' commodities lying in the accredited warehouses as collateral.

FMC had also ordered NSEL to ask defaulters to hand over books, documents, papers, assets, cheque books and other documents, and the same should vest with the exchange for the benefit of creditors.

"The Exchange, therefore should proceed to liquidate all realisable assets of the defaulter member/s to meet his/their pay-in obligations," FMC had said in a letter to the NSEL board, which includes NSEL Vice-Chairman Jignesh Shah.

The proceeds of commodities auctioned and realisation of assets of defaulter should be deposited in escrow account and should be paid to selling members with the approval of the Commission, FMC had directed.

Meanwhile, Income Tax department yesterday conducted searches on the business premises of two dozen members of the NSEL which is facing alleged irregularity charges in settling Rs 5,500 crore dues to investors.

Get Rediff News in your Inbox:
Source: PTI© Copyright 2020 PTI. All rights reserved. Republication or redistribution of PTI content, including by framing or similar means, is expressly prohibited without the prior written consent.