NSEL Reecovery Group

National Spot Exchange Limited was a platform for trading commodities and it came into news in the year 2013. It was due to the payment crisis happened on July 2013. The huge sum of Rs.5600crore was defaulted by the brokerage firms and defaulters. The issue came under scanner of the various agencies since then. Exchange was enforced to stop all trading activities & contracts.  After the payment crisis Securities Exchange board of India (SEBI), Investigating Agencies and NSEL had declared 22 members as NSEL Defaulters.

Investigation of these defaulters and brokers resulted in evidences where fraudulent transactions they made are reveled. According to NSEL and FTIL final merger order, it has been said that the outstanding amounts will be recovered from the selling defaulter’s assets. Hemce pursuing NSEL defaulters for recovery should be of chief importance.

NSEL has always been cooperating with all the investigating processes. They are willing to work with all parties to make sure complete resolution and has been continuously involved in recovery efforts. There has been various recovery efforts carried out by NSEL with the only focus to ensuring that genuine clients receive their claims. NSEL has taken efforts to affect recovery from defaulters. Recovery suits against all defaulters had been filed.

NSEL also lend a hand to Investigative Agencies in recovery process. Time to time NSEL had extended all assistance required to Economic Offences Wing (EOW), to discover & freeze assets of defaulters. Enforcement Directorate (ED) is supporting them to attach assets pertaining to defaulters. 


NSEL has been doing well in getting decrees on admission against 5 defaulters from the Bombay High Court to the sum of Rs. 1233.02 crores. NSEL has also been successful to obtained injunctions against the assets of defaulters from the Bombay High Court in respect of claims of Rs 4515.93 crores. A important part of the entire claim has therefore been secured and Rs 542.99 crores is already paid by NSEL. In view of foregoing, more than 100% of the claims of the traders are secured by way of decree, attachments and injunctions against defaulters. 

NSEL case : Kailash Aggarwal from ARK Imports behind bars

On the grounds of money laundering the Enforcement Directorate (ED) arrested a businessman from Ludhiana in NSEL case. On Friday the they decided to take the actions against Mr.Kailash Agarwal from ARK Imports who is one of the biggest defaulter in NSEL crisis.

The accused, Kailash Agarwal of ARK Imports, had allegedly looted Rs 719.21 crores from trading clients through the NSEL platform. It was his strategy to fool the trading clients by saying that he had stocked woollens of the same worth in his godown. Afterwards, he allegedly defaulted on payments. On Saturday, Aggarwal was produced before an ED court which sent him to the custody of the agency till September 29.

NSEL sources stated that, Aggarwal is among the key accused who is guilty for cheating 13,000 investors of Rs 5,600 crores in 2013. Anubhav Aggarwal, son of Kailash Aggarwal is absconding for a long time and he is currently living in Dubai. They have invested the NSEL’s defaulted money in real estate and most of the funds are diverted to overseas. It was realized that they assured the trading clients about having possession of trading commodities like wool, paddy, wheat, mustard oil at their warehouses at Ludhiana, Samrala and Nawanshahr. If found guilty he can be imprisoned for 7 years.

NSEL Defaulters and Defaulting Brokers

On July 31^st, 2013 the Rs.5600crore National Spot Exchange Ltd. (NSEL) crisis surfaced. The matter came under scanner of multiple agencies since then. Exchange was forced to shut down and suspend all its trading contracts.  After the payment crisis Regulatory Body, Investigating Agencies and NSEL had declared 24 members as NSEL Defaulters.

Brokerage firms involved in the NSEL crisis were also under the observation due to their fraudulent behavior. It came into light that some of the brokers gave promise of assured returns to the trading clients, which turned out to be wrong resulting into crisis. Corporate Affairs Ministry and other agencies including Enforcement Directorate (ED) have been investigating the defaulting brokers in the Rs.5600crore NSEL crisis case. SEBI was also been asked by government to take necessary action against these defaulting brokers.

Mr.Arun Jaitely the Finance Minister had told Lok Sabha that other than Corporate affairs Ministry Economic Offences Wing (EOW) and ED are also investigating the NSEL matter. EOW had attached properties of the accused worth Rs5757crore (approx.) and Rs.1222.89crore, 32 common properties had been attached by ED of Rs.740crore (approx.). Arun Jaitely in a written reply to Lok Sabha had said that SEBI is directed to examine and take necessary actions against defaulting brokers.

 In case of brokers various agencies are investigating into their role. It is proven in the audit report that defaulting brokerage firms named Anand Rathi Commodities, Geofin Comtrade, Motilal Oswal Commodities, India Infoline Commodities and Philip Commodities are guilty. SEBI with EOW and ED is investigating the role if these brokers in NSEL crisis Case.

NSEL Broker’s face recovery suits

Brokerage firms played a major role in the Rs.5600crore National Spot Exchange Limited (NSEL) payment crisis. Investigation agencies have been investigating brokers over cases filed against them. Trading clients in the case had earlier filed recovery suits against brokers alleging that they were involved in various fraudulent activities in regards to trading on NSEL platform.

On July 2013 the NSEL crisis came to light. Since then matter is investigated by many agencies. Exchange was forced to suspend all its trading contracts. Trading clients have filed separate cases against top five leading brokerages. Suits are filed in over brokers for mis-selling and wooing them to invest in agri commodities.

Economic Offences Wing (EOW) of Mumbai police had arrested officials of some commodity brokerage firms on charges of inducement and mis-selling of NSEL products in the past. Enforcement Directorate (ED) is also interrogating the top officials of broking firms to ascertain their role in the case. Evidently, some brokers had high exposure in the NSEL case. Among them were Anand Rathi (Rs.629crore), India Infoline Commodities (Rs.326crore) and MotilalOswal Commodities (Rs.263crore). Other broking firms with explore in NSEL are Phillip Commodities (Rs.140crore), Geofin Comtrade (Rs.313crore) and Systematix Commodities Services (Rs.277crore).

SEBI has also launched probe against leading brokerages into alleged mis-selling of products with the promise of assured returns from commodities traded on the NSEL. SEBI is also investigating brokers over various complaints including false assurances, inducements and misrepresentation, trading without appropriate authority from clients, misuse or unauthorized modification of unique client code, funding by NBFCs related to the brokers and non-receipt of payouts by clients.

Recovery suits against AnandRathi, India Infoline Commodities, MotilalOswal Commodities and Phillip Commodities are filed by trading clients in Bombay High Court. These six trading clients have put their hope in the legal system and investigating agencies; we can hope that they receive justice in least possible time, thus ending their long awaited suffering. 

Brokers modified UCC in NSEL crisis

NSEL crisis surfaced in the year of 2013 and then brokers connection in misleading clients was raised by few clients such as Moti Dadlani ,Rita Vadodaria, and Achal Agarwal. On 18^th March 2015, Rita Vadodaria, client of Anand Rathi Commodities registered a fresh complaint against Anand Rathi Commodities.

Mr. Dadlani filed a suit against his broker and has supposed that his broker has defrauded money under his name. The broker dishonestly; used Mr. Dadlani account and PAN details to invest huge amounts on NSEL platform.

ED said that they are investigating the broker’s role in the entire case and asked them to furnish the details of funding of clients through non-banking financial companies and their unexplained write-offs as per media reports. The Investigating agencies are questioning about the illegal changes made on the NSEL platform.  NSEL suspected in their charge sheet that the brokers were involved in miss-selling products of NSEL by deceiving their clients on the NSEL platform were found to be different from those on brokers’ records.

Almost two years ago, three officials of leading brokerage firms Anand Rathi Financial Services, Geofin Comtrade and India Infoline were arrested by the economic offences wing of Mumbai police, and were later released on bail. The ED registered a criminal case under the PMLA Act in 2013, to probe the case. So far, it has made an attachment of Rs 800 crore in the case. A additional charge sheet could be expected.

Evidences point out NSEL Defaulters

National Spot Exchange Ltd. (NSEL) came into focus when the crisis surfaced in the year of 2013. Since then various agencies are investigating the case. Exchange platform was shut down immediately and enforced to stop all its trading contracts. After the payment crisis Regulatory Body, Investigating Agencies and NSEL had declared 24 members as NSEL Defaulters.

Defaulters are the borrowers. The defaulters who are accountable for the NSEL payment crisis are N.K.  Proteins, Mohan Group, LOIL Group, Ark Imports Pvt Ltd, PD Agroprocessors Pvt Ltd, Yathuri Associates, Lotus Refineries Pvt Ltd, Aastha Group, Metkore Alloys & Industries Ltd, Swastik Overseas Corporation, White Water Foods Pvt Ltd, Namdhari Group, NCS Sugars Ltd, Spin-Cot Textiles Pvt Ltd, Vimladevi Agrotech Ltd, Shree Radhey Trading Co and MSR Food Processing.

All the officials who are investigating the NSEL case have the money trail traced to all these defaulters. It states clearly that defaulters have all the money laundered in NSEL case and it is siphoned to middle east where defaulters own assets in forms of properties and lands. Even after three years after the NSEL crisis the defaulters who have 100% of the traders’ amount are still roaming free. The defaulters diverted trading clients’ money into parallel businesses instead of returning the outstanding dues. The defaulters cheated the trading clients by hypothecating stocks to banks, investing the default amount in purchasing benami properties and also slowed down the recovery process by making it difficult. All the evidences point out to the defaulters.

On August 12, 2013, FMC in its letter had stated that there was a possibility that the defaulters have violated the Prevention of Money Laundering Act (PMLA). The Honble’ Bombay City Civil Court, vide its order has observed that it appears the persons responsible for default in payments are the defaulters where all the trading clients are targeting NSEL and FTIL.

Defaulters of NSEL crisis

NSEL payment crisis surfaced on July 31, 2013 and then exchange suspended trading in all its contracts. The crisis was assessed at a surprising amount of around Rs. 5,600 crores. However a enormous sum of this amount is recoverable from the real culprits, borrowers connected to NSEL. Borrowers are also known as Defaulters of the crisis which are roaming scot-free till date. This recoverable amount is estimated to be as high as around Rs. 5,300 crore which is to be made from the sale of property belonging to defaulters. Most of these properties are known to be located in Middle-east.

NSEL had declared 22 members as ‘Defaulters’ in 2013 as per Rule 41 of the Exchange Bye laws. Let us know these NSEL Defaulters closely by their defaulting amounts, Injunctions and Decrees obtained against their assets till date. 

These defaulters who have 100% of the traders’ amount are still roaming free even three years after the 2013 crisis emerged. The defaulters pushed out the trading clients’ money into parallel businesses, instead of returning the outstanding dues almost to the tune of Rs.5600crore. The amount received as a result of sale of attached assets will later be paid to as many as 13,000 investors when they will finally receive justice.  

Brokers at Fault

In the National Spot Exchange Ltd. (NSEL) crisis case trading clients had earlier complained about brokers alleging that they were involved in different fraudulent activities in regards to trading on the NSEL platform. Hence it was not surprising that the trading clients have now filed different cases against top five brokers for mis-selling and assuring them to invest in agriculture commodities.

It is in context with the Enforcement Directorate’s (ED) process of top officials of broking firms to establish their role in the 5,600 crore settlement crisis which broke out in July 2013. Some broking firms had considerably high exposure in NSEL. Among them were Anand Rathi with a 629 crore exposure, India Infoline Commodities with 326 crore exposure and Motilal Oswal Commodities with a 263 crore exposure. Phillip Commodities and JM Financial are both with a 140 crore and 90 crore exposure respectively. SEBI has also launched a probe into alleged mis-selling of products by some brokers with the assured returns from commodities traded on the NSEL and is looking into various complaints against brokers, including false assurances, inducements and parody, trading without proper authority from clients, misuse or illegal modification of unique client code, funding by NBFCs related to the brokers and non-receipt of payouts by clients.

Trading clients have filed recuperation cases in the Bombay High Court against Anand Rathi, India Infoline Commodities, Motilal Oswal Commodities and Phillip Commodities. Only time will tell if these trading clients will get justice in legal system or not. We can hope that they will receive justice in the least possible time, by putting full-stop to their long awaited suffering. 

Real Face of NSEL Brokers

Since NSEL crisis came to light there has been series of events where, FTIL the parent company of NSEL is questioned. The defaulters and brokers are sidelined when the money trail of the defaulting amount of 5600 Cr. is traced to the defaulters. Since 2013 when the crisis came to knowledge there has been a needle of doubt on brokers as they fraudulently used details of investors for NSEL platform.

Securities and Exchange Board of India (SEBI) the market regulator has launched a probe against brokers for the act of selling goods with assured returns of 16% and misleading the investors. This is altogether new turn into the NSEL proceedings as this probe has fresh evidences against brokers. According to the sources there are six leading brokers involved.

Accounts of brokers that sold NSEL schemes are also being investigated. It is suspected that these brokers conducted selling of products of NSEL with promise of assured returns. There is also possibility of involment of black money diverted to sister concerns. Apart from SEBI, a high-level committee constituted by the Bombay High Court and other probe agencies are also investigating the matter. 

It is stated that the committee as also other regulators and investigative agencies have found major differences in the data and details submitted by various investors as part of their claims, as against the data submitted by NSEL. These discrepancies include submission of wrong PANs (Permanent Account Numbers), raising doubt about source of funds, while authorisation letters and trade execution documents submitted by brokers have also been questioned. There are also cases of some brokers that they created fake ledger accounts in the name of their clients without their knowledge, sources said. Complaints against brokers include false assurances, enticement and falsification by brokers, trading without right authority from clients, misuse or unauthorised modification of unique client code, funding by NBFCs related to the broker and non-receipt of payouts by clients. 

NSEL Defaulter: Metkore Steel and Alloys Limited

In the year 2013 when National Spot Exchange Limited crisis came into light the parent company FTIL is blamed. But the defaulters who are actually responsible for all the money laundering are roaming scot-free. Defaulter AasthaMinmet, Lotus Refineries, Metkore  Alloys are some of the defaulters who are investigated by investigating agencies.

Metkore  Alloys is Andhra Pradesh based company. It turned out to be one of the biggest defaulter. Metkore  Alloys owes Rs 94.83 crore  to National Spot Exchange. Metkore  Alloys led by Prashant Boorugu and Savitha Boorugu. Amongst them Prashant Boorugu was arrested on 11 Aug 2014 but released on 11 Sep 2014. Metkore Steel and Alloys Limited (MAIL) has declared lockout at its Ferro-chrome manufacturing plant located in the north coastal Andhra district of Srikakulam.

In 2014 the factory employees reportedly blocked the representatives of the public sector Steel Authority of India (SAIL) and NSEL from inspecting the Ferro-chrome stocks that were kept at the company's warehouses in Tekkali town. The inspection was planned after the Maharashtra Protection of Interest of Depositors (MPID) court allowed the auction of Metkore's Ferro-chrome stocks worth of Rs 91 crore under the supervision of the monitoring and auction committee appointed by the Forward Markets Commission. NSEL NSEL invites bids to sell ferrochrome stock of defaulter Metkore Alloys.

There are other defaulters like Metkore  Alloys who are spending their lives on the defaulted money of NSEL investors. Enforcement Directorate is considering freezing assets of some other defaulters for the recovery of NSEL money.

NSEL Defaulter White Water Foods

Since the National Spot Exchange Limited crisis came into light the parent company FTIL is taking up blame. But the defaulters who are actually responsible for all the money laundering are roaming scot-free. Defaulter AasthaMinmet, Yathuri Associates, Namdhari Foods, White Water are some of the entities who are investigated by investigating agencies.

Haryana based NSEL Defaulter Mohit Dewan, Managing director of White Water Pvt. Ltd also involved in the Rs.5, 600 crore. Crisis and the defaulted outstanding amount is 84.82 crore

NSEL Defaulter White Water informed the HCC that they had not received any notices concerning the meetings of the committee post 28thApril, 2015 when the HCC had adjourned the matter. They further submitted that after the order was passed, they did not receive any notices regarding the meetings of the HCC. The Advocate asked for an adjournment.

There are other defaulters like Namdhari Group who are spending their lives on the defaulted money of NSEL investors. Enforcement Directorate is considering freezing assets of some other defaulters for the recovery of NSEL money.

NSEL Defaulter Namdhari Foods

In 2013 when National Spot Exchange Limited crisis came into light the parent company FTIL is taking up blame. But the defaulters who are actually responsible for all the money laundering are roaming scot-free. Defaulter AasthaMinmet, Yathuri Associates, Namdhari Foods, White Water are some of the entities who are investigated by investigating agencies.

Namdhari Group is one of the Produces two varieties of rice brands namely Namdhari Food and Namdhari Rice. Namdhari Foods is a NSEL Defaulter with the defaulting amount of total 61.41 Cr.

Advocate appearing for Namdhari submitted that paddy has been sold as per the HC order and money is lying with the Competent Authority. He was not aware whether the goods were lifted or not. He was then given an affidavit filed by NSEL with a direction to file their reply with additional directions to comply with earlier directions, failing which applicable recommendations will be made by the Hon’ble Committee to the Hon’ble Bombay High Court.

There are other defaulters like Namdhari Group who are spending their lives on the defaulted money of NSEL investors. Enforcement Directorate is considering freezing assets of some other defaulters for the recovery of NSEL money. 

Speedy Liquidation Order of NSEL Defaulter Assets by Court

The Maharashtra Protection of Interest of Depositors (MPID) court had observed and stated that there had been delays in liquidation of certain NSEL defaulter properties which were attached by various authorities. Complaints were previously raised, to which the Economic Offences Wing (EOW) had attached properties of the borrowers under the MPID Act.  

The order to liquidate the attached defaulter properties had already been passed before.  Judge D.P. Surana presiding over the matter interrogated the Competent Authority represented by Deputy Collector,AjitSakhare about the progress in the matter. The court had passed an order in allowing Competent Authority to liquidate properties of some Defaulters of NSEL. There still seems to be little or no progress taken in liquidation of the attached defaulter properties by the authority so far.

Attached properties were transferred to the Competent Authority which had to then auction and distribute the funds raised among those who have lost money. However there seems to be no action taken place in the matter.

In the case of defaulter Swastik Overseas Corporation who has a payment obligation of 102.98 crores, the court had passed an order allowing the authority to liquidate properties of Rajesh Mehta. No efforts have been seen in this matter till date. Swastik Overseas has paid just Rs. 12.18cr. EOW & crime investigating department of Mumbai has also attached the company’s property in Gujarat.

 The Court has sought help from NSEL &the group representing NSEL Investors to arrive at valuation based on ready reckoner rates of State Government.  The Court has also ordered the Competent Authority to comply with its order and file a report in one month.

In another case connected to NSEL payment crisis, the court ordered Competent Authority to take control of the five immovable properties owned by NarayanamNageswarRao, Managing Director of NCS Sugars Ltd. This Hyderabad based company has paid only Rs. 7.85 Crores of its total obligations of Rs. 58.5 crores till date.

 Yathuri Associates, yet another defaulter in the NSEL payment crisis along with its group company has a payment obligation of 640 crores. In this case GaganSuri Proprietor of Yathuri Associates also has attached properties. The court ordered the Authority to proceed with liquidation of the attached property & report back in one month. The estimated value of attached property is 300 crores

Various other cases of defaulter properties were also given in the hands of the Competent Authority to expedite the liquidation of attached properties.One can only hope and wait and watch, if these orders by the court will be immediately acted upon, thus bringing relief to the current NSEL crisis situation.

Brokers taking undue advantage of Trading Clients

Trading Clients of NSEL had made huge financial gains while trading with the exchange. They made financial advances until July 2013, when the market paused due to government directions at that time. Trading clients of NSEL were lured into trading due to fixed costs of borrowing & a higher spread of returns against commodities by brokers. Purchase price & sale price of commodities with a fixed return of 13-14 % pa was clearly mentioned in the contract issued by brokers.

Trading Clients participated in financing schemes of commodities in which they had no specific domain knowledge or expertise. They invested large funds, without proper assessment of risk management. Billing activities were outsourced by trading clients to brokers who acted as a Clearing & Forwarding agents to fulfill requirement of contracts. Physical market side involved producing, buying, purchasing, storing and trading of commodities.

Brokers took due advantage of trading clients since they had no proper domain knowledge or expertise and all billing and trading activities were in their hands. None of the trading clients obtained VAT & TIN numbers against purchases & sales though specific nature of transactions were well known. Trading clients also never collected warehouse receipts from these brokers for purchases.

The High Court Committee on the 22^nd of January 2015 had directed NSEL to collect data of 13000 trading clients through their respective trading members and brokers in order to ensure and streamline the recovery process. Following the direction of the Honorable High Court Committee, NSEL issued the circular on February 2015 to trading members to collect the required information of the trading clients and furnish their details by February 2015. This would determine the legitimate, genuine, undisputed and clean claims of the trading members and their respective clients.

NSEL has stated that only 45 trading clients have verified their claims totaling to Rs.12 crores as of now. The Exchange had also disclosed of a large scale client code modifications done by NSEL brokers for a few months namely from April to July 2013. Value of client modifications stood at over Rs. 2000 crores as per most recent findings.

NSEL Defaulter Shree Radhey Trading Company Defies Bombay HC Order

Shree Radhey Trading Company, one of the defaulters of NSEL crisis is based in Saharanpur, Uttar Pradesh. It wholesales commodities such as spices, kirana and dry fruits.

Among the 22 defaulters of NSEL, Shree Radhey Trading Company has been declared as defaulter with total outstanding due of 34.59 crore. Ramesh Nagpal, Proprietor of Shree Radhey Trading Co. failed to make payments to the exchange on due dates and hence was declared  defaulter by National Spot Exchange Ltd. on 28th August 2013.

Ramesh Nagpal – Proprietor of Shree Radhey Trading Company

High Court orders against NSEL Defaulter – Shree Radhey Trading Company

Bombay High Court had directed NSEL Defaulter Shree Radhey Trading

Ø  To dispose perishable goods (Stocks of Red chilly & black pepper)

Ø  To get an inventory prepared

Ø  To allow inspection by EOW & NSEL

Ø  To deposit sale proceeds in escrow account

­Inspite of the above orders given by the Bombay High Court; NSEL Defaulter Shree Radhey Trading Company defied the order. Shree Radhey trading Co. obstructed EOW and NSEL from entering their warehouse. Following this incident Bombay High Court warned NSEL Defaulter Shree Radhey Trading that if they obstructed again it would be treated as contempt of court. Bombay High Court had ordered EOW to break open lock of the warehouse facility of Shree Radhey Trading Company containing perishable commodities (red chilly and black pepper) at Saharanpur, Uttar Pradesh. Bombay High Court has made it clear that NSEL Defaulter Shree Radhey Trading will have to comply with Court orders.

The following properties of Shree Radhey Trading Company have been secured for attachment by Economic Offences Wing (EOW) of Mumbai Police:

Asset Type	Location Details	Area
FLAT	4/624, JAFFAR NAWAZ , PULSUBJI MANDI, DIST - SAHARANPUR 247001, UTTAR PRADESH
FLAT	NEAR SBI, RAVINDRA TALWAR WALI GALI, VIJAY TALKIES, CHAKRATA RD, SAHARANPUR, U.P. CHAKRATA RD, SAHARANPUR, UTTAR PRADESH
LAND	COMMERCIAL LAND, BEHIND TAJ HOTEL SAHARANANPUR, UTTAR PRADESH	1100 SQ YARD
PETROL PUMP	CHAKROTA RD, SAHARANPUR, UTTAR PRADESH
AGRICULTURAL LAND	NALHAR­A BAKEL - AMBALA HIGHWAY ROAD , SAHARNAPUR, UTTAR PRADESH	2.95 HECTARES
CINEMA HALL	R. G. PALACE CINEMA HALL, CHAKROTA RD, SAHARANPUR, UTTAR PRADESH
COLD STORAGE FACILITY	RADHEY TRADING, JANATA ROAD, SAHANANPUR, UTTAR PRADESH

Economic Offences Wing has been successful in seizing the properties of Shree Radhey Trading company, who have repeatedly failed to honour orders passed by the Bombay High Court. EOW is now directed to place progress report in the matter by next hearing. Proceedings are adjourned to 4th February, 2015 at 2:00 pm.