The Economic Offences Wing of the Mumbai police, which arrested Shah and Javalgekar yesterday, told the sessions court that Shah was the "financial controller" of the Financial Technologies (FTIL) and there was a huge transfer of funds from NSEL to FTIL. Profits of NSEL were siphoned off so that FTIL may benefit, it said.
Shah had in the past blamed Anjani Sinha, former CEO of NSEL, for the entire scam and feigned ignorance, it added.
The investigating agency also told the court that it wanted to unravel the entire chain of events in the scam by interrogating Shah and Javalgekar.
Shah's lawyer, advocate Mahesh Jethmalani, said the FIR was registered last year and Shah had visited EOW office 21 times to record his statement. EOW, in an earlier affidavit, had said Shah was cooperating with the probe, contrary to its present claim, he pointed out.
Shah had even set up a server of his company in EOW's office and provided expert staff to facilitate the probe. His arrest would be a set-back to the recovery of investors' money as "sitting inside (jail) he can't manage money but sitting out he can", Jethmalani argued.
Javalgekar's lawyer, advocate Aabad Ponda, said there could not be a case of forgery against his client as he had not forged any paper.
Shah came under the scanner of EOW and other agencies last year when his group company NSEL faced a payment crisis and nearly 18,000 investors allegedly lost their money.
Besides being the founder-chairman and group chief executive of Financial Technologies Group, Shah is also the founder of MCX. A first-generation entrepreneur, he founded the FTIL Group in 1999.