As the hearing on a petition requesting a stay on the proposed settlement of e-series bullion contracts traded on the National Spot Exchange (NSEL) continues in the Bombay High Court, it has emerged that most of the redemption requests cleared by the spot exchange in the last two weeks belonged to the Indian Bullion Market Association (IBMA) — a subsidiary of NSEL.
Referring to the details of investors who requested financial settlement of their outstanding exposure, petitioners pointed out that six of of the total eight requests cleared by NSEL came from IBMA. The requests added up to an exposure of 66 kg in gold and 117 kg in silver-based contracts.
The remaining 57 requests were not accepted by NSEL citing incomplete or unprocessed documents. Petitioners also claimed that nearly 99% trades of more than R5 lakh on e-series bullion since July 1, 2013 were carried out by IBMA.
The petitioners have raised objections to the IBMA redemption requests as guided by the court's interim order dated October 7,2013. In the interim order, the two-member bench of Justice SJ Vazifdar and Justice KR Sriram had permitted the settlement to take place only after October 25, 2013 even as they allowed NSEL to take investors' request for settlement.
The court had ruled that within two days of redemption requests, the petitioners could obtain details of these investors at the office of the FMC. In case the petitioners have objections to any requests due to suspicion of links to NSEL, they can intimate the FMC within four days of their inspection. None of the e-series settlement transactions is allowed without an approval from the FMC.
Further, FMC, along with the Economic Offences Wing (EOW) of the Mumbai Police were entitled to demand ledgers, documents and records related to e-series contracts, including the ledgers of Brink's Arya, the custodian for e-series gold and silver stocks.
The Bombay High court postponed its final order on the petition on Friday. Meanwhile, it asked additional solicitor general Kevin Setlvad representing FMC, the ministry of finance and the ministry of consumer affairs to clarify if all these