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NSEL crisis: MCA to look for company law violations

Aug 22 2013, 16:51 IST
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SummaryThe MCA is to initiate a probe to establish whether there were any violations of the provisions of company laws by the promoters of NSEL

The ministry of corporate affairs (MCA) is set to initiate an internal probe to establish whether there were any violations of the provisions of company laws by the promoters and top management of the National Spot Exchange (NSEL).

Sources said the MCA has received a reference in this regard from the consumer affairs ministry.

Hit by crisis, NSEL ordered to liquidate assets of defaulters by FMC

Already NSEL activities are being looked into by the consumer affairs ministry, the Forward Markets Commission (FMC), finance ministry and Securities and Exchange Board of India (Sebi).

Sources said the MCA may look into issues such as possible violations of various provisions of Companies Act, 1956, including those related to the promoters and top management.

The beleaguered exchange, which was set up to provide an electronic platform for buying and selling agriculture and other commodities, was found to be providing trading in forward commodity contracts as well in violation of rules.

After trading was suspended on July 31 on government's directive, a payment crisis got triggered involving over Rs 6,500 crore.

The exchange could manage to pay just over half of Rs 175-crore first tranche of payment due to investors on Tuesday, a day that also saw sacking of its top management brass, including its MD and CEO Anjani Sinha.

NSEL has presented a seven-month plan to settle the dues, which is being overseen by commodities markets regulator FMC (Forward Markets Commission) and the consumer affairs ministry. The FMC has already questioned the bourse's credibility and reputation for non-settlement of outstanding trade. The regulator had also said the exchange furnished "insufficient and delayed information" that is neither accurate nor reliable.

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