Asset seizures: Arrested NSEL staffers plan legal recourse against EOW

The Economic Offences Wing (EOW) of the Mumbai police, which plans to attach the assets of the accused in the National Spot Exchange (NSEL) matter, could face a legal challenge. It is believed that the arrested former officials of the exchange plan to challenge the imposition of the stringent Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 that allows the police to attach those assets of the accused that have been created using the proceeds of the crime.

Lawyers familiar with the matter said the contention is that MPID should not be invoked in this case as it pertains to an exchange, which is not a deposit-seeking entity. They added that if the court finds it to be a fit case for MPID, then the assets of the brokers and the investors should also be attached as they, too, benefited from the platform.

While it could not be independently confirmed, it is believed that submissions made by lawyers representing some of the arrested officials of NSEL state that brokers and investors made a profit of Rs 100 crore and Rs 1,100 crore, respectively in the last few years.

NSEL also profited by way of transaction fees, they said. Three former staffers of NSEL ? Anjani Sinha, Amit Mukherjee and Jai Bahukhandi ? along with Nilesh Patel, the head of the largest defaulting entity NK Proteins, have been arrested by the EOW, which registered an FIR on September 30.

Senior officials of the EOW said they have enough evidence to invoke MPID and the go-ahead from the collector?s office has already been received. The process of attaching the assets has also been initiated, they said. ?The law provides for the accused to challenge our decision. The (MPID) Act includes the word ?commodities? and the list of excluded entities like banks and cooperatives is also clearly stated,? said Balsingh Rajput, deputy commissioner of police (EOW).

?We have begun the process of tentatively attaching the assets. The process is being duly followed and details of whatever assets we attach will finally be sent to the home ministry,? he said.