NSEL case: MPID court rules to pay small investors first

In a big win for small traders, the MPID court has directed the Competent Authority to make a graded fund distribution only to about 2,040 individual traders.

FPJ Web DeskUpdated: Sunday, October 16, 2022, 02:20 PM IST
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In a big win for small traders, the MPID court has directed Competent Authority to make graded fund distributions to investors who have lost money in National Spot Exchange | National Spot Exchange

In a big win for small traders, the Maharashtra Protection of Interest of Depositors (MPID) court on Thursday has directed Competent Authority to make graded fund distributions to investors who have lost money in National Spot Exchange. The court has asked the component authority to focus on the small investors first and has excluded corporate and partnership firms from receiving any preferential payments. The competent authority has a total fund of Rs 250 crore available.

According to an order issued on Saturday, Special Judge AS Sayyad said that small investors with Rs 10-20 lakh investments were 2,232 with an outstanding of approximately Rs 312 crore. If corporates and partnership firms are excluded then the number would go down to approximately 2,040 with Rs 284 crore due.

With this payment out of unverified traders, about 72 per cent will be paid fully.

Once the payment of those falling under Rs 2 to 10 lakh is done, an amount of Rs 90 crore would still be available. The payment to individual investors in this range would satisfy about 30 per cent of their outstanding balance.

According to the order, this graded distribution to investors using an equitable formula would advance MPID Act's purpose.

The NSEL crisis was triggered by the abrupt stopping of a running exchange by Ramesh Abhishek, the then-FMC chairman. The promoters of NSEL and formerly called Financial Technologies now renamed as 63 moons have filed ₹10,000 crore damage against Abhishek, then Finance Minister P Chidambaram and KP Krishnan, the Additional Secretary of Commodities and Capital Markets, in the Bombay High Court.

NSEL, with the support of investigative agencies, has gone after defaulters and obtained decrees and awards worth ₹4,300 crore. Against the unverified claims of Rs 4,800 crore, NSEL has actively worked and supported in getting over Rs 6,000 crore worth of defaulters' assets already attached by the EOW and ED, which is sufficient to cover genuine claims of the balance traders.

NSEL urged the EOW to support its genuine mission of recovery, instead of supporting NIAG and NAARA in their petition for opposing reliefs to small traders.

With Inputs from IANS

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