Dear Esteemed Stakeholders and Readers,Welcome to the fifth issue of our newsletter - NSEL NEWS. We believe it is our prime duty to keep you updated on the progress of recovery and the ongoing litigations against the defaulters and the relentless efforts put by our recovery and legal team in this regard. Based on persistent efforts put by NSEL, the Hon’ble MPID Court has cancelled bail of certain defaulters and arrested some of them. And for others their bail cancellation application has been filed in the Court. In one major development, the Hon’ble BHC on 22 September 2016, has directed ARK Imports to provide bank guarantee/ deposit of Rs 719 crores in Court within 4 weeks, failing which the NSEL will be entitled to proceed with the execution proceedings. The Hon’ble Court has also made the attachment of property of Brizo Realty Company Pvt. Ltd under the defaulter Aastha MinMet Pvt Ltd. absolute partly to the extent of Rs 6.5 crores. In this issue, we have listed down some of the actions which are still pending against the defaulters by the various authorities and we have also indicated that some assistance is required from the Government authorities for taking actions against the defaulters for speedy recovery.After almost 2 years of the arrest of officials of three leading brokerage houses by EOW, Mumbai, for their alleged role in the NSEL matter, the ED has now summoned and questioned some of the top brokers too of NSEL in connection with the case. Besides, reportedly, the investigation which was commenced by SEBI against some of the top brokers it regulates for their alleged role in NSEL matter has been concluded. As per reports, the allegation against the brokers for mis-selling of NSEL products for higher returns has been substantiated, which suggests misrepresentation, lack of due diligence, and undisclosed material conflicts and other shortcomings on the part of these brokers. As per another report, SEBI is also suspecting money laundering by these brokers on the NSEL platform. Based on the latest news reports, the SEBI has begun issuing show-cause notices to five leading brokerages houses on NSEL for mis-selling and misrepresentation to clients, among others.We once again urge the victims not to allow themselves to be used by the unholy designs and vested interests who are running a covert agenda of demolishing NSEL and its promoter, thereby delaying recovery process.NSEL NEWS is a platform for all of us to stay connected with regular updates and for a joint action against defaulters for recovery.We would be eager to have your feedback and suggestions about the newsletter. Do write to us on nselnews@nationalspotexchange.com

Best Regards

Prakash Chaturvedi Chief Executive OfficerNational Spot Exchange Ltd. (NSEL)

ISSUE05

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TOB

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The Newsletter of National Spot Exchange Limited (NSEL)

From the CEO’s Desk

For private circulation only

INFOCUSRECOVERY UPDATE

SNAPSHOT - RECOVERY

SNAPSHOT - LITIGATIONS

DEFAULTERS WHO HAVE TO RETURN MONEY

ACTIONS PENDING AGAINST THE DEFAULTERS

ACTIONS REQUIRED AGAINST THE DEFAULTERS

NEWS HIGHLIGHTS

C O N T E N T SPage - 02-03

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Page - 11-12

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Answer given by Shri Arjun Ram Meghwal, Hon’ble Minister of State in the Ministry of Finance to Question No.3338 put up in Lok Sabha pertaining to NSEL Crisis

recoveryteam@nationalspotexchange.comWrite to us on

If you have any information about

DEFAULTERS (Their whereabouts, New Business

Ventures, Financial Dealings...)

SHARE WITH US!

INFOCUS RECOVERY UPDATE

www.nationalspotexchange.comPage02 NSEL NEWS | July-Sept 2016

MOHAN INDIA: SWASTIK OVERSEAS:

AASTHA GROUP:

ARK IMPORTS:

The Hon’ble Special MPID Court The Hon’ble Special MPID had directed the sale of properties of Mohan India Court had ordered the Competent Authority to Group namely Delhi Civil Lines and Bikaner Land. begin the auction procedure for residential & The Court has appointed Knight Frank India as a commercial properties of Swastik Overseas global consultant to bring in quality buyers. As per Corporation in Ahmedabad. Accordingly, the MPID Court directions Competent Authority has Competent Authority has issued a public notice for republished the sale notice on 8th June 2016 with sale of the properties of Swastik Overseas

Corporation on 8th June 2016. NSEL recovery team certain modified terms and conditions. MPID court has met real estate brokers in Ahmedabad and bids has directed CA to proceed with auction sale of from Viva Reality’s client has been sent to CA for Mohan India Vehicles. showing interest to purchase properties. Also Bharat The Hon’ble Bombay High Court Bio Gas (debtor of Swastik Overseas) has given on 03/02/16 has directed the defaulter Aastha proposal to repay Rs 1.89 Crs in High Court Group to deposit Rs. 157.50 Crores subject to any Committee. NSEL informed EOW and CA that Mr. already deposited amount, within four weeks Mehta has rented the properties for which CA has against their admission of liability. The appeal filed issued notice for auction.by Aastha Group against the Order of decree on

The Hon’ble MPID Court has directed admission passed by the Single Judge was the Competent Authority to fetch the valuation and dismissed by the Hon’ble Bombay High Court. Also proceed with sale of ARK Import’s 11 properties. As the Hon’ble Special MPID Court has directed the per MPID order dated 02.04.2016 inspection and Competent Authority for sale of shares in Mohit auction of raw wool at Seerah and Purba godown Agarwal and Shilpa Agarwal’s Demat accounts of was conducted and sold to the highest bidder for a Aastha Group. The Hon’ble Court has also made the sum of 40 lakhs. BHC has directed ARK Imports on attachment of property of Brizo Realty Company Pvt 22nd September 2016 to provide bank Ltd under the defaulter Aastha MinMet Pvt Ltd

absolute partly to the extent of Rs 6.5 crores. guarantee/ deposit of Rs. 719 Cr in Court within 4

• NSEL has already secured recoveries amounting • NSEL has disbursed amount of Rs. 542.99 Crores to to Rs. 1233.02 Crores by way of decree on trading brokers, which includes a without prejudice admission against 5 defaulters and through loan from Financial Technologies India Limited injunctions from a total of 18 defaulters with (FTIL) of Rs.179 Crores to be paid to the smaller outstanding of Rs. 4515.93 Crores. trading clients.

• The Economic Offences Wing (EOW), Mumbai • NSEL has additionally recovered Rs 17.01 Crores Police and the Enforcement Directorate (ED) has as available in its escrow account for distribution attached assets worth around Rs.5000 Crores & after order from High Court Committee (HCC).Rs. 800 Crores respectively of the defaulting trading members.

THE NSEL RECOVERY UPDATE

RECOVERY ACTIONS AGAINST DEFAULTERSBased on relentless single-handed recovery efforts by NSEL

INFOCUS RECOVERY UPDATE

weeks, failing which the NSEL will be entitled to The Hon’ble HCC has recommended that the Competent Authority to sell proceed with execution proceedings. ED has approx. 863 bags of sugar of Yathuri Associates. By arrested Kailash Agrawal on 23rd September Order dated March 10, 2016, Hon’ble Bombay High 2016, however he has filed bail application Court has accepted the recommendation of the before PMLA Court the same has been rejected.Hon’ble HCC. NSEL has requested EOW to attached Ramesh Nagpal of Shree movable and immovable properties of Naraingarh Radhey Trading has been arrested by EOW and was Sugar mills, Rahul sales and their directors also. EOW granted bail by MPID Court on the conditions of him has filed bail cancellation application in MPID court making FDR of Rs. 29 Lakh in Competent Authority's for Gagan Suri.account within 10 days, and depositing Rs. 25 Lakh

EOW has filed bail every quarterly in Competent Authority’s account. cancellation application in MPID court for Further the Hon’ble Special MPID Court has ordered Surendra Gupta and Ranjeev Agrawal.the Competent Authority to begin the auction

procedure for red chilly and black pepper of Shree The Hon’ble Special MPID Court has Radhey Trading in Saharanpur. Accordingly, the ordered the Competent Authority to begin the Competent Authority has issued a public notice for auction procedure for the residential & commercial sale of red chilly and black pepper of Shree Radhey properties of NCS Sugars Pvt. Ltd. NCS Sugar has Trading. Mr. Ramesh Nagpal has deposited Rs 29 been directed by MPID court to deposit Rs25 Lacs Lacs with CA in August 2016 for lifting of stock MPID per Month with effect from November 2016 as per court has fixed price Rs. 120 per kg for Red Chilly the undertaking given by Mr. Nageshwara Rao in his and Rs. 725 per kg for Black pepper. Bail cancellation application.

The Hon’ble MA filed by NSEL seeking sale of Special MPID Court has ordered the Competent properties offered by Mr. Ravindra Reddy on behalf Authority to begin the auction procedure for of Sampat Rao towards part payment of the liabilityferrochrome of Metkore Alloys and Industries in

As per MPID Court directions Tekkali. As per directions from the Hon’ble Special

Competent Authority has transferred Rs 16.10 crs MPID Court, the Competent Authority has issued a

from the attached bank accounts of Lotus Refineries public notice for sale of ferrochrome. Further, - the

to the Competent Authorities bank account.Hon’ble Special MPID Court has directed the SBI to

Hon’ble Special proceed with the sale of the properties of Metkore MPID Court has directed the Competent Authority to Alloys which were pending for sale, only after transfer the amounts from the attached bank complete intimation to the Competent Authority. accounts of eleven defaulters to the Competent The sale proceeds were directed to be deposited in Authority’s Bank account.a no lien interest bearing A/c with intimation of the

auction and sale proceeds and action of the SBI in respect of the same to the Competent Authority. EOW has filed bail cancellation application in MPID court for Prashant Boorugu.

YATHURI ASSOCIATES:

SHREE RADHEY TRADING:

PD AGRO PROCESSORS:

NCS SUGARS:

METKORE ALLOYS AND INDUSTRIES:

LOTUS REFINERIES:

BANK ACCOUNT OF DEFAULTERS:

MSR Foods:

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www.nationalspotexchange.comPage05NSEL NEWS | July-Sept 2016

SNAPSHOT-RECOVERY

www.nationalspotexchange.comPage06 NSEL NEWS | July-Sept 2016

Amount in Rs. Crore

ACTIVITIES PENDING WITH COMPENENT AUTHORITY AS PER DIRECTIONS FROM MPID COURT

Defaulter Item for Sale Direction from Hon’ble Court NSEL Efforts

Metkore Alloyes And Industries

Sale of Ferrochrome at Tekkali

MPID court vide order dated 19th December 2015 has directed CA to sell the stock of ferrochrome at Tekkali

Recovery team visited Tekkali along with EOW and prospective buyer for inspection of material in Feb 2016

Swastik Overseas Corporation

Sale of Flat/Commercial properties at Ahmedabad

MPID court vide order dated 17th December 2015 has directed CA to auction the flat/commercial properties at Ahmedabad

Recovery Team has aproached various real estate brokers and co-ordinated to arrange the bids from prospective buyers.

Mohan India Group

Sale of Land at Delhi Civil Lines and Bikaner

MPID court vide order dated 17th October 2015 has directed CA to auction the lands at Delhi & Bikaner

Recovery Team is putting continuous efforts for finding prospective buyers. Recovery team visited Delhi & Bikaner to conduct the site inspection by the prospective buyers

Mohan India Group

Sale of Vehicles in Mumbai

MPID court vide order dated 26th September 2016 has directed CA to auction the vehicles

Recovery team is assisting the CA for doing the valuation of the vehicles and finding prospective buyers.

Shree Radhey Trading

Sale of Red Chilli and Black Pepper commodity

Direction from MPID court dated 17th Feb 2016 As per MPID Court direction Shree Radhey Trading has deposited Rs. 29 Lacs with CA in the Month of August 2016

ARK Imports Pvt Ltd

Sale of land / immovable properties at Ludhiana

MPID court vide order dated 4th March 2016 has directed CA to fetch the valuation of the immovable properties in Ludhiana and file the proposal for sale

Recovery team is assisting CA for conducting the valuation of the properties

Sr. No. Group Name of defaulter

Original Outstanding

Amt Recovered

& Disbursed

Amt Recovered in Escrow

Account Amt

Outstanding

Amt with Competent Authority /

MPID Court

Arrests made

by EOW1 ARK IMPORTS PVT LTD 719.42 0.05 0.17 719.21 0.40 √2 Dunar Foods Ltd. Group P D AGROPROCESSORS PVT LTD 687.30 13.21 0.24 673.85 √3 Naraingarh Sugar Group YATHURI ASSOCIATES 424.64 19.04 6.00 399.60 √

4 Aastha GroupJUGGERNAUT PROJECTS LTD. 220.20 1.00 0.00 219.20 √AASTHA MINMET INDIA PVT LTD 26.47 3.52 0.57 22.38 0.49

5 METKORE ALLOYS & INDUSRIES LTD.

114.28 19.20 0.25 94.83 √

6 SWASTIK OVERSEAS CORPORATION 102.98 9.84 2.89 90.25 √7 WHITE WATER FOODS PVT LTD 86.12 1.30 0.00 84.82 0.01 √

8 Namdhari GroupNAMDHARI FOOD INTERNATIONAL PVT LTD

53.07 2.05 0.00 51.02 1.47 √

NAMDHARI RICE & GENERAL MILLS 10.75 0.36 0.00 10.39

9 SHREE RADHEY TRADING CO 35.34 0.75 0.11 34.48 0.30 √10 VIMLADEVI AGROTECH LIMITED 14.02 0.08 0.00 13.94 √11 MSR FOOD PROCESSING 10.05 1.23 0.00 8.82 0.10 √12 N.K. Industries Group N K PROTEINS LTD 969.89 31.59 3.85 934.45 √

13 Mohan India GroupMOHAN INDIA PVT LTD 600.08 54.70 0.00 545.38 0.09 ×

TAVISHI ENTERPRISES PVT. LTD. 333.01 0.00 0.00 333.01

14 Lakshmi Energy & Foods Group

LOIL CONTINENTAL FOOD LTD 356.21 8.50 0.00 347.71 ×

LOIL HEALTH FOODS LTD 294.48 7.00 0.00 287.48

LOIL OVERSEAS FOODS LTD 86.19 1.08 0.00 85.11

15 LOTUS REFINERIES PVT LTD 252.56 0.08 0.00 252.48 16.62 √16 NCS SUGARS LIMITED 58.85 6.65 1.30 50.90 √17 SPIN COT TEXTILES PVT LTD 38.26 0.00 1.63 36.63 √

Total 5494.19 363.71 17.01 5295.95 19.49

Sr. No. Group Name of defaulter Status as on

30 June, 2016Status as on 30 September, 2016

Injunction obtained

Decree Obtained

1 ARK IMPORTS PVT LTD

As per MPID order dated 02.04.2016 inspection and auction of raw wool at Seerah and Purba godown was conducted and sold to the highest bidder for a sum of 40 lakhs.

BHC directed ARK on 22nd September 2016 to provide bank guarantee/deposit the decreetal amount in Court within 4 weeks, failing which the NSEL will be entitled to proceed with execution proceedings. ED has arrested Kailash Agarwal & sent to remand custody.

719.42 719.4

2 Dunar Foods Ltd. Group

P D AGROPROCESSORS PVT LTD

MA filed in MPID court directing Banks to deposit amount received from PD Agro towards the repayment of loan taken by them.

EOW has filed Bail cancellation application for Surendra Gupta and Ranjeev Agrawal. 680.23 -

3 Naraingarh Sugar Group YATHURI ASSOCIATES

MA filed to seek attachment of the pending properties (14 immovable properties and 3 vehicles).

MA filed in MPID court directing Banks to deposit amount received from Naraingarh Sugar Mills towards the repayment of loan taken by them.

405.6 265

4 Aastha Group

JUGGERNAUT PROJECTS LTD. MPID court has directed CA for sale of shares in Mohit and Shilpa Aggarwal’s Demat Accounts. 219.2 145

AASTHA MINMET INDIA PVT LTD

MA filed for transferring the amounts in the Bank accounts Aastha to NSEL Escrow A/c and for sale of properties. 23 12.5

5 METKORE ALLOYS & INDUSRIES LTD.

As per direction of MPID Court SBI through its letter, informed CA that they have completed sale of two properties. The sale proceeds to be deposited in a no lien interest bearing A/c.

EOW has filed Bail cancellation application for Prashant Boorugu. Amounts from Bank accounts to be transferred to CA’s account. 94.83 -

6 SWASTIK OVERSEAS CORPORATION

MA filed in MPID Court seeking direction to accept the offer received for purchase of two residential properties of Swastik Group.

Rajesh Mehta’s Bail was canceled by MPID Court. 93.44 91.2

7 WHITE WATER FOODS PVT LTD

Attached 2 bank accounts made absolute vide MPID order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal. 86.12 -

8 Namdhari Group

NAMDHARI FOOD INTERNATIONAL PVT LTD

MA filed in MPID court directing Banks to deposit amount received from Namdhari Food International towards the repayment of loan taken by them. 53.07 -

NAMDHARI RICE & GENERAL MILLS

MA filed to direct the CA to initiate the auction sale procedure.

MA filed in MPID court directing Banks to deposit amount received from Namdhari Rice towards the repayment of loan taken by them.

10.75 -

9 SHREE RADHEY TRADING CO

Attached 3 bank accounts made absolute vide MPID Order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal.

MPID Court has ordered the Competent Authority to begin the auction procedure for red chilly and black pepper of Shree Radhey Trading in Saharanpur. For lifting of stock MPID court has fixed price Rs. 120 per kg for Red Chilly and Rs. 725 per kg for Black pepper.

34.59 -

10 VIMLADEVI AGROTECH LIMITED MA filed to direct the CA to initiate the auction sale procedure 14.02 -

11 MSR FOOD PROCESSING MA filed seeking sale of properties offered by Mr. Ravindra Reddy on behalf of Sampat Rao towards part payment of the liability 8.82 -

12 N.K. Industries Group N K PROTEINS LTD MA filed in MPID court directing Banks to deposit amount received from NK Protein towards

the repayment of loan taken by them. 937.89 -

13 Mohan India Group

MOHAN INDIA PVT LTD

CA has reissued the auction sale notice for Mohan India property and bids are invited till 12.08.16

Hon’ble MPID Court partially allowed MA 506 of 2015 and directed the CA to auction sale the two vehicles belonging to Mohan India Pvt. Ltd. on an ‘as is where is basis’.

1,037.84 -

TAVISHI ENTERPRISES PVT. LTD.

MPID court directed CA to place boards at Mohan Group’s properties. CA issued letter to NSEL to place the boards. -

14Lakshmi Energy & Foods Group

LOIL CONTINENTAL FOOD LTD

LOIL Group has filed altogether 22 suits against NSEL and others at a local court in Punjab. NSEL is contesting action taken by LOIL against it at various forums.

-

LOIL HEALTH FOODS LTD

LOIL OVERSEAS FOODS LTD

15 LOTUS REFINERIES PVT LTD

16 crores from the attached bank accounts has been transferred to CA’s account on 12.05.2016 and placed in FDR, as per MPID Court direction. NSEL has filed counter claim against Lotus in the arbitration proceeding initiated by Lotus.

-

16 NCS SUGARS LIMITED Attached 2 Bank accounts made absolute vide MPID Order dated 04.03.2016. CA to maintain the amount in FDR with auto-renewal. Arbitration proceedings initiated. 58.85 -

17 SPIN COT TEXTILES PVT LTD

Arbitration proceeding is initiated. Statement of claim filed.

MA filed in MPID court directing Banks to deposit amount received from Spincot towards the repayment of loan taken by them.

38.26 -

Total 4515.93 1233.02

Amount in Rs. Crore

SNAPSHOT-LITIGATIONS

www.nationalspotexchange.comPage07NSEL NEWS | July-Sept 2016

Special MPID Court has been appointed to expedite the NSEL cases

DETAILS OF LITIGATIONS High Court

Injunction was granted in favour of NSEL for a sum of Rs. 242.2 Crores vide Order dated 26.09.2014 and a decree was granted in favour of NSEL vide Order dated 23.12.2014 for an amount of Rs. 157.50 Crores. Chamber Summons filed by NSEL for appointing a Receiver of the Hon’ble Court, for the properties / warehouses and assets including the commodities lying in the warehouses of Aastha Group, including the power to take possession and sell such properties / warehouses / commodities and deposit the sale proceeds with the Hon’ble Court / make payment of the sale proceeds to NSEL as per directions of Court.

MPID Court

NSEL has filed MA bearing No. 146 of 2014 for de-freezing the bank account of Aastha and transfer of money to NSEL Escrow Account and also for permission to sell steel and sale of land belonging to Aastha Group. MPID Court has directed the Competent Authority for sale of shares in Mohit Agarwal’s and Shilpa Agarwal’s Demat accounts.

High Court Committee

Report No. 8, 9, 10 of 2016 has been submitted by HCC directing the debtors of Aastha Group to deposit the amounts in NSEL Escrow Account.

DEFAULTERS WHO HAVE TO RETURN MONEY

www.nationalspotexchange.comPage08 NSEL NEWS | July-Sept 2016

MOHIT AGGARWAL

SHILPAAGGARWAL

BVH PRASAD

OVERVIEWAastha Group (Aastha Minmet along with another defaulting member Juggernaut Projects) is into Steel, Minerals, Energy, Agro, Shipping, IT and Education. They have a steel manufacturing arm based out of Andhra Pradesh & operate this facility with an annual output of over 100,000 MT p.a. and sell Thermex TMT bars under the brand name “AASTHA TMX FE 500”. They also trade in Structural Steel and have tied-up with major real state and infrastructure companies as their empanelled supplier for these products. The combined liability of the group is Rs. 246.67 Crores.

DEFAULTERAASTHA GROUP

ORIGINAL OUTSTANDING

246.67Cr

RECEIVED

5.09Cr

BALANCE RECEIVABLE

241.58Cr

1. While most of the defaulters are out on bail not abiding by directions given by Appeal with an undertaking to the respective Courts Bench of Hon’ble High Court of Mumbai. This to pay the outstanding amount in a periodic has specific reference to defaulter group basis, they are not honoring the bail namely M/s. Aastha Minmet and Juggernaut. conditions. Action should be taken against It is felt that since there is no speedy these defaulters for contravention of Hon’ble mechanism explored by the State and/or no Court orders. necessary support being received by NSEL,

the Decrees and other judicial process 2. The EOW of Mumbai Police has not been able to initiated by NSEL is not effectively moving get the non-coercive order passed in the year further.2013 in favour of M/s LOIL (Lakshmi Group,

Punjab) (Defaulter of Rs 736.89 Crs), by the 6. As found by the agencies most of the thinly Khamanon Civil Court Sr. Division at Punjab, capitalized defaulting companies were used by vacated till date, which is unheard in civil their promoter/ holding companies to siphon-off jurisdiction passed by any Civil Court affecting the funds and place it with multiple related criminal investigation. Because of the same no parties through layering of transactions. The agency can take any coercive measures against money trail as found by the agencies has clearly the M/s LOIL (Lakshmi Group, Punjab) (Defaulter established the money had flown from the of Rs 736.89 Crs) and their directors even after defaulters to several related companies and three years and they are enjoying the money and individuals, proving them to be companion in doing business freely as usual & fighting executing the malafide act. Therefore, these litigation with the money. companies and individuals should be made party

to the legal proceedings and the money should 3. Mohan India has defaulted for Rs 933.09 Crs be recovered from them also by attaching their and have not complied with the settlement assets etc.agreement. Even the Competent Authority

appointed by the Govt. of Maharashtra has 7. There has been no action so far on the not been able to sell the assets offered by defaulters who have siphoned of the money Mohan India. taken from the NSEL platform to purchase

properties or for business investment in the 4. Decrees obtained by NSEL against some country and even abroad. Also there are defaulters are pending for execution in Hon’ble several defaulters who are still doing their Mumbai High Court. These decrees need to be business as usual and even investing in new transferred to respective Local Court having businesses, brands, products etc. out of the jurisdiction over properties. Majorly the money obtained from the NSEL platform, Defaulters are residing/having Office outside

Mumbai and Execution of Decree is effectively which has gone unchecked from the concerned enforceable at the concerned jurisdiction for authorities.actual impact. 8. The thinly capitalized defaulting companies

5. The Defaulters are playing all possible tricks, should be merged u/s 396 with their cash rich parent/ holding/ associated company, who have in some pretext or the other, to hamper the been partner in the crime as established through execution process including challenging the money trail by the agencies. The board of the Decree in appeal (despite they had admitted company should also be replaced under Section their liability in the settlement Agreement and 397 expeditiously, so that their combined assets where the Decree is passed by Court primarily can be attached for the purpose of recovery.based on their admission in few cases) and

www.nationalspotexchange.comPage09

ACTIONS PENDING AGAINST THE DEFAULTERS

NSEL NEWS | July-Sept 2016

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a. Action for contempt of Court should be taken g. The Government should in addition to against such Defaulters who have not existing machinery, set some speedy complied with the conditions on which they machinery/ mechanism/ special Authority/ have been granted bail. Forum/ Enforcement Agency in place

exclusively for NSEL and its genuine traders b. All attempts by some of the defaulters to shift who are aggrieved due to default committed their bail cancellation matters from the Special by the Defaulters to ensure timely and MPID Court to the previous MPID judges, should effective execution of the Decrees. be throttled, so that the Special MPID Court Proceedings pending in various Courts/forums formed for the NSEL matter, can take a across India should also be expedited.consolidated view for better justice and to

monitor the performance of each defaulter. h. The Government should initiate rapid action against the Defaulters in the most compact and c. The Government should immediately appoint a focused manner by joining with NSEL’s recovery & Government recognized Asset Reconstruction legal efforts. NSEL is alone facing hardships and Company which will ensure faster liquidation action against it from various quarters though of the assets which are attached and offered by having bonafide intentions to recover the these defaulters to be sold. outstanding amount.

d. The Competent Authority should immediately I. Strictest early action should be taken against transfer the existing balances from the attached

the defaulters who have siphoned off the bank accounts of the NSEL defaulters to the money abroad to purchase properties or for account of the Competent Authority by making business investment like ARK Imports Pvt Ltd. the accounts absolute.N. K. Proteins Limited the largest defaulter has

e. The agencies should immediately attach the recently invested huge amount in purchasing

Demat Accounts / Shares / Mutual Funds and the brand Pankaj Oil. Mohan India Pvt Ltd,

other movable assets of the defaulters and White Water Foods Pvt Ltd etc are doing their

their parent / holding / associated company business as usual.

& directors as established by money trail j. Any mischievous moves/steps/actions/tricks of found by the agencies.

the Defaulters once reported or informed should f. Incremental assets of the defaulters and their

be tracked and dealt with strict action, purely on related companies & individuals independently

the conduct and falsity of the nature of act of identified by NSEL and brought to the notice of

the Defaulters.the agencies should be attached immediately.

ACTIONS REQUIRED AGAINST THE DEFAULTERS

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NEWS HIGHLIGHTS

NSEL NEWS | July-Sept 2016

August 3, 2016- Economic Times August 31, 2016- Business Standard

The Enforcement Directorate (ED), investigating the Rs The Securities and Exchange Board of India (Sebi) has 5,600crore NSEL fiasco under the Prevention of Money come across fresh evidence indicating that as many as Laundering Act, has honed its sights on securing overseas five brokers might have used the 'exchange mechanism' immoveable properties of a few large borrowers who to launder money in the Rs 5,574-crore National Spot defaulted in settling their obligations on the exchange to Exchange (NSEL) scam, according to the audit report thousands of investors, two persons aware of the submitted to it.development told ET.

The ED estimates that 5% to as much as 10% (Rs.280-560 September, 23, 2016 Hindu Business Linecrore) of the scam proceeds have been siphoned off overseas. A few of the 24 defaulters on NSEL include ARK Imports, LOIL, NK Proteins, Mohan India, etc. The other The Enforcement Directorate has arrested Kailash person said that restitution (distribution of funds to Agarwal, Director of Ludhiana-based ARK Imports in the 13,000 affected investors) would be “possible after ED Rs. 5,600-crore settlement default case in the National confiscates properties of defaulters at home and overseas. Spot Exchange.

ARK Imports defaulted Rs. 729 crore to NSEL investors.

August 9, 2016- Business Standard Agarwal is being arrested for the second time in the case as he was earlier arrested by the Economic Offences Wing of Mumbai on August 11, 2014.

The Enforcement Directorate (ED) has issued another September 6, 2016 - Live Mintsummon to Motilal Oswal, chairman and managing director

of Motilal Oswal Financial Services, rejecting his request to be represented by one of the directors of the company.

An audit ordered by the Securities and Exchange Board of The ED has summoned nine brokers for questioning in India (Sebi) of brokers involved in the 2013 payments connection with the National Spot Exchange Ltd (NSEL) crisis at the National Spot Exchange Ltd (NSEL) has found money-laundering case. This is the first time that heads of that they mis-sold NSEL products, said three persons

familiar with the development, including a Sebi official.brokerages such as Motilal Oswal Financial Services, India Infoline Commodities, Geofin Comtrade and Phillip “The examination of the NSEL brokers is complete”, and Commodities are being called for questioning. Sebi is writing to the department of economic affairs in

the finance ministry, said the senior Sebi official. Two year ago, three executives of leading brokerage firms Anand Rathi Financial Services, Geojit Comtrade and India The audit of brokers’ books, conducted by a third party, Infoline were arrested by the Economic Offences Wing of found that brokers mis-sold NSEL contracts by promising the Mumbai police, and were later released on bail. too high a return without ensuring delivery, said the

second person.

“Mis-selling allegations have been substantiated in Sebi’s August 25, 2016- Hindu Business Lineexamination of the audit report of the NSEL brokers. Mis-selling is one of the key areas that Sebi takes into consideration while determining whether brokers complied with the ‘fit and proper’ criteria,” said the third person.Close on the heels of the Enforcement Directorate

interrogation, six investors have filed separate cases ‘Fit and proper’ regulations require an intermediary to against five top brokers for mis-selling and wooing them have a code of conduct in place, possess a sound to invest in agriculture commodities in the now defunct reputation and financial integrity, among other things. National Spot Exchange. The audit was performed on the books of accounts of

Anand Rathi Financial Services Ltd (Rs.629 crore), India Recovery suits have been filed in the Bombay High Court Infoline Commodities Pvt. Ltd (Rs.326 crore), Geojit against Anand Rathi, India Infoline Commodities, Motilal Comtrade Ltd (Rs.313.25 crore), Motilal Oswal Commodities Oswal Commodities and Phillip Commodities, said sources.(Rs.263 crore) and Phillip Commodities (Rs.140 crore).

Overseas Properties of NSEL Defaulters under ED Lens Sebi suspects money laundering by brokers in NSEL scam

ED rejects Motilal Oswal plea in NSEL case; issues fresh summons

Sebi audit may spell trouble for NSEL brokers

NSEL case: investors move court against top brokers for mis-selling

NSEL case: ED arrests Agarwal of ARK Imports

NEWS HIGHLIGHTS

“The investigation concluded last month and the matter September 25, 2016- Economic Timeshas been referred to the adjudication department for inquiry and penal proceedings under section 11 (B) of

Embattled Financial Technologies has told shareholders Sebi Act and broker regulations’ clause pertaining to ‘fit that it never got any money from NSEL's profit and also and proper’ criteria,” said the first person on condition of cautioned them against vested interests spreading anonymity. Section 11B of the act refers to Sebi’s powers rumours about the government order on merging the to act to protect interest of the market.bourse with the company.

"NSEL has never declared bonus or paid dividend. Thus, Nov 07, 2016 - Economic Times63 moons has not received any money from NSEL's profit.”

"Over a period of 10 years, 63 moons has just received a legitimate revenue of Rs 84 crore from NSEL towards rent for real estate, maintenance. All dividends declared by 63 Capital markets regulator Sebi has begun issuing show-moons till date are from its standalone profit and do not cause notices to five leading brokerages — Anand Rathi have any contribution from NSEL profit or income," it Commodities, IIFL Commodities, Motilal Oswal noted. Commodities, Geofin Comtrade and Phillip Commodities

India — as to why action should not be recommended against them for mis-selling and misrepresentation to

October 17, 2016 - Live Mint clients and client code modification (by a few), among others, in the Rs 5,600-crore NSEL payment crisis of July 2013.

The brokers will be given the customary three weeks to The action in the NSEL case could be a monetary penalty respond to the notice, following which they will get a or suspending the commodity broking licencepersonal hearing by Sebi. The regulator can then issue In a rare instance, the Securities and Exchange Board of interim orders against them, if it sees fit. India (Sebi) has appointed a three-member adjudicating

bench after its initial probe found that certain brokers involved in the 2013 payments crisis at the National Spot Exchange Ltd (NSEL) had mis-sold NSEL products, three persons with direct knowledge of the matter said.

Never received any money from NSEL's profit, says FTIL

Sebi issues show-cause notices to brokerages on NSEL scam

Sebi appoints three-member bench to adjudicate NSEL broker issue

NATIONAL SPOT EXCHANGE LIMITEDRegd. Off.: 601, Chintamani Plaza, 6th floor, Chakala, Andheri Kurla Road, Andheri (East), Mumbai - 400099.

Tel: +91-22-4905 9000, 6761 9900 | Fax: +91-22-6761 9931 | www.nationalspotexchange.com

Disclaimer: The purpose of this newsletter is to provide current status to all stakeholders. The contents of the newsletter do not necessarily reflect the views or policies of NSEL and therefore, NSEL is not responsible for and specifically disclaims any liability arising out of damages of any kind arising out of the use or reliance on this information. Links or reference to other websites if any does not constitute endorsement of the material on those sites or any association with the same.

You are requested to send your email Ids with contact number along with your Client code, Member Id

for receiving regular updates on Recovery at email: info@nationalspotexchange.com

Suggestions / feedback

on the NSEL recovery efforts to be mailed to us at email:

recoveryteam@nationalspotexchange.com

Beware!!! NSEL Trading Clients The readers may note that it has come to our notice, that there have been dealings

made by some trading clients directly with some of their known defaulters by way of agreements not disclosed to any of the regulators or to the exchange or to the HCC. Some of the recipients of the recovery amount are directly related to the leading luminaries championing the cause of trading clients.

NSEL requests you to beware of some of the miscreants who have entered into backdoor arrangements with defaulters to settle their own amounts, which had to be deposited in the escrow account for distribution to all. This action was a violation of the High Court order.

If you are aware of any such trading clients who have entered into similar malicious deals with the defaulters or planning the same, please bring it to our notice at email: recoveryteam@nationalspotexchange.com