The Rs 5,600-crore scam under which thousands of investors had been defrauded of their hard-earned savings in spot exchange of commodities had rung alarm bells in the country but the Punjab government is sitting on the request of the National Spot Exchange Limited (NSEL) for recovery of the amount from five Punjab based defaulter firms.
In a letter dated March 29, 2014, NSEL managing director Saji Cherian has written to the Punjab chief minister, Parkash Singh Badal, seeking the state’s intervention in recovery of Rs 1,524 crore from five companies — three subsidiary firms of Laxmi Overseas Industries Limited (LOIL), ARK Imports and White Water Foods.
Stating that these companies are refusing to settle dues of thousands of investors, the NSEL letter says, “This would also be good for the image of state of Punjab which enjoys very good reputation in the market.”
The biggest defaulter is Punjab’s rice king Balbir Singh Uppal of LOIL. Uppal had recently shared the stage of the Shiromani Akali Dal at an election rally with the CM in his hometown Khamano in April.
If the chief minister’s office (CMO) functionaries are to be believed, the letter stands untraced in the government corridors.
Chief minister’s principal secretary SK Sandhu, when contacted, said he would look for the said communique.
“The investigating agencies can take action on their own,” Sandhu added. As the Mumbai police have so far made four arrests, including two NSEL directors and two food stock traders, the hunt is on for over a dozen traders for at least their joining the investigations.
ARK Imports Pvt Ltd’s Kailash Aggarwal is based in Ludhiana while Kamal Dewan of White Water Foods Private Limited is a Panchkula resident.
Uppal defaults for owing Rs 720.30 crore to the investors, Kailash Aggarwal Rs 719.37 crore and Kamal Dewan Rs 84.82 crore.
The letter says these entities in connivance with some of the exchange (NSEL) officials compromised with the risk management system of the exchange and defaulted in making payments.
“They sold goods which were supposed to be in their warehouse and received the money in lieu of sales.
However, when the exchange operations were closed on July 31, 2013, it was found that they had no goods. When called upon to settle, they are not paying the money, which they took from the market.
This had led to an unprecedented settlement crisis of Rs 5,600 crore,” it adds. “At present, the matter is under probe and investigation of multiple agencies -- economic offences wing (EOW) of Maharashtra police under the MPID Act, income tax department, the enforcement directorate and the CBI,” the letter stated.
“Despite all such efforts, the said entities are not cooperating and are refusing to come forward for settlement or payment of their dues.
However, they are running their businesses as usual without any empathy towards the investors’ plight and without fear of law,” it goes on to add.
In November 2013, the EOW wing of the CID of Maharashtra police had even issued summons to LOIL director Balbir Singh Uppal as part of the probe into the scam, but to no avail.
The NSEL on its website has identified several properties of these defaulters as ‘properties secured for attachment by EOW, crime branch, CID, Mumbai Police’.
The LOIL assets included five flats in posh localities of south Delhi, two shops in Naya Bazaar and an office on Kasturba Gandhi Marg in Delhi, besides the entire Laxmi Complex having the rice mills and a captive power plant at Khamano on the Ludhiana national highway.
Despite repeated efforts, none of the three LOIL directors came forward for the company’s version on the scam.
Uppal’s son and one of the LOIL directors, Janak Raj Singh, told HT on phone to call after 15-20 minutes. He then did not take the call.