NSEL fraud: HC stays freeze of accused company’s accounts | mumbai news | Hindustan Times
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NSEL fraud: HC stays freeze of accused company’s accounts

Jignesh Shah-promoted Financial Technologies India Ltd (FTIL) has changed its name to 63 Moons Technologies Ltd. FTIL has been under the regulatory scanner for its alleged role in the Rs 5,574 crore settlement fraud at National Spot Exchange Ltd (NSEL). FTIL (now 63 Moons) holds a 99.99% stake in NSEL.

mumbai Updated: Jan 22, 2017 00:28 IST
Kanchan Chaudhari
Jignesh Shah
Jignesh Shah(File photo)

In a relief for 63 Moons Technologies Limited, the Bombay high court has stayed an order passed by the enforcement directorate (ED) freezing all demat accounts and investments of the Jignesh Shah-promoted company in the share market.

Jignesh Shah-promoted Financial Technologies India Ltd (FTIL) has changed its name to 63 Moons Technologies Ltd. FTIL has been under the regulatory scanner for its alleged role in the Rs 5,574 crore settlement fraud at National Spot Exchange Ltd (NSEL). FTIL (now 63 Moons) holds a 99.99% stake in NSEL.

The division bench of Justice Ranjit More and Justice AM Badar stayed the ED order primarily on the grounds of non-compliance with statutory provisions by the agency.

On September 26, 2016, a deputy director of ED had instructed compliance officers of National Securities Depository Limited and Central Depository Services Limited to freeze all accounts or investments of the Jignesh Shah-promoted company.

The company then approached high court challenging the order. Its counsel, senior advocate Mahesh Jethmalani submitted that the ED officer had not complied with requirements of section 17 of the Prevention of Money Laundering Act.

While ED counsel, advocate Hitendra Venegaonkar, countered submitting that the order had been passed not under section 17 of the PMLA Act, but under section 65 of the PMLA Act and section 102 of the Code of Criminal Procedure, which requires the officer effecting seizure to report it immediately to the local magistrate.

The judges, however, found that the ED official did not comply with the requirement of the Code of Criminal Procedure. “Even assuming that the impugned orders are passed resorting to section 102 of the Code of Criminal Procedure, 1973, we are of the prima facie opinion that the respondents (ED officials) have not complied with sub-sections (2) and (3) of section 102 of the Code of Criminal Procedure, 1973,” said the bench while staying the order.

The ED counsel then made a statement that the officials would complete investigation in respect of the frozen assets within four weeks. In view of the statement, Jethmalani assured the court that the company would not transfer or create any third party interests in respect of the frozen assets during the period. He also assured that a 72-hour notice would be given to the deputy director of ED before any treasury operation being conducted by the company.

Also read:NSEL case: ED attaches property worth Rs1,170 crore