HC upholds maintainability of plea for adding 7 accused to NSEL case

The case, which came to light in 2013, involved a settlement crisis and payment default of ₹5,574 crore, leading to losses for 13,000 investors

Mumbai The Bombay high court recently upheld maintainability of a special court order, holding an application to prosecute five directors of different financial institutions and two firms as the accused in the National Spot Exchange Ltd (NSEL) payment default case. The plea was filed by the spot exchange in 2023.

HC upholds court orders adding 7 accused to NSEL case

The case, which came to light in 2013, involved a settlement crisis and payment default of ₹5,574 crore, leading to losses for 13,000 investors. The accused allegedly hatched a criminal conspiracy to defraud investors by inducing them to trade on the NSEL platform, creating forged documents like bogus warehouse receipts and falsified accounts.

The Mumbai police’s Economic Offences Wing (EOW) has filed 11 charge sheets in the case so far, with 220 individuals and entities named as the accused.

In 2023, the NSEL had filed an application seeking to implead Nirmal Jain, director of India Infoline Commodities Ltd; Preeti Gupta and Rupkishore Bhutada, the directors of Anand Rathi Commodities Ltd; Shiney George and Manish Gupta, directors of Geojit Comtrade Ltd; and two entities, India Infoline Finance Ltd and Anand Rathi Financial Services Ltd, as the accused in the case.

All the individuals and the institutions named in the plea as also the EOW has opposed the plea, claiming it was not maintainable at the pre-trial stage and needed to be considered at a later stage.

A special court for cases under the Maharashtra Protection of Interest of Depositors Act (MPID), however, held that the plea was maintainable and dismissed their objections and in May 2023 allowed the application and took cognizance of the offences alleged against the proposed accused, prompting them to challenge the orders in the high court. EOW too has approached the high court in appeal.

Apart from raising technical objections that the application could not have been filed at this pre-trial stage, they argued that the special court could not have added them as the accused in the case at the behest of a co-accused.

A division bench of justices Bharati Dangre and Manjusha Deshpande recently upheld dismissal of their objections and held the application was maintainable at this stage.

The bench said it was the special court’s duty to proceed against any person involved in the offence but not arraigned as accused by the police. “...if such a duty is cast upon the court, merely because it is one of the accused who has invited the attention of the court to this aspect, it cannot afford to refuse to discharge such duty,” the bench said.

The court has, however, kept the issue of adding the five individuals and two firms as accused in the case pending and it will be decided after hearing all the parties on merits.