The Mumbai zonal office of the directorate of enforcement (ED) has provisionally attached immovable assets worth Rs115.86 crore in connection with the Rs5,600 crore National Spot Exchange Ltd (NSEL) fraud case.
The attachment, carried out on 31 March 2025, includes 15 immovable properties located in Mumbai, Delhi and Rajasthan, belonging to defaulters Mohan India group, Vimladevi Agrotech Ltd, Yathuri Associates and Lotus Refineries. The action has been taken under the Prevention of Money Laundering Act (PMLA), 2002.
ED initiated its probe based on the a information report (FIR) registered under various Sections of the Indian Penal Code (IPC), 1860. The investigation revealed a criminal conspiracy orchestrated to defraud investors, wherein the accused allegedly induced victims to trade on the NSEL platform using forged documents, bogus warehouse receipts, and falsified accounts. The total fraud is estimated at a staggering Rs5,600 crore.
Authorities found that trading members and defaulters of NSEL misappropriated investor funds, diverting them into real estate, debt repayments and other financial activities. Shockingly, NSEL permitted commodity trading without ensuring the presence of actual goods in its exchange-controlled warehouses, leading to thousands of investors unknowingly trading in non-existent commodities, ED says.
So far, ED has attached assets worth Rs3,433.06 crore in the NSEL case, with seven prosecution complaints filed against NSEL, defaulting entities and brokerage firms. Further legal proceedings are underway and the investigation is still in progress to trace additional proceeds of crime, the agency says.
In February this year, ED filed a prosecution complaint (PC) against 19 broking entities and their directors for allegedly conspiring with officials of the NSEL to mislead investors into trading on its platform. The complaint was filed on 28 January 2025 before the special court (PMLA) in Mumbai under the PMLA. The court has taken cognisance of the complaint on 3 February 2025. (
Read: NSEL Scam: ED Files Prosecution Complaint against 19 Brokers, Directors)
In September 2009, NSEL allegedly introduced the concept of 'paired contracts', i.e., buying and selling the same commodity through two different contracts at two different prices on its platform wherein investors could buy a short-duration settlement contract and sell a long-duration settlement contract and vice versa at the same time. It entailed the occurrence of buy trades (trading plus two --T+2 / T+3) and sell trades (T+25 / T+36) on the same day at different prices on the platform of NSEL. The transactions were structured so that buyers of the short-duration contract always made profits.
According to market regulator Securities and Exchange Board of India (SEBI), the scheme of 'paired contracts' traded on NSEL ultimately has caused loss to the market to the extent of Rs5,500 crore, which casts serious aspersion on the conduct, integrity and reputation of the brokers who facilitated such 'paired contracts', and, therefore, its continuing role in the securities market cannot be viewed as good and congenial for the interest of the investors or of the securities market.
In 2007, the Union government had given an exemption to all forward contracts of one-day duration for the sale and purchase of commodities traded on NSEL from operations of the provisions of the Foreign Contribution Regulation Act (FCRA) subject to certain conditions including 'no short sale by the members of the exchange shall be allowed' and 'all outstanding positions of the trades at the end of the day shall result in delivery'.
However, the Forward Market Commission (FMC) which had looked into NSEL's functioning, found that the exchange had violated the no-short-sale clause and was allowing contracts that had settlement periods that extended beyond the set limit.
