NSEL: MPID Court Asks To Pay Small Traders up to Rs20 Lakh, Excludes Corporates

Moneylife Digital Team/IANS 17 October 2022

In a big win for small traders, the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act (MPID) court has directed the competent authority (CA) to make a graded distribution only to about 2,040 individual traders who have outstanding amounts between Rs10 lakh and Rs20 lakh.

However, the MPID court last week excluded corporates and partnerships from getting preferential payment in the Rs5,600 crore NSEL (National Spot Exchange Limited) payment default crisis.

Now by this order, out of the total unverified 12,735 traders, as many as 72% or 9,193 traders will be paid fully, NSEL said in a statement on Saturday.

To give immediate relief to small traders in 2013, NSEL had paid 50% to the about 6,400 traders and 100% to 708 traders having outstanding below Rs2 lakh, it added.

Earlier in May, the Supreme Court approved the constitution of a high-powered committee headed by retired judge of the Bombay High Court, Pradeep Nandrajog, for recovery of monies from the defaulters where NSEL has secured money decrees.

Immediately after the NSEL payment crisis emerged in August 2013, NSEL had taken a without prejudice loan of Rs179 crore from 63 moons technologies limited, which will also be recovered from the defaulters.

This loan was used by NSEL to repay traders having claims of up to Rs2 lakh in entirety and those with claims between Rs2 lakh and Rs10 lakh by up to 50%, a statement from NSEL had said.

Last year in March, the Bombay High Court had asked the CA to distribute the amount lying in its escrow account to genuine claimants whose outstandings between Rs2 lakh and Rs10 lakh on a priority basis.

Earlier in 2013, the economic offences wing (EOW) of Mumbai police registered a first information report (FIR) in the NSEL fraud. Based on the FIR, the enforcement directorate (ED) initiated money laundering investigation against directors and key officials of NSEL, 25 defaulters of NSEL and others.

Investigation conducted by ED under PMLA (Prevention of Money Laundering Act) revealed that the money collected from various investors was diverted by borrowers and trading members of NSEL for other activities like investment into real estate and repayment of outstanding debts.

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