Mumbai, May 30, 2023: The Maharashtra Protection of Interest of Depositors (MPID) Court has directed the Economic Offences Wing (Mumbai) to investigate the involvement of former Forward Markets Commission (FMC) chairman Ramesh Abhishek in the NSEL case. The court has instructed the EOW-Mumbai to submit the investigation report within 40 days.
The directive comes in response to an application filed by National Spot Exchange Limited (NSEL), which expressed concerns that the EOW had not investigated the role of FMC and specifically Mr. Ramesh Abhishek in the NSEL Payment Crisis. NSEL had previously provided a detailed representation to the EOW in 2020, highlighting instances of negligence and failures on the part of Mr. Abhishek, which were not thoroughly investigated.
Neeraj Sharma, the MD & CEO of NSEL, expressed hope that the investigation into Mr. Abhishek’s role would be fair and impartial, shedding light on any motives behind inactions.
The crisis, according to NSEL, was caused by the ill-advised actions of the FMC chairman, who wrongly advised the Department of Consumer Affairs (DCA) that NSEL had violated certain conditions of exemption under FCRA. This led to the issuance of a Show Cause Notice (SCN) to the exchange, but despite a detailed response, the SCN remained unadjudicated until the exchange was abruptly ordered to stop functioning, resulting in the payment default crisis.
NSEL also questioned the lack of action against N-Spot, a subsidiary of NSE and a competitor of NSEL, which had contracts exceeding the permitted 11-day period. This raised concerns about favoritism towards N-Spot and NSE, indicating Mr. Abhishek’s potential ulterior motives.
“The 4th Aug 2013 meeting was an important event wherein the defaulters before the FMC, the Brokers, NSEL Board and some traders admitted their entire liability and committed to pay. This fact was further fortified by various media interviews given by Mr. Abhishek post the meeting. However, the minutes of the said meeting are stolen or intentionally misplaced / destroyed. This finding also forms part of Serious Fraud Investigation Office (SFIO) in their report,” the NSEL Press Release says.
It further adds :”On 6th Aug 2013, the Government reiterating its stand, gave omnibus power to FMC and in turn Mr. Abhishek by way of Gazette Notification to solve and settle the crisis. However, none of the actions taken by Mr. Abhishek were towards resolving the crisis. Infact, the laidback attitude of Mr. Abhishek towards recovery resulted in siphoning off the monies by defaulters, making the recoveries from them difficult to repay the genuine claimants who are still awaiting for their legitimate dues even after nearly a decade. Mr. Abhishek failed to solve the crisis while it was solvable in 10 days back in 2013.”
Despite the EOW-Mumbai’s report on the wrongdoings of brokers, Mr. Abhishek refrained from taking action against them. The ongoing investigation into his role aims to uncover any motivations or quid pro quo that led Mr. Ramesh Abhishek to neglect the EOW’s recommendations against the brokers, the release says.
“Infact, Mr. Abhishek acted on the wishes of the Brokers and recommended a forced merger of two private companies in so-called public interest to the Government. The
decision of merging two companies was overturned by Hon’ble Supreme Court as there was “no public interest”. Infact, the recommendation to merge two companies was termed as ‘non application of mind’.”
The NSEL feels that Mr. Ramesh Abhishek created, fuelled, and aggravated the NSEL crisis and did not solve it when it was solvable, thereby abdicating his regulatory duty leading to omissions of criminal nature on his part that caused wrongful loss to the investors and wrongful gains to the defaulters.
“Mr. Abhishek will now have to face the investigation and cannot take shelter of merger of FMC with SEBI and his inability to attend investigation which he had taken before
SFIO. It is a trite law that no government servant is above law and cannot seek protection of “actions taken in good faith”, until those actions are investigated under
the lens of investigation agency,” the Press Release says.
Earlier in 2019, 63 moons technologies limited has filed a criminal complaint with CBI against Mr. Ramesh Abhishek, Mr. K. P. Krishnan and Mr. P. Chidambaram alleging
conspiracy against the group.