MPID court accuses directors-promoters of IIFL, Anand Rathi Commodities, Geojit Comtrade in NSEL case

MPID court accuses directors-promoters of IIFL, Anand Rathi Commodities, Geojit Comtrade in NSEL case

The enactment was passed in 2000 to tighten the noose against financial wrongdoers

The National Spot Exchange Limited (NSEL) has said that the special Maharashtra Protection of Interest of Depositors (MPID) court has accused certain entities of a payment default.

The names are India Infoline Commodities Ltd (IICL) director Nirmal Jain; Anand Rathi Commodities Ltd (ARCL) director Preeti Gupta, and Geojit Comtrade Ltd (GCL) director Shiney George. Besides, Roop Kishor Bhootra, director of ARCL, Anand Rathi Financial Services Ltd, the promoter of ARCL, IIFL Finance Ltd (erstwhile known as IIFL), the promoter of IICL, and GCL director Manish Gupta.

In 2018, in its chargesheet, the Economic Offences Wing (EOW), Mumbai, made three broking entities and three directors accused and declared the entities as Financial Establishment under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999.

NSEL, in its application, prayed to the MPID court to take cognisance and issue a process against the directors and promoters in view of the statutory mandate of Section 3 of the MPID Act.

Meanwhile, a separate application seeking similar relief was also filed by an individual trader, whose broker was ICL.

The MPID court ordered: "If the documents are taken into consideration in its entirety, it would prima facia indicate that the main promoter and director of broker companies are kept out of chargesheet by the concerned IO, despite the statutory mandate of Section 3 of the MPID Act without providing cogent reasons, while similarly placed persons have been arrayed as an accused."

The court further noted, "The statements of witnesses would prima facia indicate that brokers had misrepresented investors about high returns and induced them to trade on the NSEL platform. This court noticed in the chargesheet dated 27.12.2018 various brochures issued by three brokers to their investors, inducing them to trade and promised fixed returns.”

MPID thus took cognizance of the offences punishable under many IPC sections and Section 3 of the MPID Act. It ordered issuing process for the offences against the promoting companies - IIFL Finance Ltd (earlier known as IIFL) and Anand Rathi Financial Services Ltd, and directors Nirmal Jain, Preeti Gupta, Roop Kishor Bhootra, Shiney George and Manish Gupta.

These persons and entities will now be on the same footing as the other accused in MPID case No. 1 of 2014 and shall face trial. Until now, the tally of the accused in the NSEL case is 220 in 11 chargesheets filed by the EOW.

In another case before the MPID court, the state of Maharashtra filed an affidavit stating that IICL collected deposits from 1,653 traders amounting to Rs.326.22 crores, in addition to having earned handsome brokerage and other fees. It added that the properties of IICL, its promoters and directors needed to be secured for the interest of the depositors.

In 2022, the Securities and Exchange Board of India (SEBI), had also declared India Infoline Commodities Ltd, Anand Rathi Commodities Ltd, Motilal Oswal Commodities Ltd, Geojit Comtrade Ltd and Philip Commodities Ltd as ‘Not Fit.’ It had cancelled the application for registration as intermediaries.