Mumbai Court Directs Economic Offences Wing To Investigate Former FMC Chairman Ramesh Abhishek's Role In NSEL Crisis

Special Judge A.S. Sayyad under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act) opined that NSEL has disclosed suspicious acts and omissions on Ramesh Abhishek’s part which need to be investigated further.

“…there are some suspicious acts and omissions appears on the part of Mr. Ramesh Abhishek, the then Chairman of FMC at the relevant time. Whatever the suspicious acts and omissions highlighted by the applicant, by way of this application, in my considered opinion required to be investigated by way of further investigation. No prejudice or harm will cause to prosecution if the matter is investigated into the above facts. On the contrary, actual truth will come out which will helpful to decide criminal liability of the actual culprits”, the court held.

The court allowed prime accused NSEL’s application seeking further investigation into the role of Ramesh Abhishek and directed EOW to submit its report preferably within forty days from the date of order i.e., May 12, 2023.

Earlier the court has issued process against three broker companies and their directors and promoters.

Ramesh Abhishek was the Chairman of the Forward Markets Commission from 2012 to 2015. NSEL alleged that in 2014, FMC under the control of Ramesh Abhishek sent a mala fide proposal to the Ministry of Corporate Affairs to merge NSEL with its parent company FTIL. FMC allegedly had the intention to cause loss to NSEL as this proposal would put the entire outstanding claims of Rs. 5000 crores on the amalgamated entity. NSEL claimed that Ramesh Abhishek only initiated action against it and FTIL but no action was taken against the defaulters and the brokers.

The EOW, after a nine-year long investigation, has filed eleven charge sheets in the case and arrayed NSEL, FTIL, brokers and others as accused. However, Ramesh Abhishek is not named as an accused.

The prosecution objected to NSEL’s application on the ground that NSEL itself is the prime accused and does not have locus standi to file the application. Further, during investigation no material was found against Ramesh Abhishek indicating any action which was criminal in nature.

The court relied on Apex Court judgment in R.N. Agarawal v. R.C. Bansal and held that an accused can also file application for cognizance against a proposed accused.

In a letter dated May 18, 2020 to the investigating officer, NSEL claimed that Ramesh Abhishek aggravated the payment crisis by taking harsh action against NSEL and its directors and promoters. Ramesh Abhishek deliberately did not take action against the defaulters who admitted their liability in front of him and the brokers who flouted various regulations, NSEL claimed.

NSEL further claimed in the letter that Ramesh Abhishek didn't solve the crisis that could be solved by crystallizing liability and passing orders against the defaulters. Instead, he allowed them to divert their assets, withdraw the stocks, and destroy evidence of their culpability.

On August 4, 2013, according to NSEL’s letter, Ramesh Abhishek held an open meeting with all the defaulters in the presence of brokers, traders, and the NSEL management and Board of Directors. All the defaulters admitted that they owe the complete liability to the exchange, it claimed. Despite the defaulters’ confession, the FMC did not take any action against them, NSEL alleged.

The court said that the current case is regarding an economic offence of Rs. 5600 crores. The IO has the duty to carry out investigation very carefully and cautiously on each and every aspect, the court observed.

The court said that the prosecution’s reply randomly states that Ramesh Abhishek was not charge sheeted as no material of criminal nature was found against him but all the charge sheets are silent on this point.

The court said that the investigating officer is expected to clearly mention every fact regarding the involvement of any person in the charge sheet. There is a separate table provided in the prescribed format in the charge sheet, the court noted.

Thus, the IO created doubt and confusion in the charge sheets and the unnecessary burden shifted on the court to decide this application due to IO’s negligence despite having other heavy work to decide important cases, the court remarked.

The court concluded that NSEL’s letter to the IO highlights some suspicious acts. The court clarified that these observations are for further investigation only and it has not formed any adverse opinion against Ramesh Abhishek.

Case no. – Misc. Application No. 212 of 2023 In MPID Case No.1 of 2014

Case Title – National Spot Exchange Ltd. v. State of Maharashtra