Will Issue Notification To Attach Properties Of IIFL In ₹5,600 Crore NSEL Scam Within Four Weeks: State To Bombay High Court

The Maharashtra government recently informed the Bombay High Court that it will attach within four weeks properties belonging to commodities broker IIFL Commodities Limited, formerly India Infoline Commodities Ltd. (IICL) in the Rs. 5600 crore National Spot Exchange Limited (NSEL) payments default case.

A division bench of Justice Revati Mohite Dere and Justice Manjusha Deshpande summoned Anoop Kumar Singh, Principal Secretary of the Department of Home, Maharashtra, expressing dissatisfaction with the reply affidavit in a writ petition filed by an investor.

“Pursuant to the directions passed by us, in the first session directing the Principal Secretary, Home Department, Government of Maharashtra, to remain present in this Court at 2:30 p.m., Mr. Anoop Kumar Singh, Principal Secretary, Home Department, is present before this Court. He assures us that without waiting for the outcome of the final decision in the aforesaid petition, as stated in para 5 of the affidavit, the State by following due process of law, will issue notification for attachment of the conerned properties of IIFL, within four weeks from today. Statement accepted”, the court recorded.

The court was dealing with a writ petition filed by investor Vishvanidhi Dalmia, who sought the attachment of properties of IIFL, its promoters and directors under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act in relation to financial losses incurred by investors. Dalmia alleged that IICL lured investors to invest on the NSEL platform resulting in substantial losses.

On December 15, 2023, a co-ordinate bench had instructed the Principal Secretary, Home Department, Government of Maharashtra, to submit a comprehensive affidavit addressing the allegations raised in the petition and outlining the steps to be taken in response. However, despite the stipulated six-week timeframe, the court noted a lack of compliance with this direction.

The court highlighted another instance of non-compliance with its order dated July 26, 2022, which pertained to a previous writ petition filed by the same petitioner. In that order, the court recorded Special Public Prosecutor Avinash Ahvad's submission that appropriate steps will be taken by the authorities pursuant to the petitioner's representation to the Principal Secretary regarding attachment of IICL's properties. Further, the Investigating Officer will take into consideration the properties mentioned and after verifying, will take decide the petitioner's representation.

On February 9, 2024, Avhad sought additional time to file a comprehensive affidavit-in-reply. The court granted a final extension of four weeks for the filing and warned that failure to comply within this timeframe would result in appropriate action against the Principal Secretary.

However, on March 12, 2024, Ahvad tendered a 1.5-page affidavit. In para 1 of the affidavit, leave of the court was sought to file a detailed affidavit-in-reply, as and when required. “The affidavit filed is a 1½ page affidavit and not a comprehensive affidavit, as directed by this Court vide order dated 15th December 2023. The affidavit is also bereft of several details and is vague, in particular para 3”, the court observed.

The affidavit further stated that the State will, within a three weeks after getting a final decision from the court, issue notification for attachment of the required property of IIFL. The court stated that this affidavit is “vague and is far from comprehensive”.

Therefore, the court summoned the Principal Secretary, Home Department, to appear before it the same day at 2:30 PM. Singh appeared before the court and assured the court that the state will issue notifications for the attachment of properties associated with IICL within four weeks, without waiting for the final decision in the ongoing petition.

The next hearing is scheduled for April 16, 2024.

The petition by Vishvanidhi Dalmia, an investor though IICL, revolves around the alleged financial irregularities and fraudulent practices linked to the Rs. 5600 crores NSEL scam.

NSEL was hit by a Rs 5,600 crore payment default fraud in 2013 when the exchange failed to repay 13,000 trading clients. Brokers like IICL have been accused of mis-selling NSEL contracts by promising assured returns without ensuring delivery.

Last year, a special court in Mumbai issued process against directors and promoters of India Infoline Commodities Ltd (IICL), Anand Rathi Commodities Ltd (ARCL), and Geojit Comtrade Ltd (GCL) in the NSEL scam.

Case no. – Criminal Writ Petition No. 4231 of 2022

Case Title – Vishvanidhi Dalmia v. State of Maharashtra and Ors.