In a recent development, the Special MPID Court on May 19, 2023, has accused Mr. Nirmal Jain, the director of India Infoline Commodities Ltd (IICL), Ms. Preeti Gupta, the director of Anand Rathi Commodities Ltd (ARCL), and Ms. Shiney George, director of Geojit Comtrade Ltd (GCL) in the National Spot Exchange Limited (NSEL) payment default crisis. Alongside them, Mr. Roop Kishor Bhootra, the director of ARCL, Anand Rathi Financial Services Ltd., the Promoter of ARCL, IIFL Finance Ltd. (previously known as IIFL), the promoter of IICL, and Mr. Manish Gupta, the director of Geojit Comtrade Ltd., have also been accused in the NSEL case by the Hon’ble Court.
Previously, in 2018, the Economic Offences Wing (EOW), Mumbai, had charged the three broking entities and three directors, declaring them accused and categorizing the entities as Financial Establishments under the MPID Act.
NSEL had filed an application with the Hon’ble Special MPID Court, urging it to take action against the directors and promoters of the mentioned commodities broking entities based on Section 3 of the MPID Act. A separate application was also submitted by an individual trader who sought similar relief and whose broker was India Infoline Commodities Ltd.
The Hon’ble Special MPID Court reviewed the presented evidence and observed that the main promoters and directors of the broker companies were excluded from the chargesheet without sufficient justification, contrary to the statutory mandate of Section 3 of the MPID Act. The court also noted that the brokers had misled investors about high returns and induced them to trade on the NSEL platform through brochures promising fixed returns.
Based on the evidence and its own findings, the Hon’ble MPID Court took cognizance of the offenses punishable under various sections of the Indian Penal Code (IPC), the MPID Act 1999, and the FCR Act, 1952. The court ordered the issuance of a process against the accused promoter companies and directors, including IIFL Finance Ltd., Anand Rathi Financial Services Ltd, Mr. Nirmal Jain, Ms. Preeti Gupta, Mr. Roop Kishor Bhootra, Ms. Shiney George, and Mr. Manish Gupta.
With these developments, the total number of accused individuals and entities in the NSEL case has reached 220 across 11 chargesheets filed by the EOW.
Furthermore, in a separate case before the Special MPID Court, the State of Maharashtra has filed an affidavit stating that IICL collected deposits amounting to Rs. 326.22 crores from 1653 traders, in addition to earning substantial brokerage and other fees/charges. The State of Maharashtra affirmed the need to secure the properties of IICL, its promoters, and directors for the interest of depositors.
It is worth noting that last year, the Securities and Exchange Board of India (SEBI) declared India Infoline Commodities Ltd, Anand Rathi Commodities Ltd, Motilal Oswal Commodities Ltd, Geojit Comtrade Ltd., and Philip Commodities Ltd as “Not Fit and Proper” entities and canceled their applications for registration as intermediaries.
