NSEL crisis: MCA to look into possible Companies Act breach

As crisis at National Spot Exchange continues to deepen, the Corporate Affairs Ministry has also begun looking into the  matter to ascertain whether there have been any violations of the Companies Act.

"We have received a reference on NSEL issue from the Consumer Affairs Ministry. We are looking into it," a Corporate Affairs Ministry source told PTI.

Also read: NSEL crisis: Are stock brokers as blameless as they claim?

Among others, the Consumer Affairs Ministry, Forward Markets Commission, Finance Ministry and Securities and Exchange Board of India (Sebi) are already looking into various aspects of the NSEL crisis.

The Corporate Affairs Ministry may look into issues like possible violations of various provisions of Companies Act including those related to the promoters and top management, sources said, without divulging further details.

The beleaguered exchange, which was set up to provide an electronic platform for buying and selling agriculture and other commodities, was found to be providing trading in forward commodity contracts as well in violation of rules. It is engulfed in a crisis after it suspended trade on July 31 following government directives. This triggered a payment crisis of Rs 5,600 crore.

The exchange could manage to pay just over half of Rs 175 crore first tranche of payment due to investors yesterday, a day that also saw sacking of its top management brass including Managing Director and CEO Anjani Sinha. NSEL has presented a seven-month plan to settle the dues, which is being overseen by commodities markets regulator FMC (Forward Markets Commission) and the Consumer Affairs Ministry.

The bourse has already drawn flak from the FMC, which has questioned the bourse's credibility and reputation for  non-settlement of outstanding trade. The regulator had also said the exchange furnished "insufficient and delayed information" that is neither accurate nor reliable.

NSEL was asked to cease operations by the government, after violations of various regulations came to fore recently.