EoW attaches assets of Jignesh Shah-founded FTIL

The Economic Offences Wing (EOW) of Mumbai police on Tuesday attached assets of Financial Technologies India FTIL), under the Maharashtra Protection of Interest of Depositors Act (MPID) Act. All the offices of FTIL will be taken over by EOW. Moreover, other assets of FTIL like bank balances will also be attached.EOW of Mumbai has served only a letter to FTIL and the assets haven’t yet been physically seized by police.CNBC-TV18 spoke to Senior Lawyer Satish Maneshinde, Senior Advocate Majeed Memon and BJP MP Kirit Somaiya, to talk about the implication of this. According to Maneshinde, the applicability of the MPID Act in this case may be questionable. When asked if FTIL will have an option to appeal against this, he said that any order of attachment can be appealed against provided it has a legal standing. Memon too said that FTIL can question the attachment of assets. According to him, the judicial scrutiny is still awaited in this matter. EOW will have to prove that the attachment was necessary, he added.However, Kirit Somaiya, BJP MP said that 13000 investors of NSEL are now getting restless and there is a need for drastic action against Jignesh Shah in the FTIL scam. Jignesh Shah had been sent to judicial custody till August 1. On July 12, Enforcement Directorate (ED) had arrested the founder and former chairman of Financial Technologies (India) in the National Spot Exchange NSEL commodity exchange fraud.However, in major setback for ED, on July 18 the Enforcement Directorate’s (ED’s) plea seeking an extended custody was rejected.
FTIL in its response have issued a statement: “We have received a letter from EOW dated 18/7/2016 at 6 pm today on 19/7/2016 securing assets of FTIL. 63 moons is a listed company having 63000 plus shareholders and about 1000 plus employees. We will take all legal remedies to protect their interest. There is no legal basis for the said action and we will be moving court soon on the said letter.”

Read More: Jignesh Shah and his journey so farBelow is the verbatim transcript of their discussion with kritika Saxsena on CNBC-TV18.Q: What is the implication of this because in 2015, Bombay High Court had said that the Maharashtra Protection of Interest of Depositors (MPID) Act will not be applicable to the case of National Spot Exchange Limited (NSEL) so what do you think is the reason, why things have changed and Economic Offences Wing (EOW) has now under the MPID Act said that they will attach Financial Technologies India (FTIL) assets? Maneshinde: First of all, one has to see that whether the MPID is applicable or no; it is a debatable point and I am sure the Maharashtra government may have appealed in the Supreme Court against the Bombay High Court judgment. However, be that as it may, even if it is not MPID, if the police have any evidence or material to prove that the proceeds of crime were utilised to purchase the property of the company -- one of the charges alleged earlier was of criminal breach of trust and any property which is derived out of an offence of criminal breach of trust could be determined as a stolen property and therefore it could be attached even otherwise.EOW must have jumped the gun because now after Foreign Exchange Management Act (FEMA) having come into the picture, with Money Laundering Act coming into the picture, they must have been concerned that the authorities dealing with the Money Laundering Act could have sealed this property. Q: What I am trying to understand is essentially the hearing was today i.e. the first hearing of the Maharashtra Protection of Interest of Depositors Act i.e. MPID Act was today. In the first hearing itself EOW has attached assets. What would be the grounds under which they can attach assets is what I am trying to understand? Maneshinde: I can’t say what the grounds were unless I see the order of attachment. It can’t be speculative but in every case of money laundering, MPID or criminal breach of trust, property of an accused can be attached if the proceeds of crime were utilised to acquire this property.Q: Now that MPID court has given EOW the right to attach FTIL's assets, what can be the course of action now? Does FTIL have an option now to appeal against this? Can they move to Bombay High Court? Maneshinde: Any order of attachment can be appealed provided it has any legal standing. However, the one fact is clear that if police is in a position to prove that any amount which was involved in this case has been utilised to acquire this property, that property can be attached and that can be made use of to settle all the investors.  Q: We don’t have the details of that hearing, we don’t have exactly what the grounds were, but in September 2015 Bombay High Court has said that the Maharashtra Protection of Interest of Depositors (MPID) Act will not apply in the case of NSEL. Clearly today was the first hearing of the MPID Court and things have changed. I am trying to understand under what grounds can the Mumbai Police or the Economic Offences Wing (EOW) takeover the headquarters and assets of FTIL?Memon: When any such act is done by the investigating agency in the course of investigation of a scam like this and they have to report to the Court immediately and both sides the attacher as well as the person whose property is attached would be before the Court and the Court will have judicial scrutiny with regards to this action as to whether it is justified, legally tenable or otherwise, and if attaching investigating agency is unable to persuade or satisfy the Court that this is in fact amount involved and attachment was necessary, otherwise this kind of justice wouldn’t have resulted, the money would have been dispersed elsewhere and that these conditions that if they are satisfied the Court may approve that. Otherwise, the person who is affected by attachment can also question and say that this money doesn’t constitute a part of the scam money and attachment could be withdrawn or revoked. Therefore the judicial scrutiny is still awaited. They are just making because the investigating agency has interrogated Jignesh Shah and custodial interrogation has probably yielded this material, which EOW maybe trying to put forth before the Court in due course.Q: So now that the MPID Court has directed EOW to attach the assets, how long does FTIL have to appeal? What is the procedural window?Memon: There is no question of how long, if they are affected they would rush immediately tomorrow in a day or two. They will just immediately go and say that look here we have wrongly attached this property which is not a subject matter of crime. Because see whenever any property is attached it is supposed to be tainted property or it’s a proceeds of crime, which could be justifiably withheld during the investigation. It is not confiscated, it is only attached. So it cannot be moved, it has become stagnant and even this attachment is subject to judicial scrutiny as I said earlier.Q: Your initial reaction, EOW has attached the assets of FTIL and this includes its properties, FTILs headquarters and offices including the bank balance. FTIL on its part has said that these are immoveable properties. What is your initial reaction based on the MPID Act, how strong is EOWs case?Somaiya: FTIL officials may be talking in legal terminology but in last two days I had interaction with all the concerned agencies - ED, CBI, EOW, Mumbai Police, we want drastic action. Jignesh Shah with the help of his finance is in a way involving in dillydallying tactics. 13000 investors are becoming restless, we want strong action and now ED has also gone two steps forward. CBI - the new additional director incharge of NSEL is also going forward. Q: You said that you have spoken to EOW, ED, I want to understand the plan of action because they have now moved and they are looking to attach the assets, what is the plan and what is the case that they have so far? There is prima facie evidence of money laundering but what is the case that they have as things stand based on the questioning that has been conducted over the last 10 days?Somaiya: Money laundering is one angle, we do not know about the foreign transactions. I am 110 percent sure there is violation of all the foreign codes. CBI also has to go fast. EOW for last 3-4 years is working on that and now all the agencies have started action.FTIL-NSEL merger has been announced long back but as I told you Jignesh Shah is abusing his money power and trying to misuse the legal provision. Mumbai Police new joint commissioner has taken his action and he must have done some legal study on that.For the entire discussion, watch video