Besides, Roop Kishor Bhootra, director of ARCL, Anand Rathi Financial Services Ltd, the promoter of ARCL, IIFL Finance Ltd, erstwhile known as IIFL, the promoter of IICL, and GCL director Manish Gupta have also been made accused in the NSEL case by the MPID Court.
With this order, all the accused persons will face trial in the NSEL case, the NSEL said in a statement.
Earlier in 2018, in its chargesheet, the Economic Offences Wing(EOW), Mumbai, had made three broking entities and three directors accused and declared the entities as Financial Establishment under the Maharashtra Protection of Interest of Depositors (In Financial Establishments) Act, 1999 (MPID Act).
In an application, NSEL had prayed to the special MPID court to take cognisance and issue process against the directors and promoters of the said three commodities broking entities in view of the statutory mandate of Section 3 of the MPID Act.
A separate application was also filed by an individual trader, seeking similar reliefs whose broker was India Infoline Commodities Ltd.
After perusing the evidence adduced before the court, the special MPID court yesterday ordered: “If the documents referred as above, taken into consideration in its entirety, it would prima facia indicate that main promoter and director of broker companies are kept out of chargesheet by the concerned IO, despite the statutory mandate of Section 3 of MPID Act without providing cogent reasons while similarly placed persons have been arrayed as an accused.”
“The statements of witnesses referred to as above, would prima facia indicate that brokers had misrepresented investors about high returns and induced them to trade on the NSEL platform. This court while examining the documents on record noticed in the chargesheet dated 27.12.2018 various brochures issued by three brokers to their investors, inducing them to trade, promising fixed returns etc,” the order noted.
After recording its reasons and having prima facie satisfied itself with the evidence, the MPID took cognizance of the offences punishable under many IPC sections and Section 3 of MPID Act 1999, and ordered issuing process for the aforesaid offences against the promoting companies – IIFL Finance Ltd (earlier known as IIFL) and Anand Rathi Financial Services Ltd, and directors Nirmal Jain, Preeti Gupta, Roop Kishor Bhootra, Shiney George and Manish Gupta.
These persons and entities will now be on the same footing as that of the other accused in MPID Case No. 1 of 2014 and will have to face the trial as and when it begins. The tally of total accused so far in the NSEL case is 220 in 11 chargesheets that have been filed by the EOW. The brokers are now facing the heat in the NSEL case.
In another case before the special MPID court, the state of Maharashtra has filed an affidavit stating that IICL collected deposits from 1,653 traders amounting to Rs 326.22 crore, in addition to having earned handsome brokerage and other fees/charges.
In the same affidavit, Maharashtra made an affirmative statement that the properties of IICL, its promoters and directors need to be secured for the interest of depositors.
Last year, market regulators SEBI too had 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 persons, and cancelled their application for registration as intermediaries.