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NSEL crisis: Court dismisses petitions filed by LOIL Group, White Water Foods

K. R. Srivats New Delhi | Updated on January 09, 2018 Published on November 08, 2017

EOW had attached properties worth over ₹500 crore belonging to these companies



The Punjab and Haryana High Court has dismissed a clutch of petitions filed by LOIL Group and White Water Foods Pvt Ltd challenging the attachment of their properties under the Maharashtra Protection of Investors Deposits (MPID) Act.

This decision is being seen as a boost to the recovery efforts of the Economic Offences Wing (EOW) of the Mumbai police in the ₹5,600-crore National Spot Exchange Ltd (NSEL) scam that broke out in 2013.

LOIL Group and White Water Foods Pvt Ltd had together made six petitions to the Punjab and Haryana High Court challenging the attachment of their property by the EOW-Mumbai under the MPID Act and the directions issued to respective governments to stop them from creating any third-party interest in those properties without the permission of the MPID court. With the money trail of NSEL payment default crisis having been established to the 24 defaulting entities, EOW-Mumbai under the MPID Act had attached 54 properties of LOIL Group and 26 properties of White Water Foods.

The attached properties of these two corporate entities are believed to be over ₹500 crore.

NSEL had intervened in the case objecting to the claims made by the LOIL Group and White Water Foods Pvt Ltd against attachment of their properties under the MPID Act.

Default amounts

While LOIL Groups total default amounts to ₹989.44 crore, the White Water Foods defaulted to the tune of ₹86.12 crore on the spot exchange.

NSEL had helped EOW in tracking the assets of these companies for recovery purpose.

While dismissing the petitions, the Punjab and Haryana High Court observed that the authorities in the UT and Punjab and Haryana State governments had acted merely based on the communication issued from the State of Maharashtra. Also, with the case in point pending in Mumbai, no ground is made out to entertain this petition, it was concluded.

The Punjab and Haryana High Court also cited the similar view taken by the Gujarat High Court in the petition move by the same petitioners and which also stands dismissed.

Both these entities, along with other 22 others, had defaulted when the NSEL was told not to issue fresh contracts by the Department of Consumer Affairs on July 2013. This abrupt closure of operations led to a payment crisis at NSEL. Last month, the Punjab and Haryana High Court shifted all cases pertaining to NSEL defaulter LOIL Group to Mumbai courts where cases of other defaulters are being heard.

The Chandigarh-based LOIL Group, the second-largest defaulter in the ₹5,600-crore NSEL crisis, had obtained an ex-parte “no-coercive action by the Economic Offences Wing (EOW), Mumbai” from the Khamanon court in Punjab which was challenged by NSEL in the Punjab and Haryana HC. The HC set aside the ex-parte order.

The High Court also slapped a fine on LOIL Group of ₹1 lakh per petition filed by the NSEL to be paid to the latter. The NSEL had challenged the jurisdiction of the Khamanon court and filed as many as 13 revision petitions in the Punjab and Haryana HC.

In March this year, the Enforcement Directorate (ED) had attached LOIL Group’s assets worth ₹414 crore in connection with its probe in the NSEL crisis.

srivats.kr@thehindu.co.in

Published on November 08, 2017
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