The Enforcement Directorate had arrested Mr Jignesh Shah on 12th July, 2016 under Section 65 of the Prevention of Money Laundering Act, 2002 (PMLA).
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Three years have gone by since the NSEL crisis unsettled the financial markets; but the man once heralded as the undisputed ‘Baadshah of Exchanges’, continues fire walking as his Agnipariksha doesn’t seem to end.
It was in May 2014 that Jignesh Shah was first taken into custody. The evening of May 7 was going to be a turning point in his life. After months of interrogation, he was summoned once again by the Economic Offences Wing (EOW), Mumbai. But there was something unusual this time; he would have to appear before them twice in the same day. As his car whisked towards the EOW office in the evening, little did he know about the nightmare waiting to engulf him. Shah was staring into an abyss of darkness when he was put behind bars by the EOW on charges of "non-cooperation”. His reputation was tarnished; he was branded a villain and accused by the EOW officers of “deliberately avoiding interrogation”. The reality was exactly the opposite. Shah had visited the offices of EOW of Mumbai Police 21 times, though he was called 7 times. He even opened up a mini NSEL office with computers at the premises of the EOW to help track the missing cash. Worse, despite keeping him in custody for 108 days for interrogation, the officers of EOW did not even interrogate him for a single day, the Mumbai High Court was told in a petition. Shah was arrested yet again in August 2016, this time by the Enforcement Directorate, Mumbai on a similar charge of ‘non-cooperation’. He was subsequently granted bail by a PMLA Court citing that his arrest was illegal. Shah’s third arrest in September 2016, was for a different charge altogether. On this occasion, it was the CBI trying to tighten its rope on him. The main allegation in the CBI FIR was regarding the alleged suppression of the buy-back arrangements made by MCX-SX from SEBI while granting renewal of license in 2010. However, Shah’s legal counsel, Arvind Lakhawat said that this was factually incorrect. “That’s because SEBI was fully aware about these buy-back arrangements even prior to the grant of this renewal on August 3, 2010. What is more, the legality and validity of these buy-back arrangements was upheld by the Bombay High Court in March 2012 itself. This fact was deliberately overlooked by the CBI.” Mr Lakhawat further stated that the CBI had registered a case in this regard two years ago. “As it is the matter was six years old. Then how come the CBI took Mr Shah into custody all of a sudden on September 20? He is the only person they have held in this case. None of the accused, including the accused public servants, has been arrested. This shows the high-handed state action targeting only one individual.” Shah is now out on bail but continues to be attacked by vested interests on social media, who are hell-bent on pinning him down. He has already been forced to exit from his exchange ventures which have revolutionized the Indian Financial Markets. His empire FTIL, that he so painstakingly built, is being merged with its subsidiary, NSEL, by the Ministry of Corporate Affairs. Whereas, the real culprits in the NSEL case, the defaulters continue to roam free. The Government and its investigative agencies are yet to initiate a single action against them! All their actions seem to be concerted only against FTIL, NSEL & Jignesh Shah. Despite being singularly targeted and attacked from various quarters, Jignesh Shah continues to wage a lone battle. He is fighting valiantly and believes that truth and justice shall ultimately prevail. He is hopeful that his Agnipariksha will one day end and he will come out unscathed…….Time will tell! For more information check 63 Moons Reviews. Our Judiciary is not known for efficiency and fast-track approach. There are several cases wherein the culprits deserve capital punishment but are rarely even put behind bars. Contrary to this system, the case of Jignesh Shah is ironically efficient. The man has been caught not just once but thrice for the same case.
The curiosity is lit like fire when news follows that some investigating agency caught a guy who, on legal grounds, has the immunity from being detained since he has already been put to the criminal territory earlier and is out on bail. And if that isn't fishy enough, consider the fact that the guy is being pinned down in a case that is so intricately woven that no one man can be the mastermind and yet he has been detained thrice in two years at regular intervals. The reasons cited included non-cooperation which is again dubious since other agencies established that Shah has been fully cooperative. Well, if an agency detains a person for questioning then other government agencies also reserve the right to question him, if any. Jignesh Shah was unfairly arrested on 20th September for the charges of suppression of material facts. While it is worth pointing put that the FIR was filed way back in 2014 but no actions were seen so far as if the FIR ceased to exist for almost 2 years, then why all this and why now? This surely seems to be the working of vested interests in the background. The big question is how many times does Jignesh Shah have to be detained? Reference - ShantanuGuhaRay:(2016): ‘The Target’: New Delhi: Publisher: AuthorsUpfront Government seems to be taking corporate arm twisting to the next level. Jignesh Shah, the Exchange Man of India, who took the commodities market by storm, now finds himself in the middle of one. Arrested on 12th July for alleged money laundering in the NSEL Case — for links never established — this arrest raises questions of intent and political muscle power.
The Enforcement Directorate’s plea for extension of bail hearing till 3rd August got rejected by a special Prevention of Money Laundering Act Court in Mumbai. AabadPonda and other eminent lawyers strongly opposed any extension stating that the detention itself was unjust and illegal. Ponda brought out two major pointers on how Shah’s arrest is illegal and that ED or any agency actively involved in the case had no right to arrest Jignesh Shah under Section 19 of the PMLA Act, once court had taken cognizance. Whereas Shah, booked under both the sections, was arrested without any legal warrant issued. It also came to light that the major blooper in the case where the court on December 4, 2015 had declared it as a “case of summons, not warrants” was left unchallenged by the Enforcement Directorate. One of the noted Rajya Sabha Members and a senior advocate of Supreme Court KTS Tulsi also stood by that viewpoint and said that Jignesh Shah’s arrest is unconstitutional since Shah has been arrested once and sent to the judicial custody for a FIR registered in 2013. “The money trail has not been established, and the ED has not submitted any fresh evidence, they cannot force an accused to accept allegations. The investigating agencies want favorable judgement all time and becoming a bit desperate,” said the veteran lawyer. However, the unnerving question still remains that who gave Jignesh Shah’s arrest orders to ED? But, the Government’s high handedness did not work before the Court, as it granted bail to Jignesh Shah stating that the arrest was illegal. For more information check 63 Moons Reviews. The year was 2007, when 63 moons (formerly FTIL) was taking shape of a true multinational company with its Group, MCX, handling 90% of trades across electronic commodity exchanges in India. It built up institutions like the MCX-Stock Exchange (MCX-SX), India Energy Exchange (IEX), NSEL and global exchanges like Singapore Mercantile Exchange (SMX), Dubai Gold and Commodities Exchange (DGCX), Bahrain Financial Exchange (BFX), Global Board of Trade – Mauritius (GBoT) and Bourse Africa.
The spectacular rise of the group allegedly attracted “jealousy” of many high profile bureaucrats, corporates, and a “powerful politician” who has interest in stock markets. They were all waiting for a single chance to hit 63 moons and the NSEL crisis was the opportune time. The Forward Markets Commission (FMC) was then under the purview of the Ministry of Agriculture and Consumer Affairs. While the judiciary is yet to assess who was at fault, confidential documents accessed through an RTI indicate that the crisis was a conspiracy carefully crafted by some bureaucrats and market competitors. The documents also depict undue interest of KP Krishnan, the then Joint Secretary in the Ministry of Finance, in the National Commodity & Derivatives Exchange Limited (NCDEX). An article, as published in Bureaucracy Today in 2015, states that the RTI reveals Krishnan was in correspondence with the National Stock Exchange (NSE), the promoter of NCDEX. He wrote a letter to the government sharing his plans of giving the NSE an additional shareholding in the NCDEX at the cost of government subsidiaries. At the time when Krishnan wrote this letter, neither the MCX nor the NCDEX was within the regulatory purview of his department or the Ministry of Finance. Both these exchanges were regulated by the FMC, which fell in the preview of the Ministry of Consumer Affairs (MCA). This makes it even more surprising as to why did Krishnan go beyond his jurisdiction and initiate such a proposal clearly favoring the NSE. In July 2012, the MCX got to know about Krishnan’s letter favoring NCDEX following which it moved the Central Vigilance Commission against him. Krishnan was subsequently shunted to a side-posting in September 2012, which further fuelled his grudge against the MCX. Ten months after his posting, Krishnan returned to the Ministry of Finance in July 2013. On the very day of his joining, the Department of Consumer Affairs ordered the NSEL to stop issuing fresh contracts, which brought all the trading to a sudden halt. This was done despite the NSEL clarified its position on the contracts and explaining the MCA that any abrupt halt would lead to a crisis and chaos on the exchange. Krishnan and his associates started pursuing the NSEL crisis with a feeling of revenge now. The Ministry of Finance took over the control of the FMC from the MCA. In October 2013, the FMC lodged an FIR against Jignesh Shah in the Economic Offence Wing (EOW). The FMC passed an order in December 2013 declaring that Shah and 63 moons are “Not Fit and Proper” to run any exchange, forcing their abrupt exit from exchanges in India and abroad. Furthermore, on the recommendation of the FMC, the Ministry of Corporate Affairs initiated a move in October 2014 for a merger of NSEL with 63 moons. Although October 17-19, 2014 were holidays, the otherwise “lazy and laid back” government officials worked throughout this period to collate information to draft the merger order as Krishnan was to leave the Finance Ministry on October 20 owing to his transfer. He is now the Additional Secretary in the Department of Land Resources. The urgency shown by the MCA in processing the draft merger order after the FMC’s recommendation raises eyebrows behind the ill-brained motives. While we still hope for justice and fair play in the sub-judice NSEL crisis, only time will tell if justice prevails. Reference :ShantanuGuha Ray:(2016): ‘The Target’: New Delhi: Publisher: Authors Upfront The role of agencies in handling the NSEL crisis is a huge cause of concern. The way it was addressed by various agencies, including the regulatory authorities raises far more important issues that could cause anxiety for those people who believe in free markets and justice. A complete and comprehensive review of the whole episode what contributed to the crisis and how it was managed subsequently – brings into light the importance of balance and maturity in handling crisis such as this, which unfortunately is in severe shortcoming in this case. In democracies and free markets, crises are not uncommon. If the authorities go into excessive overdrive, demolishing everything that is remotely connected with the issue in the name of resolution of the crisis, the image and ability of India to emerge as a major and mature economic power will come into serious doubt and dispute.
There is so much of misconception, misinformation, misreading, misunderstanding and misinterpretation around the whole crisis that it has made it into a sordid drama where players who should have taken the responsibility of finding a solution to the crisis went beyond their brief, leading to a complex situation arising. The NSEL accident is not something that the world has not known in the past or that has never taken place. The context of the crisis is also not something so unusual. The question that only comes to mind is how and why there was so much hurry on destroying a vast ecosystem that has great potential to grow and contribute to India’s progress, which was carefully built over long years. There definitely seems to be some ulterior motive behind engineering the crisis and solely targeting NSEL. The possibility of few higher-ups in the political system trying to demolish 63 moons cannot be denied. Reference :ShantanuGuha Ray:(2016): ‘The Target’: New Delhi: Publisher: AuthorsUpfront |
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