On a plea made by investors, the Bombay High Court today formed a committee headed by a retired high court judge to conduct a forensic audit of the troubled NSEL and liquidate the assets of its defaulting borrowers in the over Rs 5500 crore payments scam.
The three-member committee headed by Justice (Retd) V C Daga will also have a solicitor and a chartered accountant, according to Advocate Ameet Naik, who represents NSEL in the case.
The committee will ascertain the liability that is outstanding against the defaulting borrowers of NSEL, conduct a forensic audit and monetise the assets, the court said in its order.
The committee will determine where the amount has gone and is empowered to ascertain the assets of company.
It has also been empowered to distribute the assets to the duped investors but distribution of funds will require the court's permission.
Justice S C Gupte of the high court said in his order the panel will have to seek separate directions from the court to access the assets that have been attached by the Economic Offences Wing of Mumbai police and Income Tax department in the NSEL fraud. It excluded the sale of assets attached by the Enforcement Directorate.
Justice Gupte set up the committee while hearing a representative suit filed by Modern India Ltd, one of the major investors in the bourse, against NSEL and its promoters.
Before any mutual settlement between NSEL and the borrowers, the committee will give a notice to the Forward Market Commission (FMC) of such a settlement and also inform the court about it, the HC order said.
The high court has also allowed the investors or any aggrieved person to challenge the decision of the committee before it.
The court had recently granted bail to NSEL promoter Jignesh Shah in the case.
Meanwhile, the NSEL welcomed the HC verdict and expressed hope that it will lead to fast-tracking of recovery process.
"This is a landmark judgment which will definitely expedite the recovery process. It is in line with the diligent recovery efforts of NSEL Team and Board and a great enabler in providing the required relief to the clients.
"As this is a step in the right direction, we look forward to increased focus of all related groups to work collectively in achieving desired objective," Saji Cherian, MD and CEO of NSEL, was quoted as saying in a release here.
"The committee's role is to act under the supervision of the court to receive and collect assets and monies of the alleged defaulters, their clients and third parties, akin to a court receiver.
"It will act like a court commissioner for the purpose of facilitating settlements of claims against alleged defaulters, their clients and third parties who may be owing monies to NSEL. The purpose being to gather in one basket all monies, which were lost by the trading clients of NSEL," said Janak Dwarkadas, a senior counsel appearing for Financial Technologies, the holding company of NSEL.