NATIONAL SPOT EXCAHNGE LTD (NSEL)—INCOME TAX RAIDS

Tejinder Narang

1        Unfortunately, the creditors will be at a loss. The very of hope, of realizing any payments from NSEL after Income tax raids on the borrowers, will fade away.

2        Exchange’s liability is total irrespective of pay –in. Drawing a monthly schedule of payments by NSEL was in any case illegal, hollow and subjective due to pay-in/pay out procedure. Even that is rendered worthless now. 

3        With IT department’s intervention, bank accounts of all borrowers may be sealed or blocked. Borrowers/ defaulters are in the imminent danger of being slapped with income tax notice for the unpaid amounts which will be deemed income. A new dispute will crystalize. Intervention of ED has already been hinted at.

4        Income tax department may enter into settlement proceedings. The money goes to the income tax department, if any ---and not to NSEL/creditors

5        Sales tax department may equally become active due to commodity related transaction.    

6        Investigations/litigation can be dragged for years amongst borrowers/ IT/ST departments.

7        Even the creditors/investors may be questioned for source of funding large commodity transactions without having any information of underlying assets. (Since Creditors were dealing with an exchange they are not supposed to know anyhow). But what about due diligence??

8        This is typical of any default that Government departments handle. Multiple agencies naturally get involved without realizing that dodgers may benefit and beneficiaries may suffer. The concept of profit/loss/purpose/guarantees is rendered void.

9        They say--There is none above law. But what is the law?  Company Law, FMC, Income tax, Indian law? Or Law of Equity and Justice??