INDIAN--NATIONAL SPOT EXCHANGE LIMITED
(PART 5)
Tejinder Narang
THERE IS NO ASH FROM WHERE THE PHOENIX CAN RISE.
NSEL episode calls
for a moment of introspection whether delivery based transactions should at all
be undertaken in future exchanges till such time back-end superstructure of
storage and negotiable warehousing receipts, systemic perfection in banking and
reputed/qualified surveyors is put in place.
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Indian Finance Minister, Mr. P. Chidambaram’s views on NSEL
default/alleged fraud must be taken with full solemnity. He is a genius in finance
and a legal luminaire of exceptional excellence with gifted abilities of
intelligence, acumen and foresight.
According to the Finance Minister, investors invested with “open
eyes.” They made money and lost money. They were not babes in the
woods. Any wrong doings of NSEL are now subject matter of investigations and
court proceedings. That is the sum, substance and the conclusion of the highest
financial authority in the Indian Government after preliminary findings.
This contentious matter is now dragged to the probe agencies
followed by judgements of the court—from the lower to the Highest Court.
The wrong doers may be subject to penalties or jail or bail but recovery
appears to be a farfetched dream. Tracing the money may not mean its
recovery.
In all fraudulent transactions emotions over rule the
reason. The emphasis is directed towards punishing the cheaters and not
upon the recovery of the outstanding. Neither it is possible to restructure the
payments in deferred instalments because exchange’s operations are not
comparable to bank.
The very fact that NSEL transactions were not supported by any
physical stock is a clever camouflage by its management for last three
four years where in perhaps some other stake holders might have colluded and
may be implicated.Are designers and connivers of this alleged frauds are merly
the employees and their associates/companies? No high profile VIP or Minister
has so far been named. Even prominent Indian PSUs are deceived by
the web of deception.
With millions of litigations lingering in Indian courts for
umpteen years, these 25-30 cases will also add to the list of unending hearings
with extra income to the advocates. 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?? Or the Law as interpreted
by me-Lord?
Evidence of shady stocks through managed warehouse receipts,
non-genuineness of surveyor’s reports to support the withdrawal of money from
the financial institutions is known to all in the trade. All delivery
based transactions whether in spot or future exchange are always in the grave
danger of either having less inventory or poor quality of inventory or
sometimes no inventory.
NSEL episode calls for a moment of introspection whether
delivery based transactions should at all be undertaken in future exchanges
till such time back-end superstructure of storage and negotiable warehousing
receipts, systemic perfection in banking and reputed/qualified surveyors is put
in place.
However, the present state of affairs does not provide any ray
of hope for recovery. Phoenix is a mythological myth. It defies the
reality of reincarnation.
Earlier Blogs on the same subject--
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