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Investor payback: Maharashtra government to auction NSEL properties

Investors who put their money into the scam-hit National Spot Exchange Limited (NSEL) may soon recover their lost money, with plans to recover Rs6,200 crore from auctioning real estate, including some 10 flats in Mumbai as well as properties in Thane, Navi Mumbai and Pune from just four individuals. 

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Jignesh Shah
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Investors who put their money into the scam-hit National Spot Exchange Limited (NSEL) may soon recover their lost money, with plans to recover Rs6,200 crore from auctioning real estate, including some 10 flats in Mumbai as well as properties in Thane, Navi Mumbai and Pune from just four individuals. 

The Maharashtra government is all set to appoint auction houses recommended by Economic Offences Wing (EOW) of Mumbai police to sell the attached real estate properties.

Among the properties attached, the most hefty attachment, worth around Rs800 crore, came from Jignesh Shah, former managing director of the parent company Financial Technologies India Ltd (FTIL). This includes his 1.19 lakh shares in FTIL, two flats in Mumbai (including one in Juhu), a plot of land in Pune, five demat accounts and shares in Indian Energy Exchange. Agencies have also attached assets worth Rs 4.5 crore from Anjani Sinha, former CEO, NSEL. This includes three flats in Mumbai and one in Navi Mumbai.

Another NSEL official facing the wrath is Amit Mukherjee, former vice president of NSEL. His attached properties worth Rs5.68 crore include two flats in Thane and one in Mumbai, and one Range Rover Evoque SUV. Four flats in Mumbai owned by Shrikant Javalgekar, former CEO of MCX, worth Rs11.2 crore, were also seized by EOW.

NSEL had been grappling with a payment crisis since suspending trade in July 2013.

“We have submitted the names of a few big auction houses and real estate consultants for liquidation of attached assets worth Rs6,200 crore. We hope that the state government will shortly take a call on the appointments so that the process of valuation can begin,” Rajvardhan Sinha, additional commissioner of police, EOW, told dna.

A senior EOW official said JLL, Cushman & Wakefield, Knight Frank and Collier International are among the real estate consultants recommended by the department to undertake the auction process.

Interestingly, the total fraud, pegged at Rs5,600 crore, is less than the value of attached properties.

A senior real estate consultant told dna that the auctioning and liquidating of assets, if done in a phased manner, would not take more than eight-nine months.

“But the obstacle in the way of auctioning is the 'title opinion report' of respective properties. This means that the legal status of each property should be clear,” added the consultant.

According to sources, most of the attached assets are real estate properties. This includes around 400 properties worth Rs4,000 crore.

EOW is confident of recovering funds worth Rs5,600 crore with the police having invoked provisions of the stringent Maharashtra Protection of Interest of Depositors (MPID) Act, 1999, to recover the same.

MPID is an investor-friendly act, which supports attachment and auctioning the attached property.

Before auctioning the assets, the state government has to notify them. Subsequently, the MPID court, which is hearing the NSEL matter, will issue notices to the owners of the secured assets and pass an order for auctioning, said sources.

“More than 70 percent of the Rs6,200 crore-worth of assets secured by EOW have already been notified by the state government, and the process for notifying the rest is under way,” Sinha said.

The fund disbursal would be monitored by the High Court Committee (HCC) appointed by Bombay High Court last year to act as receiver under its supervision.

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