NSEL –LIST OF BORROWERS
AND WILLING NESS TO SETTLE
Tejinder Narang
It is a very well-orchestrated move by National
Spot Exchange Limited- NSEL (Exchange) to make public list of entities (
Economic Times dt 8.8.2013 page7) who
are willing to pay as per schedule or offered to pay to investors about 40% in full and
balance 60% in partial installments of 5% every week. Note the words “willing” or “offered”!! To
what extent they are implied commitments--- is in the grey zone.
If the investors bite the bullet and enter into a new agreement
in the 40:60 ratios as proposed, it amounts to entering into new contract/agreement
with exchange which means that the old/original schedule and earlier terms of
payment deemed waived/ cancelled/terminated or become void ipso –facto.
In legal terminology this is called Novation. The exchange is thus able to get out of the regulatory
mess and establishes a new relationship with investors. Will such a new
agreement be covered by FMC?? Perhaps, not.
Should the second contract be defaulted, the party will have to proceed for
that specific amount in Court.
This appears to be a direct attempt by the exchange to
provoke parties—who even may not be defaulters-- to take recourse to the” judicial
convenience” so that Exchange can get enough breathing time.
OTHER ISSUES
It is highly doubtful that 5 Lac Tons of Basmati Paddy
and 4 lac tons of sugar could have been available in stocks. (NCDEX monthly volume
of sugar trade is about 5000mt/month in last four months.) The same could be
the story with the castor seeds.
On what basis the surveyors have endorsed availability
of these quantities is questionable. Whether it was stock that was pledged to
the bank and then again accounted for by the exchange? Have the banks become
vigilant to this exposure? How the oversight was exercised by the exchange on
stocks or is there some sort of collusion??
For spot trading nobody is authorized to sell short
and only the quantity in possession (long) can be sold. How the exchange arrogated itself to sell
short and collect 6-7000 crores is something to be reflected upon !!
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