The 22 defaulters confessed in the 'Open Durbar', convened by FMC, to holding the entire default money of Rs. 5,600 crore with them and also promised to repay in a phased manner.

Despite the defaulters not sticking to their promise of payment, the FMC did not take any action against them. The claim against the subsidiary of FTIL is an ‘alleged claim’ and all matters with respect to the alleged claim are still sub judice.

The privity of contract of the trading client is not with NSEL, but is with their brokers.

The maximum amount of outstanding out of the 25 defaulters is against the applicant company (NSEL) and if the total amount of all the 25 defaulters is considered, it comes to around Rs. 5,600 crores and thus it prima facie appears that the only persons responsible for the entire fiasco are these defaulters.

The money trail has been established to 22 defaulters and their assets worth Rs. 5,600 crore have been seized or frozen and needs to be recovered by fast-tracking selling of defaulters assets.

The order is all the more strange, given the fact that the government has endorsed the on-going process, under supervision by the Bombay High Court, to recover dues from the defaulting traders whose assets worth around Rs. 5,800 crore have been frozen by the Economic Offences Wing of the Mumbai Police.

The logical thing to do is to speed up this recovery process, identify the traders who are owed money and settle their dues. Expropriating FTIL shareholders to settle the dues owed by defaulting traders violates natural justice, besides the principle of limited liability. How does this square with the government’s on-going earnest efforts to improve the ease of doing business in India?

The review will, when it concludes, settle the propriety or otherwise of the government’s action, but the company FTIL, its promoters and investors will have been deprived of time and resources, scuppering their enterprise and value creation. How does this serve public interest?

A total of 50,389 representations (physical papers as well as emails) were received during March, 2015 to October, 2015 in response to the public notice issued by the Ministry of Corporate Affairs, in compliance of provisions of section 396(4)(b) of the Companies Act, 1956.

…Representations have been received asking for early action against the persons responsible in the matter. Other than the Ministry of Corporate Affairs, the Economic Offences Wing (EOW) of Mumbai Police and the Directorate of Enforcement (ED) are also investigating the matter. Properties valued at Rs. 5,757 crores (approx.) of the accused have been attached by EOW while 32 common properties valued at Rs. 740 crore (by ED) and Rs. 1222.89 crore (by EOW) have been attached. Further, directors have also been given to the Securities and Exchange Board of India to examine and take necessary action against the defaulting brokers.