Bombay High Court set up V V Daga Committee to conduct forensic audit of NSEL

Bombay High Court on 2 September 2014 set up  V V Daga Committee to conduct forensic audit of NSEL and liquidate the assets of its defaulting borrowers in the over 5500 crore rupees payments scam. V V Daga is a retired judge of Bombay High Court.

The V V Daga headed committee will be a three member committee and will also have a solicitor and a chartered accountant.

The committee will discover the liability that is outstanding against the defaulting borrowers of NSEL, conduct a forensic audit, and monetise the assets. The Committee has been empowered to distribute the assets to the duped investors but distribution of funds will require the court’s permission.

However, the Court ordered the committee will have to seek separate directions from the court to access the assets that have been attached by the Economic Offences Wing of Mumbai police and the Income Tax Department in the NSEL fraud. Sale of assets attached by the Enforcement Directorate is excluded.

The court further ordered that in case of any mutual settlement between NSEL and the borrowers, the committee will give a notice to the Forward Markets Commission (FMC) of such a settlement, and also should inform the court about the mutual settlement.

The Court ordered setting up of the committee while hearing a representative suit filed by Modern India Ltd., one of the major investors in the bourse, against NSEL and its promoters.

Background
NSEL was promoted as a spot commodity exchange by Financial Technologies (India) Limited (FTIL) and a token 100 share were given to National Agricultural Cooperative Marketing Federation (NAFED).

In July 2013, it was discovered that underlying commodities did not exist and the buying and the selling of commodities was being conducted only on paper. Jignesh Shah and Shreekant Javalgekar who were believed to be masterminds of the scam were arrested.

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