The government has already returned ₹1,220 crore out of ₹3,255 crore defrauded from 13,000 investors in the Jignesh Shah-run National Spot Exchange Ltd (NSEL) fraud case and is making efforts to quickly return the rest, people familiar with the matter said.
The defrauded money was recovered by the Enforcement Directorate (ED), which has led to refunding the full amounts to 8,430 out of 13,000 investors, they said, requesting anonymity. In all, ₹1,220 crore out of ₹3,255 crore proceeds of crime identified and attached by the financial crimes probe agency have been refunded.
“The competent authority has directed all agencies, including the ED, to make conscious efforts for expeditious return of confiscated assets to their legitimate owners,” an official in the finance ministry said.
The NSEL scam, which came to light in 2013, involves defrauding 13,000 investors of ₹5,574 crore after inducing them to trade on the platform, creating forged documents and falsifying accounts, and thus committing a criminal breach of trust.
On October 24, 2013, the Economic Offences Wing of Mumbai police invoked provisions of the MPID (Maharashtra Protection of Interest of Depositors) Act, claiming that the money collected by NSEL was deposits. Thereafter, 63 Moons Technologies Ltd was roped in the case since its subsidiary NSEL did not have sufficient money or property to return the deposits or make repayments.
Investigation carried out by the ED under the Prevention of Money Laundering Act (PMLA) revealed that the money collected from investors were diverted by borrowers and trading members of Jignesh Shah-run NSEL for other activities like investment into real estate, repayment of outstanding debts and other activities.
The Centre amended the PMLA in 2019, enabling repayment to defrauded investors.
The federal agency has been actively pursuing the process of restitution of attached assets to investors or banks in the money laundering probes, said a second official. For instance, state-run banks have received ₹15,184 crore out of total ₹22,586 crore defrauded by fugitive businessmen Vijay Mallya, Nirav Modi and Mehul Choksi, the second officer said. The total proceeds of crime attached by ED involving three fugitives is ₹19,312 crore.
“There is a misconception that ED only investigates political cases. Over 95% of the cases in which we have attached the properties relate to bank frauds, terrorism, smuggling, siphoning of funds by businessmen, etc,” an ED officer said. “We are aiming to return the money to those it belongs to. We have regular meetings with banks, sister agencies, etc., on this issue.”
In the NSEL case, the Maharashtra government is also making efforts to fast-track the selling of properties attached by the EOW to make repayments to investors.
As of November, the ED has attached over ₹1.23 lakh crore through 2,117 provisional attachment orders in hundreds of money laundering cases. Besides NSEL or Punjab National Bank case involving Nirav Modi and Mehul Choksi, the government is also working on ways to refund money to investors in other cases, the officials said.
“The government is considering legal ways to refund the amount taken from thousands of poor as bribe by the corrupt elements in the West Bengal recruitment scam,” said the first official, referring to the bribe-for-job scam in the state education department, which is being investigated by the Central Bureau of Investigation and ED.
HT on March 27 reported on the telephonic conversation between Prime Minister Narendra Modi and the Bharatiya Janata Party candidate from Krishnanagar, Amrita Roy, when he said the government is seeking legal opinion to return about ₹3,000 crore looted from the poor in West Bengal.
“I am seeking legal advice. The ED has attached around ₹3,000 crore in Bengal. This money belongs to poor people,” Modi had said.
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