New Delhi, Former Union Finance Minister and senior counsel P. Chidambaram is representing top brokers in the Supreme Court, who have been declared ‘Not Fit and Proper by the Securities and Exchange Board of India (SEBI) in the Rs 5,600 crore NSEL payment crisis.

The National Spot Exchange Limited (NSEL), a part of 63 Moons Technologies (formerly known as Financial Technologies India Ltd), has moved the apex court seeking its direction to the Securities and Appellate Tribunal (SAT) for hearing its appeal in the ‘Not Fit and Proper' case against leading brokers Anand Rathi Commodities, Motilal Oswal Commodities, India Infoline Commodities, Phillip Commodities and Geofin Comtrade. The case is slated for hearing before the apex court on Tuesday.

It must be noted that the Rs 5,600 crore NSEL payment default crisis surfaced during Chidambaram's tenure as the Finance Minister.

The Forward Market Commission (FMC) has applied the ‘Not Fit and Proper' clause on NSEL and its promoter entities. Notably, the brokers were an integral part of the exchange ecosystem and had the privity of contract with their clients and not the exchange.

Further, 63 Moons Technologies has filed a Rs 10,000 crore damage suit against Chidambaram and two former IAS officers - K.P. Krishnan and Ramesh Abhishek – for allegedly destroying the ecosystem and causing huge damage to the company's shareholders.

"Defending the brokers from the ‘Not Fit and Proper' verdict and victimising the exchange and its promoters show the biased and malafide intent and ulterior motive of Chidambaram. This also confirms the larger conspiracy that he plotted the NSEL crisis to eliminate 63 Moons group from the exchange space, thereby protecting the monopoly of the National Stock Exchange in which he has vested interest," said a spokesperson at NSEL.

Following the NSEL crisis in 2013, the brokers evaded scrutiny and punitive action for many years. It was only in 2015 that the involvement of the brokers was unearthed by forensic auditors of the Economic Offences Wing (EOW) of the Mumbai Police.

The investigation found five leading broking firms guilty of various malpractices such as offering assured returns, KYC manipulation, client code modification, infusing benami funds by creating fictitious client accounts, and luring clients to trade on NSEL through funding by their NBFC arm. The agency also arrested some key officials of brokerage houses for these irregularities.

The spokesperson found it surprising that a former Finance Minister is defending them in the apex court.

After the incriminating report by the EOW Mumbai and the complaint filed by NSEL, the SEBI had found top five NSEL brokers guilty of malpractices in the Rs 5,600 crore NSEL payment default crisis.

The Serious Fraud Investigation Office (SFIO) has also filed its report detailing the illegalities committed by the brokers on the NSEL exchange platform. As a result, in February 2019, the SEBI had declared these brokerages, Anand Rathi Commodities, Motilal Oswal Commodities, India Infoline Commodities, Phillip Commodities and Geofin Comtrade 'Not Fit and Proper' to function as commodities brokers.

The SEBI order was challenged by these brokers in the SAT. Since NSEL was an affected party and the SEBI failed to consider all the allegations and materials in the complaint filed against the brokers, NSEL filed an appeal at the SAT which refused to admit on the technical ground of delay.

The NSEL then moved the Supreme Court seeking direction to the SAT for hearing its appeal. The apex court had admitted NSEL's plea to be heard on Tuesday.

"If brokers are not guilty of any wrongdoings, why are they afraid of accepting the SAT hearing with NSEL intervention," asked the NSEL spokesperson.

NSEL has repeatedly pointed out that Chidambaram was the brain behind the NSEL crisis along with two bureaucrats - K.P. Krishnan who was then Joint Secretary in the Department of Economic Affairs (DEA), and former FMC chairman Ramesh Abhishek.

By abruptly closing the fully-functioning exchange, NSEL alleged that they had triggered the payment default with the intention of killing the competition to National Stock Exchange in which Chidambaram has benami (dummy) holdings.

"Now, when brokers are facing the heat, their godfather Chidambaram has come to their rescue in the apex court," the spokesperson added.