Almost 11 years after the National Spot Exchange Ltd (NSEL) default, NSEL and the involved brokers promoted by 63 moons technologies (formerly Tehnologii Financiare) have proposed to settle the case by paying Rs 1,950 crore to investors.

This one time settlement proposal is equal to about 42% of the principal amount (INR 4,650 crore) owed to the unpaid investors.

63 months, NSEL and the brokers will pay the settlement amount (INR 1,950 crore) and will be entitled to the amount lying in any court, authority or other fora.

The NSEL Investor Forum (NIF) – which was appointed to find an amicable settlement – ​​made a proposal and put it to a vote among investors. The online single settlement module will go live on November 11 at 11:00 am and will be available for consent/disagreement until December 9.

In order to reach a settlement, the agreement of the majority of investors who have more than 75% of the amount of outstanding contributions would be required.

According to the proposal, brought together for investors’ agreement, the settlement amount will be paid for 63 months and NSEL to all investors remaining unpaid in proportion to the balance of outstanding claims on July 31, 2024. All investors will receive their outstanding dues on a pro-rata basis in proportion to the outstanding amounts on end of July 2024.

Any sums due in any court, authority or other forum in respect of non-payment shall be available for 63 months and NSEL only for payment of the settlement amount. However, 63 months and NSEL will be fully entitled to such amounts after the entire settlement amount is transferred.

The NIF has been indicated by certain brokers through which investors have invested on NSEL that they are also interested in a single global settlement. The brokers have indicated that they are likely to participate in the proposed settlement by contributing the brokerage amount earned by them and the same may be used by 63 moons and NSEL as part of the settlement amount, according to NIF’s communication to investors.

In such event and subject to the payment of the settlement amount, the proceedings against the contributory brokers as aforesaid would be withdrawn. After payment of settlement amount, 63 months and NSEL would be entitled to contribution from brokers.

The payment of the settlement amount or any part thereof will be subject to certain legal proceedings against 63 months, NSEL and the indicated persons of 63 months in the process of withdrawal/settlement/closed, and their obligations being discharged according to the provisions of the settlement arrangement, according to the proposal.

Once the legal proceedings are withdrawn / settled / closed, the settlement amount will be transferred for 63 months and NSEL

Recovery process

As per the proposal, eligible investors in the INR 10-20 lakh category had already received around 37% (6.6% from NSEL and 30.75% from Competent Authority). “Now, with this agreement, they will get about 42 percent of the current balance. This will result in a total recovery of 79 percent,” the statement said.

In addition, in case of other unpaid investors, they have already received about 7 percent (6.6 percent from NSEL and 0.75 percent from competent authority). Now, with this settlement, they will receive about 42 percent of their current balance. This will result in a total recovery of 49%, according to the proposal.

Consent to the proposal, once granted by an investor, will act as a non-objection on the part of the investor to NSEL and 63 months and designated persons of 63 months to make the necessary interim applications or initiate other appropriate proceedings in the competent courts in this scope. of the settlement, said the Forum.

It will also act as a consent to remove the attachments of the properties and subsequently make the properties available for the purpose of settlement of claims of the investors as per the proposal, it said.

The settlement agreement should be submitted by 63 moons and NSEL within 90 days from the date on which the NIF communicates receipt of the agreement to the majority and maximum investors. The consent given will be valid for 180 days from the date on which the competent courts/forums approve the settlement and lift the 63-month property seizure, according to the NIF.

“During this period, 63 months, as approved by the appropriate courts/forums, will effect the payment of the settlement amount,” the statement said.

In July 2013, NSEL abruptly suspended trading of all its spot contracts, leaving investors and brokers reeling. The exchange had about 148 members and brokers for facilitating trading on the exchange.

The stock exchange owed ₹5,500 crore to 13,000 investors and cleared the dues of small investors by paying ₹92 crore in 2013.