Nearly 11 years after payment default on the National Spot Exchange Ltd (NSEL), the 63 moons technologies (erstwhile Financial Technologies)-promoted NSEL and brokers involved have proposed to settle the case by paying ₹1,950 crore to investors.

This one-time settlement proposal is equal to about 42 per cent of the principal amount (₹4,650 crore) due to unpaid investors.

63 moons, NSEL and brokers will pay the settlement amount (₹1,950 crore) and will be entitled to the amount lying with any court, authority or other forums .

The NSEL Investors Forum (NIF) — which was assigned to find an amicable settlement — has made a proposal and put it out for vote among investors. The online module for one-time settlement will be made live on November 11 at 11 am and will be available for consent/dissent till December 9.

To achieve a settlement, consent of a majority of investors having more than 75 per cent in value of the outstanding dues would be required.

Per the proposal, put together for investors’ consent, the settlement amount will be paid by 63 moons and NSEL to all remaining unpaid investors in proportion to their balance outstanding claims as on July 31, 2024. All investors will receive their outstanding dues on pro-rata basis in proportion to their outstanding amounts as on July-end 2024.

Any amounts lying with any court, authority or other forums with respect to the payment default willl be available to 63 moons and NSEL only for the payment of the settlement amount. However, 63 moons and NSEL will be fully entitled to such amounts after the entire settlement amount is transferred.

The NIF has been intimated by certain brokers through whom investors had invested on NSEL that they are also interested in a one-time overall settlement. The brokers have indicated that they are likely to participate in the proposed settlement by contributing the amount of brokerage earned by them and the same can be utilised by 63 moons and NSEL as part of the settlement amount, per the NIF’s communication to investors.

In such an event and subject to payment of the settlement amount, the proceedings against brokers who have contributed as aforesaid would be withdrawn. After payment of the settlement amount 63 moons and NSEL wouldl 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thereof will be subject to certain legal proceedings against 63 moons, NSEL and persons indicated by 63 moons being withdrawn / settled / closed and their liabilities being discharged as provided in the settlement arrangement, per the proposal.

Once the legal proceedings are withdrawn / settled / closed, the settlement amount would be transferred by 63 moons and NSEL

Recovery process

Per the proposal, eligible investors in the ₹10-20 lakh category had already received about 37 per cent (6.6 per cent from NSEL and 30.75 per cent from the Competent Authority). “Now, with this settlement, they will receive around 42 per cent of the current outstanding. This will result in a total recovery of 79 per cent,” it said.

Further, in the case of rest of the unpaid investors, they have already received about 7 per cent (6.6 per cent from NSEL and 0.75 per cent from the Competent Authority). Now, with this settlement, they will receive around 42 per cent of the current outstanding. This will result in a total recovery of 49 per cent, according to the proposal.

The consent to the proposal, once granted by an investor, will act as a no objection from the investor to NSEL and 63 moons and persons indicated by 63 moons to make the necessary interim applications or initiate other appropriate proceedings to the relevant courts for the purposes of the settlement, said the Forum.

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

The settlement arrangement ought to be filed by 63 moons and NSEL in 90 days from the date on which NIF communicates the receipt of consent from majority and maximum of investors. The consent given will be valid for 180 days from the date on which the relevant courts / forums approve the settlement and lift the attachment of the properties of 63 moons,according to NIF

“Within such period, 63 moons, as approved by the appropriate courts / forums, will make payment of settlement amount,” it said.

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

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

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