New Delhi, Feb 24 (IANS): The Supreme Court has upheld the appeal of National Spot Exchange Limited (NSEL) seeking direction to the Securities and Appellate Tribunal (SAT) for hearing its plea in the "Not Fit and Proper" case against brokers.

The apex court has rejected the opposition put up by senior advocate and former Finance Minister P. Chidambaram on behalf of brokers, and directed SAT to allow NSEL, part of 63 moons technologies, to present its appeal in the case.

Following the NSEL crisis in 2013, brokers evaded scrutiny and punitive action until 2015 when their involvement was unearthed by forensic auditors of Economic Offences Wing of Mumbai Police. The probe found five leading broking firms - Motilal Oswal Commodities, India Infoline Commodities, Phillip Commodities, Anand Rathi Commodities and Geofin Comtrade - guilty of various malpractices.

These brokerages were accused of 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.

After the report by the EOW-Mumbai and complaint filed by NSEL, the market regulator SEBI had ordered its own probe, found the brokers guilty of malpractices and finally declared them "Not Fit and Proper" to function in the commodity segment in 2019. The SEBI order was challenged by these brokers in SAT and since NSEL was an affected party and the SEBI failed to consider all the allegations and material in the complaint filed by it against the brokers, NSEL filed an appeal at SAT, the company said in a statement.

However, SAT had rejected NSEL appeal on the technical ground of delay.

The Supreme Court on Tuesday restored the appeal by NSEL before the Securities Appellate Tribunal in a case related to 'Not Fit and Proper' brokers in the Rs 5,600-crore NSEL payment scam.

A bench led by Justice R.F. Nariman while condoning the delay in refiling of the appeal by NSEL asked it to deposit Rs 20,000 with the SC legal aid service committee.

NSEL expressed its surprise over Chidambaram's appearance for the brokers despite having been personally involved in the matter as the then finance minister and now being faced with a Rs 10,000 crore suit by 63 moons Technologies Limited, the parent company of NSEL.

It was under Chidambaram's tenure as Finance Minister that the Forward Market Commission (FMC) applied 'Not Fit and Proper' clause on NSEL and its promoter entities. "The same Chidambaram is now applying a different yardstick for the brokers by defending them from 'Not Fit and Proper' in the same NSEL payment crisis case," NSEL stated.

The exchange has been stating in various forums that Chidambaram is the brain behind the NSEL payment default crisis, along with two bureaucrats K.P. Krishnan, who was the then Joint Secretary in Department of Economic Affairs, and former FMC chairman Ramesh Abhishek.

By abruptly closing the fully functioning exchange, the company alleged, the trio had triggered the payment default, with the intention of killing the competition to National Stock Exchange in which Chidambaram had multiple vested interests, NSEL added.