NSEL Fraud: Bombay High Court Rules Separate CBI Cases Cannot Be Clubbed Without Common Transaction Nexus

Case Overview

Case Name: National Sport Exchange Limited Vs Central Bureau of Investigation Bank Securities and Fraud Cell
Court: Bombay High Court
Provisions Considered: Sections 219, 220, and 223 of the Code of Criminal Procedure (Cr.P.C.)
Key Reference: State of Jharkhand Through Sp. Central Bureau of Investigation versus Lalu Prasad Yadav alias Lalu Prasad (2017) 8 SCC 1

Background of the Dispute

The Bombay High Court was called upon to adjudicate a revision application filed by National Sport Exchange Limited (NSEL), challenging an order dated 4th July 2024 passed by the learned Special Judge for CBI, Greater Bombay in Miscellaneous Application No. 1313 of 2022. The impugned order had turned down NSEL's request to consolidate Special CBI Case No. 62 of 2016 and Special CBI Case No. 34 of 2017 into a single joint trial.

NSEL, positioned as accused No. 1 in both proceedings, sought consolidation of the two cases before the Sessions Court, Mumbai, arguing that a unified trial was both legally permissible and practically necessary.

Nature of Allegations in Both Cases

Special CBI Case No. 62 of 2016

This case involved allegations of cheating against M/s. PEC Ltd., a Public Sector Undertaking. The purported wrongful loss suffered by PEC Ltd. was approximately Rs. 120.75 crores. The allegations arose from transactions conducted on the NSEL platform during 2007 to 2013, involving what were described as fraudulent paired contracts — specifically T+2 buy and T+25 sale — executed without actual delivery of underlying commodities, thereby resulting in siphoning of funds.

Special CBI Case No. 34 of 2017

This case pertained to alleged cheating of M/s. MMTC Ltd., another Public Sector Undertaking, with the alleged wrongful loss amounting to approximately Rs. 222.49 crores. The same broad NSEL platform and the same general class of paired contract transactions formed the backdrop of these allegations.

Arguments Advanced by NSEL

NSEL's counsel pressed strongly for a joint trial, placing reliance on the following contentions: