MUMBAI, May 22: Bombay Stock Exchange president MG Damani has maintained that badla is an inherent part of trading and does not constitute money lending as alleged by the economic offence wing of Mumbai police.

The economic offence wing had maintained that the Mumbai bourse and its brokers were engaged in badla financing deals, considered to be illegal.

Former deputy commissioner of police Sanjay Pandey, had through a letter dated March 14, maintained that badla financing was part of money lending activities, and was a `cognisable offence under the Bombay Money Lending Act.' Pandey, now transferred, sought clarifications in this regard from the exchange.

``BSE members cannot be treated at par with criminals,'' Damani said informally to newspersons on Thursday evening, in an attempt to clarify the allegations made by the economic offence wing..

"We pay tax to the government and it is not a police raj that anybody can be called to join the criminals. Moreover, a police official's views cannot be stronger than the judicial verdict,'' the Bombay Stock Exchange president said.

Damani cited a 1986 Mumbai high court verdict. It said (in the case of Harkisondas Lukhmidas & Anr versus Ramniklal Mohanlal, arbitration petition no.89 of 1984): `Vyaj badla' transactions are not money lending transactions.

The exchange has also taken the opportunity to explain the concept of badla transaction and the scope and applicability of the Bombay Money Lenders Act, 1946, in the carry forward business conducted on the bourse.

"Moreover, the carry forward system is being implemented pursuant to the scheme devised by the Sebi under the Securities and Exchange Board of India Act, 1992, (which is also an enactment of Parliament)," it further stressed.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.