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Kohinoor Mandal
CALCUTTA, DEC 27: Activities at the East India Jute & Hessian Exchange, the only commodity exchange in the east of the country, have almost come to a standstill from the end of November due to a Calcutta high court order.
President-elect of the exchange, Bhag Chand Jain is also under a close watch of the Forwards Market Commission as his firm Kankinarrah Company Ltd, and Tapcon International (India) Ltd defaulted in supplying A Twill jute bags to seven buyers.
The Calcutta high court has ordered the exchange to carry on with the daily activities but financial transactions should not be carried out till a final verdict on the default case is given. And with the court going on vacation, it is most likely that things will not be normal till the middle of January.
The hessian exchange was established in 1945, with the amalgamation of the two existing bodies -- The Calcutta Hessian Exchange Ltd and East India Jute Association -- to serve as a centre for forward and futures trading in raw jute and jutegoods.
Allegations of speculative trading were a regular feature of the exchange. So, in 1964 the Union government banned futures of raw jute and in 1983, futures in jute sackings. Only in 1995 the ban on jute sackings was lifted.
Problems started with the annual elections of the exchange held in the last week of September this year. Though the out going president Arun Kumar Seth, who held the post for two consecutive years, was supposed to make a clean sweep, still he lost it by a narrow margin at the board meeting held immediately after the annual general meeting of the members.
Jain won the elections and was ready to take charge, when two members of the exchange went to court challenging the election process. These two members were not allowed to vote as they failed to clear their annual subscription, despite several opportunities.
Initially, Calcutta high court stayed Jain's election and also the board members from taking charge. Later, through another order the board was allowed to look into thedaily affairs of the exchange but barred from taking any decision.
So, from the middle of October the exchange started functioning for the November delivery of jute goods. However, when the delivery closed it was found that seven buyers, including the jute baron Arun Kumar Bajoria of Hooghly Mill Company Ltd alleging default against Jain for goods worth Rs 1.66 crore. The matter went to court and as an interim order Jain was asked to return the money and total stoppage of financial transactions at the exchange. At present, sources said that the ring members are only engaged in speculative activities as no legal transaction can take place.
Board members also alleged that from June minutes of the board meeting are not confirmed by them.
"From June to November the minutes of the board meetings were circulated amongst us but they were not confirmed. However, on December 1 and 12 we had two board meetings, whose minutes were not even circulated amongst us," a board member told The FinancialExpress.
The Forwards Markets Commission, the parent body of all the commodity exchanges of the country is yet to take any action on the hessian exchange. However, its chairman Vijay Kumar Aggarwal has not given the concurrence to the election of Jain.
"In spite of being elected through a democratic process FMC's concurrence is necessary for our exchange and it has been stated clearly in our bye-laws. Generally, the FMC chairman gives the nod but for Jain there were charges of default pending against him, which perhaps stopped the FMC from giving a nod" sources said.
Even in the August delivery, Jain's Kankinarrah Company defaulted and the case is yet to disposed off. Even the board members are no longer interested in that case.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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This story was printed from Net Express located at http://www.expressindia.com. Net Express provides a portal to India, with news from The Indian Express and The Financial Express along with sites on travel and tourism, the entertainment industry, the power sector, the environment and much more.
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