Mumbai, Oct 5 (IANS): The Economic Offences Wing (EoW) of Mumbai Police on Friday arrested two EY partners, Shravan Jalan and Amit Kabra, in the NSEL case.

The two were statutory auditors with the company previously and would be produced in the court on Monday. EY was auditor for NSEL during 2010-12.

Reacting to the arrests, NSEL, in a statement, said it is "shocked" at the "unwarranted" arrest and the two audited the company, and not the exchange platform.

"Auditing of the company accounts and 'stock-audit of an exchange' are totally different subjects. Stock verification of an exchange is done by buyers, brokers and auditors of the brokers, who had visited the warehouses more than 50 times, and had verified the stock availability in those warehouses. Ernst & Young had nothing to do with verification of these stocks," it said.

NSEL also said that the action by the EoW has taken place after over six years since the NSEL payment default case emerged.

"...Over the years, full money trail has also got established to 24 defaulters. NSEL is being subject to such unfortunate targeting despite it single-handedly working at recovery, having already obtained Rs 3,300 crore worth of decrees and arbitration awards against defaulters' attached proper ties of over Rs 8,000 crore (as per EOW), while decree on remaining amounts are underway."

The NSEL statement also said that in the matter, majority of the action has been faced only by NSEL, 63 moons and persons associated with them since the last over six years and is not in parity with others such as the Forward Markets Commission chairman, its relevant officials and defaulting brokers.

"Despite EOW's own report on brokers, erstwhile FMC chairman and officials, no actions have been taken against them. Even the observations of the Bombay High Court on actions of brokers, no decisive action has been initiated against them by EoW, and it's a mystery. Presently, NSEL has been focusing only on recovery and it expects full cooperation from EOW and all stake-holders," said the NSEL statement.

Ernst & Young, in a statement, said: "We are surprised and dismayed at the sudden course of action taken by the Economic Offences Wing and will vigorously defend the reputation of our partners and our firm. The action by the department is for a six-year-old matter. During this period, we have always extended our full cooperation to the authorities and participated in over 50 meetings with the department."

"We reiterate that our audit of the National Spot Exchange Limited's financial statements for the years ended 31 March 2010, 2011, 2012 was in accordance with the auditing standards generally accepted in India. We were succeeded by another auditor for the financial year 2012-13. NSEL defaulted in its settlements in August 2013."

"We have made several written and oral submissions during the last six years about settlement of NSEL's contracts that were outstanding as of 31 March 2012, our last year of the audit. We are confident of the quality of our audits and hopeful that our submissions and cooperation will be taken into account by the relevant authorities," it added.