ILFS Securities Services Limited (IISL), a subsidiary of ILFS, has filed a criminal writ petition in the Delhi High Court against Delhi Police EOW (Economic Offences Wing) claiming they passed orders, restricting the company from selling specified securities, “without application of mind, on wrongful assumption of power, without following due process, without authority of law and in an arbitrary and illegal manner.”The petition also challenged the order on the grounds that EOW acted on the basis of a complaint filed by Dalmia Cements “without any FIR and without having any provision under law” authorising it to issue such impunged order prior to initiating investigation under CrPC.The case involves IISL, a clearing member; Allied Financials, a broker; and its clients Dalmia Cements in an Options Contract.Allied Financials sold Options Contract on Nifty, in the F&O segment of NSE, in December 2018. The contracts were to be settled in cash on expiry in March 2019 and June 2019.Allied Financials got Rs 380 crore for these contracts and offered MFs to IISL towards collaterals for these Options, which was transferred to NSE Clearing Limited(NCL).The MF offer included units from funds of Reliance Mutual Funds, Axis, L&T, DSP, Kotak Mahindra Mutual Fund and UTI MF.Subsequently, IISL transferred the collateral to its demat account, after Allied Financials failed to provide the shortfall with additional collaterals, to sell and close any open positions, according to the petition.Dalmia Cements East Limited, client of Allied Financials, filed a complaint with the EOW charging the broker with fraudulently and deceptively acquiring the MFs and using them as collateral to IISL. The EOW, based on the compliant, ordered IISL not to sell these securities till further order.ISSL has challenged the order saying while there is an ongoing investigations by SEBI and EOW, the said contracts have not been suspended or put in suspended animation and ISSL is expected to deposit collateral commensurate with expected cash liability arising at the time of maturity of the contract.”As of now the specified securities continue to remain in the ISSL demat account and the inability of the petitioner to provide margins as per existing norms as well as meet NSE norms on cash collateral, poses significant risk to the petitioner. The impunged order impairs the ability of the petitioner to comply with its legal obligations”, said ISSL in its petition.