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The Supreme Court on Friday set aside the Bombay High Court’s order of freeing the attachment of assets of 63 moons technologies. It upheld the Maharashtra Government’s order to attach the company’s assets under the Maharashtra Protection of Interest of Depositors (MPID) Act in the ₹5,600 crore National Spot Exchange Ltd (NSEL) payment default crisis.
Allowing the Maharashtra Government’s appeal, the bench of Justices DY Chandrachud, Surya Kant and Bela M Trivedi observed: ‘’For the reasons recorded, we allow the appeals and set aside the impugned judgment of the Bombay High Court. Notifications issued under section 4 of Maharashtra Protection of Depositors in Financial Establishments Act, 1999 of attaching the property of the respondent are valid.’’
With the latest apex court’s direction, the assets and properties attached under MPID stand valid.
The Maharashtra government had issued notices for attachment of assets for allegedly defrauding over 13,000 investors. The value of the alleged fraud in the NSEL payment crisis was ₹5,600 crore, and NSEL is a wholly-owned subsidiary of 63 moons (formerly financial technologies). This Maharashtra Government action came after a complaint by Mumbai police’s Economic Offences Wing, following which 63 moons had approached the Bombay High Court.
Giving relief to 63 moons, the High Court had ruled that NSEL is not a financial establishment and, as such, action under MPID Act cannot be invited on the matter. The Bombay High Court had quashed the notifications under this MPID Act to attach the company’s properties.
Appearing for 63 moons technologies at Supreme Court, Senior Advocate Abhishek Manu Singhvi urged that the Special Court be asked to decide the matter within three months. The bench directed Singhvi to move an application for such prayer.
Notably, in 2019, the Bombay High Court judges Ranjit More and Bharati Dangre ordered: “NSEL is not a financial establishment within the purview of the Maharashtra Protection of Interest of Depositors (MPID) in Financial Establishments Act (under which attachment was made). Hence, we decline the prayer (of the state).”
The Bombay High Court had held that NSEL was not a financial establishment since it did not accept any deposits, as defined under the MPID Act. The court held that NSEL was a commodities exchange where commodities were traded between willing buyers and sellers acting through their brokers.
The High Court had also observed, “the EOW finding the entire money trail to the defaulters, the State attached properties of 63 Moons, which was not legally sustainable”.
63 moons had called the state’s action ‘’in excess’’, arbitrary, unreasonable, and illegal.
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