NEW DELHI: The Supreme Court on Friday set aside the Bombay High Court order and upheld the decision of the Maharashtra government to attach assets of company 63 Moons Technologies Limited under the Maharashtra Protection of Interest of Depositors (MPID) Act in relation to the National Spot Exchange Limited (NSEL) case.
"... We allow the appeals and set aside the impugned judgment of the Bombay High Court dated August 22, 2019. The impugned notifications issued under Section 4 of the MPID Act attaching the properties of the respondent are valid," the top court said on Friday.
The appeal arose from the Bombay High Court judgment, by which certain notifications attaching the property of the respondent (63 Moons technologies) under Section 4 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act 19991 were quashed.
The top court on the question of the challenge to the constitutionality of the MPID (in Financial Establishments) Act 1999 while relying on the earlier judgments said that there is no reason for it to reopen the question.
“.. Court has held that the MPID Act is constitutionally valid on the grounds of legislative competence and when tested against the provisions of Part III of the Constitution," it said.
The top court said that the High Court ought not to have made observations on the merits of the criminal proceedings when the writ petition was restricted to the issue of whether NSEL is a financial establishment for the purpose of the MPID Act.
The court observed that the high court lost sight of the fact that Section 2(c) of the MPID Act defines ‘deposit’ in broad terms. The High Court has read the definition of ‘deposit‘ narrowly without any reference to the salutary purpose of the MPID Act, the top court said.
The Bombay High Court had earlier observed that the National Spot Exchange Ltd (NSEL) is not a financial establishment and hence notifications for attachment of the company’s assets including bank accounts and properties under the MPID Act stand quashed.
The Maharashtra government had issued notices for attachment of assets over allegedly defrauding 13,000 persons who traded on the platform of NSEL. The value of the alleged fraud was Rs 5,600 crores, and NSEL is a wholly owned subsidiary of 63 moons. The Maha government action came from a complaint by Mumbai Police's Economic offences wing, which led to 63 moons moving the Bombay high court for relief.