Supreme Court issues notice in SLP in 63 Moons Tech case

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Supreme Court/Photo: Anil Shakya
Supreme Court/Photo: Anil Shakya

In The State Of Maharashtra Vs  63 Moons Technologies today Supreme Court issued notice and listed matter for 27th November 2019.

The Present SLP is filed before a bench of Justices Rohinton Fali Nariman, Surya Kant and V. Ramasubramanian against the order of Bombay High Court dated 22nd August 2018 in which the High Court held that National Spot Exchange Limited (NSEL) was not a ‘financial establishment’ since it did not accept any deposits, as defined under the Maharashtra Protection of Interests of Depositors in Financial Establishments Act, 1999 (for short ‘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 HC had also observed that, “the EOW finding the entire money trail to the defaulters, the State attached properties of 63 Moons, which was not legally sustainable”.

Before the High Court, Moon Technologies, therein the petitioner, had posed a challenge to the Constitutional validity of Sections 4 and 5 of the Maharashtra Protection of Interests of Depositors in Financial Establishments Act, 1999 (for short ‘MPID Act’) being violative of Article 14, 19 and Article 300A of the Constitution and also to the levy of attachment on the petitioner’s assets by six notifications issued by the respondent no.1 by invoking the powers conferred on the authority under the said enactment.

It stated that NSEL provided an electronic trading platform for spot contracts in various commodities on a compulsory delivery basis. It is stated that NSEL commenced its operation in October 2008 in accordance with the Notification dated 5th June 2007 issued by the Department of Consumer Affairs, by which “All forward contracts of one day duration for the sale and purchase of commodities traded on” NSEL were exempted from the purview of Forward Contract Regulations Act, 1952 (for short ‘FCRA’).

On a complaint filed by one Pankaj Ramnaresh Saraf on 30th September 2014, an FIR came to be registered under Section 120-B read with Sections 409, 465, 467, 471, 474 and 477(A) of the IPC. It was alleged that by unilaterally closing down the Exchange, the NSEL defaulted in repayment of approximately Rs.5600 crore which was due to be paid to approximately 13,000 investors. It was also alleged that the money collected by NSEL from the investors fell within the definition of the term “deposit” as per section 2(c) of the MPID Act and hence the provisions of MPID Act were invoked and applied on 24th October 2013.

High Court relying on Carona Limited Vs. M/s. Parvathy Swaminathan and Sons had concluded that the NSEL is not a Financial Establishment and resultantly, the petitioner who is a promoter of the said establishment cannot be proceeded under the provisions of MPID Act. Resultantly, we are constrained to quash and set aside the action to which the petitioner is subjected to by taking recourse to the provisions of MPID Act.

While granting the permission to file the Special Leave Petition, apex court clarified that “the statement recorded of Shri Mukul Rohatgi, learned senior counsel, that nothing will be done to disturb the status quo existing as on 03.09.2019 will continue until further orders.”

–India Legal Bureau