The Bombay High Court (HC) on Thursday vacated the Maharashtra government’s order for attaching properties worth Rs 2500 crore of 63 Moons Technologies (formerly Financial Technologies) in the Rs 5600 crore payment default at its subsidiary National Spot Exchange Ltd (NSEL). The decision is a major relief for 63 Moons Technologies. On behalf of the state, attachment was made by the Economic Offense Wing of Mumbai Police investigating the case. EOW plans to challenge the HC order.
Hearing the case, the two judge bench comprising Justice Ranjit More and Justice Bharati Dangre observed, “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), 1999. Hence, we decline the prayer of Rafiq Dada (the advocate appearing for the state of Maharashtra).” The competent authority (state government in this case), meanwhile, had prayed for a stay which was declined by the Bombay HC.
The HC had held that the NSEL is not a Financial Establishment since it did not accept any deposits as defined under the MPID Act and resultantly. The court held that NSEL was a commodities exchange where commodities were traded between willing buyers and sellers acting through their brokers. The HC 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.”
Jignesh Shah, Mentor & Chairman Emeritus, 63 moons technologies, said, that, “From day one, I and my 63 moons, have maintained utmost faith in the Indian judiciary and we have fully complied with all investigative agencies and the courts and, will continue to do so. I want to reiterate that truth prevails and triumphs! I thank all our well-wishers, shareholders and stakeholders for standing by us and, we are committed to rise.” He also said the statement that today exactly five years ago he got back my personal liberty with the judgment of Mumbai HC and today the company got its economic liberty.
Earlier, 63 Moons Technologies had filed a special leave petition in the Supreme Court in this case which the apex court rejected interventions and re-directed the case to the Bombay HC for hearing.
Sources said that economic offense wing is considering to go in appeal against the HC order as the stake is high and the NSEL ‘investors’ are yet to get meaningful refund of the losses they had incurred.
The case was pertaining to properties of the 63 Moons and directors of the defunct NSEL and defaulters’ attached properties were not part of this case.
In October 2018, the Bombay HC had restrained the government of Maharashtra to attach further properties of 63 Moons Technologies and further investments made further. The court had ordered stay on a bunch of notifications or directions issued by the Maharashtra government attaching the company’s properties and bank accounts.
Earlier in April 2018, the government of Maharashtra had issued several notifications and orders attaching properties worth over Rs 2500 crore including reserves of around Rs 1800 crore in several bank accounts and FT Tower valued over Rs 700 crore.
Today’s decision of the Bombay HC, however, would provide a major relief for investors, shareholders, promoters and employees of 63 Moons and may lead to the question on applicability of the MPID Act in NSEL case.
Appearing for 63 Moons, Mukul Rohatgi, argued, “The Supreme Court has already dismissed petition of the government of India ordering merger of the defunct NSEL with its parent 63 Moons under Section 396 of the Companies Act. Also, the matter pertaining to the applicability of Section 397 of the Companies Act explaining the supersession of the 63 Moons’ board is pending in the court of law.”