Supreme Court Upholds Attachment Of Properties Of 63 Moons Technologies; Allows NSEL's Appeal

The Top Court had set aside the judgment bench passed by the bench of Justices Ranjit More and Bharati Dangre in the writ preferred by 63 Moons Technologies Ltd had also observed that National Spot Exchange Limited is not a financial establishment under the Maharashtra Protection of Depositors in Financial Establishments Act, 1999 ("MPID Act, 1999").

Submissions By Counsels

NSEL Is Only A Pass-Through Mechanism Which Does Not Accept Deposits, Even If There Is Default By Brokers, NSEL Did Their Best: Senior Advocate AM Singhvi

It may be noted that Senior Advocate Mukul Rohatgi on previous occasion had submitted that the issue before the Court was whether NSEL was covered under the provisions of MPID Act and within the definition of Financial Establishment under the Act. Explaining the meaning of the term "Deposit", he further argued that NSEL neither received any deposits nor issued any promise to the customers to get interest on money on making deposits.

NSEL Is Bailee Both At Buyer's & Seller's End; There Is Entrustment To NSEL At Both Ends Of Commodity & Money; It's Not Pass Through & Dark Room, It's Too Simplistic In Understanding Of What NSEL Was Doing; Paired Contract Is Not A Product Not Developed By The Buyer But By NSEL In Cohorts With The Seller : Advocate Jayant Mehta

Appearing for NSEL Investors Action Group, Advocate Jayant Mehta in his rejoinder submissions apprised the bench with regards to the process followed by NSEL in the settlement of paired contract between the buyers and sellers.

It was also his contention that paired contract is not a product not developed by the buyer but by NSEL in cohorts with the seller and that the contract came to the buyer as one single tied up product.

It was also Mehta's contention that NSEL was a counter guarantor in every contract in buying as well as selling contracts.

He also added that in the submissions made by Senior Advocate AM Singhvi, he had agreed that although NSEL was not a financial establishment he had accepted that NSEL was a financial establishment which could be prosecuted.

63 Moons Is 99% Shareholder Of NSEL; To Read Down Section 3 & 4 Of MPID Act Would Cut To Root Of The Act : ASG Vikramjit Banerjee

Appearing for the State of Maharashtra, ASG in his rejoinder submissions contended that 63 Moons was 99% shareholder of the exchange. "This case which is now being made that we are completely independent should have been made before the High Court and why now?" ASG further added.

He also referred to the High Court judgements wherein the constitutionality of Tamil Nadu Protection of Depositors in Financial Establishments (akin to MPID Act) was upheld.

"The whole thing is about the brochure wherein you advertised, accepted the deposit and then you wriggle out. Brochure was quite explicit that they were looking for investment. That's why the Act had come. Definition of "Deposit" is very wide. To read down the provisions would cut to the root of the Act. There is clear diversion of funds ," ASG further added.

Case Title: The State Of Maharashtra v. 63 Moons Technologies Ltd| Diary No.- 31272 - 2019 and NSEL Investors Action Group v. 63 Moons Technologies Ltd. And Anr.| SLP(C) No. 23502-23503/2019

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