Bombay HC vacates Maharashtra's order attaching 63 Moons' properties

Observes NSEL is not a financial establishment; EOW to challenge the order in SC

The Bombay High Court (HC) has struck down the Maharashtra government’s order for attaching properties worth Rs 2,500 crore of 63 Moons Technologies (formerly Financial Technologies India or FTIL) in the Rs 5,600-crore payment default of 2013 at its then subsidiary, National Spot Exchange (NSEL). 

The verdict, issued on Thursday, is a major relief for 63 Moons. On behalf of the state, the attachment was made by the city police's economic offences wing (EOW), which probed the case.  EOW sources say it plans to challenge the HC order.

The Bench of judges Ranjit More and 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). Hence, we decline the prayer (of the state)."

The judges also rejected the state's plea for a stay on their order.

The HC 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 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, “From Day One, 63 Moons and I 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.” He said exactly five years ago on this date he had got back his personal liberty due to the judgment of the Bombay HC, and today, the company got its economic liberty.

Originally, 63 Moons had appealed to the Supreme Court; the latter had redirected the case to the HC. Sources said the EOW might decide to petition the SC against the HC order, as the amounts involved are high and many who had invested in NSEL are yet to get any meaningful refund for their loss.

The matter only concerned the properties fo 63 Moons. Last October, the HC restrained the state government from any further attachment, directing a stay 

on a bunch of notifications or directions issued by the Maharashtra government to attach more of the company’s properties and bank accounts.

In April 2018, the government had issued several notifications and orders to attach property worth Rs 2,500 crore, including reserves of around Rs 1,800 crore in several bank accounts.

Mukul Rohatgi, former Union attorney-general, had argued for the company in the HC. He'd noted the SC had already struck down the central government's order to have NSEL merged compulsorily with 63 Moons under section 397 of the Companies Act. And, that a related matter on the section's applicability to explain the supersession of 63 Moons’ board of directors was pending in a court of law.