April 6, 2024 In Uncategorized


A 3 Judge Bench of Supreme Court comprising of Dr D.Y Chandrachud, J. Surya Kant, J. Bela M Trivedi passed a judgement in State of Maharashtra v. 63 Moons Technologies Ltd. on 22.04.2022 where they upheld the validity of Maharashtra Protection of Interest of Depositors (in Financial Establishment) Act 1999 (MPID).


An appeal was filed in Supreme Court against the Order of Bombay High Court where certain notifications attaching the property of the Respondent under Section 4 of the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act 1999 have been quashed.

National Spot Exchange Ltd (NSEL) is a company incorporated under the Companies Act 1956, and is a wholly owned subsidiary of Financial Technologies (India) Limited, which is now known as 63 Moons Technologies Limited. The Respondent held 99.99% of the shareholding of NSEL and provided an exchange platform for buying and selling of securities. Further, they provided assurances and representations regarding providing fixed rate of return to investors on their exchange.

Pankaj Ramnaresh Saraf, a Director of Vostak Far East Securities Pvt. Ltd., a company involved in the business of investment, trading, and financing filed a complaint dated 30.09.2013 under Sections 120B, 409, 465, 468,471,474 and 477A of the Indian Penal Code 1860 (IPC) against the directors and persons holding key management posts in NSEL.  The company was alleged to have committed the offence of suspending the trading and deferred settlement of all one-day forward contracts of the investors.


The primary dispute was whether NSEL was a ‘Financial Establishment’ within the meaning of Section 2(d) of the MPID Act.

Decision by Supreme Court

The Supreme Court relied on State of Maharashtra v. Vijay C. Puljal (2012) 10 SCC 599 and Sonal Hemant Joshi v. State of Maharashtra (2012) 10 SCC 601. In both the decisions, the Hon’ble Court upheld the constitutional validity of the MPID Act in view of the earlier decision of KK. Bhaskaran v. State (2011) 3 SCC 793.

The Apex Court in New Horizon Sugar Mills Ltd. v. Government of Pondicherry (2012) 10 SCC 575 has held that the state legislature is competent to legislate upon financial establishments with an object to protect investors. The Court also held that the expression ‘financial establishment’ includes a natural and a juristic person such as a company incorporated under the Companies Act. This Court has held in KK Bhaskaran (supra), State v. KS Palanichamy (2017) 16 SCC 384, and PGF v. Union of India (2015) 13 SCC 50 that the object of a law regulating financial establishments is to protect the investors.


The Supreme Court allowed the Appeal and set aside the judgement by High Court by upholding the validity of the MPID Act. The Hon’ble Court also held that the assurances made by the company were significant and not faint as stated by the High Court. Thus, the attachment of properties of the company as per the MPID Act was held valid by the Supreme Court.





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