NSEL scam: HC grants interim relief to 63 Moons

MUMBAI: In a relief for

63 Moons Technologies

(formerly

Financial Technologies

) and its group CEO

Jignesh Shah

in the Rs 5,600-crore

National Spot Exchange

(NSEL) scam case, the Bombay high court has stayed notifications for attachment of the company’s assets, including bank accounts and properties, calling the state’s action “in excess”, arbitrary and unreasonable.


The state had issued notifications in April 2018 under provisions of the Maharashtra Protection of Interest of Depositors (MPID) — In Financial Establishment — Act. The company had challenged its validity. The HC bench of justices Ranjeet More and Bharati Dangre, in its order on October 24,, made available on Friday, also stayed a corrigendum issued, whereby accrued returns on investments are likely to now become available to 63 Moons.

The HC also stayed portions of a September 2018 notification, as a result of which the company will continue to receive periodically accrued benefits on its investments. The company had moved the HC to assail validity of certain provisions of the MPID Act and its counsel — former attorney general Mukul Rohatgi with Aabad Ponda and Sujay Kantawala — argued that the authorities sought to attach over Rs 8,500 crore. The bench agreed.

63 Moons develops and sells technology products that facilitate trading on stocks and commodities exchanges. It also claims that ODIN, a software developed by it, provides a platform for online trading.

In July 2016, the Economic Offences Wing (EOW) had restrained the company from creating third-party rights or disposing assets without permission of a designated court. In September 2016, the state issued a notification to attach the company’s assets, including investments in mutual funds and bonds. This notification, however, excluded the periodically accrued benefits on these investments.

In April 2018, the state issued a notification to attach movable property, the ODIN software that provides a platform for online trading and the receivables from it. The home department, Maharashtra, had issued a fresh notification on September 19, 2018 ratifying the government’s earlier notifications.

The HC in its order said that it found “sufficient substance in the grievance of the petitioner... as ODIN is a software developed by the petitioner and that it accrues income to the petitioner by using technology and attaching ODIN perpetually would strangulate the business of the petitioner company.” The state’s counsel Rafiq Dada had opposed the petition.

The HC said the state did not dispute that the properties attached are worth Rs 8,548 crore, though it disputes its value after realisation and the various factors to which it may be realised. The HC said that prima facie “amount earned from the non-ODIN business and the revenue accruing from ODIN need not be brought within the purview of attachment…”

The validity of the corrigendum and the impugned notification dated September 19, 2018 would be dealt by this court at the time of final hearing of the petition, the court said.

The HC also rejected a plea for a stay of its order, made by the state, after Ponda opposed it. “Since we are prima facie convinced that the notification issued by the state government purporting to attach the properties…in 2018 is in excess of the defaulted amount and also since we are satisfied that the respondent has acted in arbitrary manner in as much as it initially excluded certain attachments from the purview of the notification, and subsequently has included the same without following the due procedure…we are not inclined to stay the effect and operation of the order which we have pronounced,” the court said.