# National Spot Exchange Limited v. Union of India & Ors

- **Citation:** 2025 INSC 694
- **Court:** Supreme Court of India
- **Decided:** 2025-05-15
- **Bench:** Bela M. Trivedi, Satish Chandra Sharma
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/national-spot-exchange-limited-v-union-of-india-ors-38963
- **Pages:** 55

## Headnote

Whether the Secured creditors would have priority of interest over
the assets attached under the Provisions of Prevention of Money
Laundering Act, 2002, (PMLA) and Maharashtra Protection of
Investors and Depositors Act, 1999 (MPID Act), by virtue of the
provisions of SARFAESI Act, 2002 and RDB Act, 1993; whether
the properties of the Judgment Debtors and Garnishees attached
under the Provisions of MPID Act, 1999 would be available
for the execution of the decrees against Judgment Debtors in
view of the Provision of Moratorium under Section 14 of the
IBC, 2016.
Headnotes†
Prevention of Money Laundering Act, 2002 (PMLA) -
Maharashtra Protection of Investors and Depositors Act,
1999 (MPID Act) - s.4 - Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest
Act, 2002 (SARFAESI Act) - s.26E - Recovery of Debts and
Bankruptcy Act, 1993 (RDB Act) - Constitution of India -
Article 246 - Commodity Exchange Platform of National
Spot Exchange Limited committed payment defaults and
fraud of about Rs.5,600 Crores - Secured creditors, if would
have priority of interest over the assets attached under the
PMLA and MPID Act, by virtue of the SARFAESI Act and RDB
Act:
Held: No priority of interest can be claimed by the Secured
Creditors against the properties attached under the MPID Act -
The provisions of MPID Act would override any claim for priority
of interest by the Secured Creditors in respect of the properties
* Author
[2025] 7 S.C.R.
253
National Spot Exchange Limited v. Union of India & Ors.
which have been attached under the MPID Act - Monies or
deposits of depositors/investors, who were allegedly defrauded
by the Financial Establishment, and for the recovery of which
the MPID Act has been enacted, could not be said to be a "debt"
contemplated in s.26E of the SARFAESI Act, and hence also the
provisions of s.26E are not attracted to the facts of the case - Order
passed by the Supreme Court Committee on 10.08.2023 upheld.
[Paras 43, 44, 53]
Maharashtra Protection of Investors and Depositors Act, 1999
(MPID Act) - ss.4, 4(2), 5, 7 - Insolvency and Bankruptcy Code,
2016 - s.14 - The properties of the Judgment Debtors and
Garnishees attached under the MPID Act, if would be available
for the execution of the decrees against Judgment Debtors in
view of the provision of moratorium u/s.14, IBC:
Held: Yes - Properties of the Judgment Debtors and Garnishees
attached under the provisions of the MPID Act, would be available
for the execution of the decrees against the Judgment Debtors by
the Supreme Court Committee, despite the provision of moratorium
u/s.14, IBC - Order passed by the Supreme Court Committee on
08.01.2024 upheld. [Paras 52, 53]
Constitution of India - Article 246, 254; Seventh Schedule -
Federal Structure Doctrine - Maharashtra Protection of
Investors and Depositors Act, 1999 (MPID Act) - Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act) - Recovery of
Debts and Bankruptcy Act, 1993 (RDB Act) - Prevention of
Money Laundering Act, 2002 (PMLA) - Conflict between the
laws made by the Parliament and the law made by the State
Legislature - Overlapping of legislative fields - Whether the
MPID Act covers or relates to the same subject matter as
covered under the Central Legislations i.e., SARFAESI Act
and RDB Act as also PMLA:
Held: State of Maharashtra was within its legislative competence
to enact the MPID Act, the subject matter of which in pith and
substance was relatable to Entries 1, 30 and 32 of the State List
(List II) of the Seventh Schedule of the Constitution of India - The
subject matter of PMLA is traceable to the Entry-13 of Union List
254
[2025] 7 S.C.R.
Supreme Court Reports
(List-I) of Seventh Schedule - Further, both SARFAESI and RDB
Act have been enacted with regard to the matter pertaining to
"Banking," which subject matter is relatable to the Entry 45 "Banking"
falling in the Union List (List-I) of Seventh Schedule -

## Text

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[2025] 7 S.C.R. 252 : 2025 INSC 694
National Spot Exchange Limited
v.
Union of India & Ors.
(Writ Petition (Civil) No. 995 of 2019)
15 May 2025
[Bela M. Trivedi* and Satish Chandra Sharma, JJ.]
Issue for Consideration
Whether the Secured creditors would have priority of interest over
the assets attached under the Provisions of Prevention of Money
Laundering Act, 2002, (PMLA) and Maharashtra Protection of
Investors and Depositors Act, 1999 (MPID Act), by virtue of the
provisions of SARFAESI Act, 2002 and RDB Act, 1993; whether
the properties of the Judgment Debtors and Garnishees attached
under the Provisions of MPID Act, 1999 would be available
for the execution of the decrees against Judgment Debtors in
view of the Provision of Moratorium under Section 14 of the
IBC, 2016.
Headnotes†
Prevention of Money Laundering Act, 2002 (PMLA) -
Maharashtra Protection of Investors and Depositors Act,
1999 (MPID Act) - s.4 - Securitisation and Reconstruction
of Financial Assets and Enforcement of Security Interest
Act, 2002 (SARFAESI Act) - s.26E - Recovery of Debts and
Bankruptcy Act, 1993 (RDB Act) - Constitution of India -
Article 246 - Commodity Exchange Platform of National
Spot Exchange Limited committed payment defaults and
fraud of about Rs.5,600 Crores - Secured creditors, if would
have priority of interest over the assets attached under the
PMLA and MPID Act, by virtue of the SARFAESI Act and RDB
Act:
Held: No priority of interest can be claimed by the Secured
Creditors against the properties attached under the MPID Act -
The provisions of MPID Act would override any claim for priority
of interest by the Secured Creditors in respect of the properties
* Author
[2025] 7 S.C.R.
253
National Spot Exchange Limited v. Union of India & Ors.
which have been attached under the MPID Act - Monies or
deposits of depositors/investors, who were allegedly defrauded
by the Financial Establishment, and for the recovery of which
the MPID Act has been enacted, could not be said to be a "debt"
contemplated in s.26E of the SARFAESI Act, and hence also the
provisions of s.26E are not attracted to the facts of the case - Order
passed by the Supreme Court Committee on 10.08.2023 upheld.
[Paras 43, 44, 53]
Maharashtra Protection of Investors and Depositors Act, 1999
(MPID Act) - ss.4, 4(2), 5, 7 - Insolvency and Bankruptcy Code,
2016 - s.14 - The properties of the Judgment Debtors and
Garnishees attached under the MPID Act, if would be available
for the execution of the decrees against Judgment Debtors in
view of the provision of moratorium u/s.14, IBC:
Held: Yes - Properties of the Judgment Debtors and Garnishees
attached under the provisions of the MPID Act, would be available
for the execution of the decrees against the Judgment Debtors by
the Supreme Court Committee, despite the provision of moratorium
u/s.14, IBC - Order passed by the Supreme Court Committee on
08.01.2024 upheld. [Paras 52, 53]
Constitution of India - Article 246, 254; Seventh Schedule -
Federal Structure Doctrine - Maharashtra Protection of
Investors and Depositors Act, 1999 (MPID Act) - Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 (SARFAESI Act) - Recovery of
Debts and Bankruptcy Act, 1993 (RDB Act) - Prevention of
Money Laundering Act, 2002 (PMLA) - Conflict between the
laws made by the Parliament and the law made by the State
Legislature - Overlapping of legislative fields - Whether the
MPID Act covers or relates to the same subject matter as
covered under the Central Legislations i.e., SARFAESI Act
and RDB Act as also PMLA:
Held: State of Maharashtra was within its legislative competence
to enact the MPID Act, the subject matter of which in pith and
substance was relatable to Entries 1, 30 and 32 of the State List
(List II) of the Seventh Schedule of the Constitution of India - The
subject matter of PMLA is traceable to the Entry-13 of Union List
254
[2025] 7 S.C.R.
Supreme Court Reports
(List-I) of Seventh Schedule - Further, both SARFAESI and RDB
Act have been enacted with regard to the matter pertaining to
"Banking," which subject matter is relatable to the Entry 45 "Banking"
falling in the Union List (List-I) of Seventh Schedule - Considering
the pith and substance of the State and the Central Legislations
in question, the Central Legislations i.e., SARFAESI Act or RDB
Act cannot be permitted to prevail over the State Legislation i.e.,
MPID Act, merely because the Central Legislations are enacted
by the Parliament - Since all these Acts have separate field of
operations, provisions of SARFAESI Act or RDB Act cannot be
permitted to override the provisions of MPID Act, a validly enacted
State Legislation for the subject matter falling in List-II- State List,
otherwise it would tantamount to violation of federal structure
doctrine envisaged in the Constitution - MPID Act would prevail in
the State of Maharashtra in respect of the specific subject matter
for which the said Act was enacted, in view of Clause (3) of Article
246. [Paras 34-37, 40, 41]
Maharashtra Protection of Investors and Depositors Act, 1999
(MPID Act) - s.4, 4(2), 5, 7 - Insolvency and Bankruptcy Code,
2016 - ss.14, 238 - If there is any inconsistency between the
MPID Act and the IBC:
Held: No - A conjoint reading of ss.4, 5 and 7, MPID Act makes it
clear that though s.4(2) states about the attached properties being
vested in the Competent Authority appointed by the Government,
such vesting would be subject to the orders passed by the Designated
Court - There is no inconsistency between the MPID Act and the
IBC - In absence of any inconsistency having been brought on
record, between the provisions contained in the MPID Act and in
the IBC, s.238 of IBC, which gives overriding effect to the IBC over
the other Acts for the time being in force, cannot be said to have
been attracted - Constitution of India - Article 254. [Paras 50, 51]
Constitution of India - Article 246(1), (2), (3); Seventh
Schedule-List-I, II and III - Distribution of legislative powers
between the Union and State Legislature - Principle of Federal
Supremacy:
Held: A three-fold distribution of legislative power between the Union
and the States made in the three Lists in the Seventh Schedule
r/w Article 246, exhibits the Principle of Federal supremacy - Thus,
in case of inevitable conflict between Union and State powers, the
[2025] 7 S.C.R.
255
National Spot Exchange Limited v. Union of India & Ors.
Union power as enumerated in List-I shall prevail over the State
power as enumerated in Lists-II and III, and in case of overlapping
between Lists II and III, the latter shall prevail. [Para 26]
Constitution of India - Article 142 - Powers under - Plea of
the intervenors that exercising powers u/Article 142, this Court
appointed the Supreme Court Committee conferring upon
the committee wide powers for the execution of the decrees/
orders/awards, which virtually superseded the statutory
provisions contained in the Acts like SARFAESI Act, RDB Act,
PMLA, IBC, etc. - Scope of powers u/Article 142, discussed.
[Paras 13, 14, 19]
Maharashtra Protection of Investors and Depositors Act,
1999 (MPID Act) - s.4 - Insolvency and Bankruptcy Code,
2016 - s.14 - Constitution of India - Article 254; Seventh
Schedule - List I-III:
Held: MPID Act has been validly enacted by the Government
of Maharashtra for the matters falling in List-II- State List, and
therefore would prevail in the State of Maharashtra - The MPID
Act having been enacted for the matters relatable to the Entries-1,
30 and 32 in List-II-State List, and the IBC having been enacted
for the matters relatable to the Entry-9 in List-III- Concurrent List,
the provisions of Article 254 would not be attracted - The issue of
repugnancy or conflict as contemplated in Article 254 would arise
only when the State Legislation and the Central Legislation, both,
are relatable to the Entries contained in List-III-Concurrent List of
Seventh Schedule - In the instant case, there is also no overlap
or inconsistency between the provisions contained in the IBC and
MPID Act - s.14 of IBC has the connotation which is very much
different from s.4 of MPID Act - s.14 of IBC is consequent upon the
order passed by the Adjudicating Authority declaring Moratorium -
However, so far as the attachment of properties u/s.4 of the MPID
Act is concerned, it is beyond the realm of the Debtor-Creditor
relationship as contemplated in the IBC. [Para 47, 48]
Maharashtra Protection of Investors and Depositors Act, 1999
(MPID Act) - Object:
Held: MPID Act was enacted by the State of Maharashtra to
protect the interest of depositors of the Financial Establishments -
256
[2025] 7 S.C.R.
Supreme Court Reports
It was enacted in the public interest to curb the unscrupulous
activities of the Financial Establishments, who had defaulted to
return the deposits of the public in the State of Maharashtra.
[Paras 24, 47]
Prevention of Money Laundering Act, 2002 - Securitisation
and Reconstruction of Financial Assets and Enforcement of
Security Interest Act, 2002 - Recovery of Debts and Bankruptcy
Act, 1993 - Object - Discussed. [Paras 21-23]
Case Law Cited
Supreme Court Bar Association v. Union of India & Another
[1998] 2 SCR 795 : (1998) 4 SCC 409; Shilpa Sailesh v. Varun
Sreenivasan [2023] 5 SCR 165 : (2023) 14 SCC 231; State of
West Bengal and Ors. v. Committee for Protection of Democratic
Rights, West Bengal and Ors. [2010] 2 SCR 979 : (2010) 3
SCC 571; M/s Hoechst Pharmaceuticals Ltd. and Ors. v. State
of Bihar and Ors [1983] 3 SCR 130 : (1983) 4 SCC 45; Kartar
Singh v. State of Punjab [1994] 2 SCR 375 : (1994) 3 SCC 569;
Rajiv Sarin and Another v. State of Uttarakhand and Ors. [2011]
9 SCR 1012 : (2011) 8 SCC 708; Sonal Hemant Joshi and Ors.
v. State of Maharashtra and Ors. (2012) 10 SCC 601; State of
Maharashtra v. 63 Moons Technologies Ltd. [2022] 10 SCR 465 :
(2022) 9 SCC 457; K.K. Baskaran v. State [2011] 3 SCR 527 :
(2011) 3 SCC 793; Mardia Chemicals Ltd and Ors. v. Union of
India and Ors. [2004] 3 SCR 982 : (2004) 4 SCC 311; Union of
India and Another v. Delhi High Court Bar Association and Others
[2002] 2 SCR 450 : (2002) 4 SCC 275; ITC Limited v. Agricultural
Produce Market Committee and Others [2002] 1 SCR 441 : (2002)
9 SCC 232; State of West Bengal v. Kesoram Industries Limited
and Others [2004] 1 SCR 564 : (2004) 10 SCC 201; Innoventive
Industries Ltd. v. ICICI Bank and Another [2017] 8 SCR 33 : (2018)
1 SCC 407 - referred to.
List of Acts
Prevention of Money Laundering Act, 2002; Maharashtra Protection
of Investors and Depositors Act, 1999; Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002; Recovery of Debts and Bankruptcy Act, 1993;
Constitution of India; Forward Contracts (Regulation) Act, 1952.
[2025] 7 S.C.R.
257
National Spot Exchange Limited v. Union of India & Ors.
List of Keywords
Commodity Exchange Platform; National Spot Exchange Limited
(NSEL); NSEL Scam; Payment defaults and fraud; Secured
Creditors; Priority of interest over the assets attached under the
Provisions of Prevention of Money Laundering Act, 2002, (PMLA)
and Maharashtra Protection of Investors and Depositors Act, 1999;
Recovery of monies lost by the traders; Properties of the judgment
debtors and garnishees attached; Supreme Court committee;
Constitutional validity of the Maharashtra Protection of Investors and
Depositors Act, 1999; Debts due to the Secured Creditor have to
be paid in priority; Fraudulent Default by a Financial Establishment;
Security interest; Garnishee; Sale and purchase of commodities;
Traders duped; Priority of interest of the charge over the attached
properties; Speedy recovery of the outstanding amount; Doctrine
of pith and substance; Powers under Article 142 of Constitution
of India; Article 246 of Constitution of India; Federal Structure
Doctrine; Principle of Federal Supremacy; Seventh Schedule of
the Constitution of India; List-I, II and III.
Case Arising From
CIVIL ORIGINAL JURISDICTION: Writ Petition (Civil) No.
995 of 2019
(Under Article 32 of The Constitution of India)
Appearances for Parties
Advs. for the Petitioner:
Atul Nanda, Sr. Adv., Ms. Diksha Rai, Ms. Rameeza Hakeem.
Advs. for the Respondents:
Amit Sibal, Sr. Adv., Aditya Verma, Y Suryanarayana, Vijay Kumar
Singh, Ms. Shivani Tandon, Prem Prakash, Mukesh Kumar Maroria,
Arvind Kumar Sharma, Aaditya Aniruddha Pande, Sachin Patil,
Himanshu Chaubey, Vikalp Mudgal, Shashwat Anand, Ms. Abha
Jain, Ashok Kumar Gupta II, Bijoy Kumar Jain, Bhaskar Aditya,
Ankur Mittal, Ms. Sanjana Saddy, Mohd. Zahid Hussain, Y. Raja
Gopala Rao, Gopal Singh, Ms. Arti Singh, Chand Qureshi, Shashank
Singh, Sumit Sinha, Ratish Kumar Sharma, Ananta Prasad Mishra,
Sanyat Lodha, B. K. Satija, Nitesh Ranjan, Sanjay Kapur, Shiv
Sagar Tiwari, Ms. Anindita Mitra, Ajay Kumar, Satish Vig, Anand
Varma, Navneet R., Nikhil Jain, Ritwik Parikh, Rajat Sehgal, Ms.
Shisba Chawla.
258
[2025] 7 S.C.R.
Supreme Court Reports
Judgment / Order of the Supreme Court
Judgment
Bela M. Trivedi, J.
1.
While considering the validity of the orders dated 10.08.2023 and
08.01.2024 passed by the Supreme Court Committee appointed by
this Court vide the order dated 04.05.2022, following two questions
were framed by this Court to be heard in priority on the basis of the
categorisation of the Applications filed in the captioned Writ Petition
vide the Order dated 02.04.2024.
"(i) whether the Secured creditors would have priority of
interest over the assets attached under the Provisions of
Prevention of Money Laundering Act, 2002, (PMLA) and
Maharashtra Protection of Investors and Depositors Act,
1999 (MPID Act), by virtue of the Provisions of SARFAESI
Act, 2002 and RDB Act, 1993; (In view of order dated
10.08.2023 passed by the Committee)
(ii) whether the properties of the Judgment Debtors and
Garnishees attached under the Provisions of MPID Act,
1999 would be available for the execution of the decrees
against Judgment Debtors in view of the Provision of
Moratorium under Section 14 of the IBC, 2016; (In
view of the Order dated 08.01.2024 passed by the
Committee)"
2.
The genesis of the Writ proceedings, is the scam which took place
at the Commodity Exchange Platform of the Petitioner Company -
National Spot Exchange Limited (NSEL), a company registered
under the Companies Act, 1956, on 18.05.2005. It is promoted by 63
Moons Technologies Limited (Formerly Financial Technologies India
Limited), which holds 99.99% of total share capital of the company
and the National Agricultural Cooperative Marketing Federation of
India Limited (NAFED) holds 0.01% of total share capital of company.
The Exchange Platform of the NSEL committed payment defaults
and fraud aggregating to about Rs.5,600 Crores vis-à-vis their trading
counterparts numbering about 13,000 traders who traded through
its Members/ brokers.
[2025] 7 S.C.R.
259
National Spot Exchange Limited v. Union of India & Ors.
PRELUDE
3.
Brief facts germane for deciding the above stated two priority questions
of law are as under: -
i.
The Petitioner - National Spot Exchange Limited (hereinafter
referred to as the "NSEL") provided an electronic platform
for trading of commodities between willing buyers and willing
sellers through NSEL's Members/ brokers representing them.
On 05.06.2007, the Department of Consumer Affairs issued an
Exemption Notification to the NSEL under Section 27 of the
Forward Contracts (Regulation) Act, 1952 (hereinafter referred
to as "FCRA"), exempting forward contracts of one day duration
for sale and purchase of commodities traded on the NSEL from
operation of the provisions of the FCRA. The NSEL commenced
its operations in October, 2008.
ii.
The trading on the Exchange Platform of the Petitioner could
be undertaken only by the registered Members of the exchange
either on their own behalf or on behalf of their clients. At the
request of their clients, the Members of NSEL would place
orders for buying/ selling commodities. When the orders placed
by willing buyers and willing sellers of a particular commodity
would get matched automatically on NSEL's Exchange Platform,
based on the price and time priority, it would result in a trade.
iii.
The NSEL launched contracts for buying and selling of
commodities with different settlement periods ranging from T+0,
T+1, T+2 days to T+36 days. In the said Contracts, 'T' meant
the Trade date, that is the date on which the trade is executed
on the exchange and '+ 2' or '+ 25' referred to the number of
business days, after which the delivery of the commodity and
payment of price (that is settlement of transaction) was to be
affected by the buying Member and the selling Member as
the case may be. At the end of the day all trades would get
clubbed and the obligation of respective Members of NSEL
would be generated.
iv.
Thereafter, the funds "Pay - in" obligation would be intimated to
the Members of NSEL whose clients purchased the commodities,
and the funds "Pay - out" obligation would be intimated to the
260
[2025] 7 S.C.R.
Supreme Court Reports
Members of NSEL whose clients sold the commodities. Similarly,
the commodity "Pay-in" obligation would be intimated to the
Members of NSEL whose client sold the commodities and
the commodity "Pay-out" obligation would be intimated to the
Members of NSEL whose clients purchased the commodities.
Based on the intimation from the exchange, the clients would
have to fulfil their respective obligations through the Members
of the NSEL, through whom they had traded, on the Exchange
Platform.
v.
On 27.04.2012, the Department of Consumer Affairs,
Government of India issued a Show Cause Notice to the NSEL
as to why action should not be initiated against it for permitting
transactions in alleged violation of exemption granted to it under
the FCRA, vide the notification dated 05.06.2007.
vi.
On 12.07.2013, the Department of Consumer Affairs, directed
the NSEL to give an undertaking that no further contracts
shall be launched until further instructions, and that all existing
contracts shall be settled on due dates. Accordingly, the NSEL
gave an undertaking to the Department of Consumer Affairs
on 22.07.2013.
vii. On 31.07.2013, the NSEL suspended its Exchange operations
and called upon its Members to inter alia complete their
respective delivery and payment obligations for the outstanding
trades as on 31.07.2013. In July 2013, 13,000 persons who
traded on the platform of the NSEL claimed to have been duped
by about 24 trading Members, who defaulted in payment of
their obligations amounting to approximately Rs.5,600/- Crores.
viii. An FIR in this regard was registered by the M.R.A. Marg, Police
Station vide C.R. No.216 of 2013, which was transferred to
and lodged in the EOW Police on 30.09.2013 as C.R. No.89
of 2013. Several suits also came to be filed by the traders who
were allegedly duped on the trading platform. One Suit being
No.173 of 2014 came to be filed in the Bombay High Court,
as a representative suit under Order 1 Rule 8 of the Code of
Civil Procedure, 1908. The NSEL filed third party notices in
the said suit for recovery of Rs.5,600/- Crores against its 24
defaulter members.
[2025] 7 S.C.R.
261
National Spot Exchange Limited v. Union of India & Ors.
ix.
According to the NSEL, in the process of recovery proceedings
filed by it, the decrees/ awards of about Rs.3,365 Crores
out of Rs.5,600 Crores were passed against the defaulters.
Additionally, the Enforcement Directorate also had attached
assets worth approximately Rs.1740.59 Crores of the defaulters
under the PMLA 2002. The provisions of the Maharashtra
Protection of Interest of Depositors (in Financial Establishments)
Act, 1999 (hereinafter referred to as the "MPID Act") were also
added to the said F.I.R. in October 2013, as a result of which
the State of Maharashtra also attached movable and immovable
properties worth about Rs.8,548 Crores belonging to the 24
defaulters, the Directors and Sister concerns of the NSEL
and its Directors and Promoters, in order to ensure recovery
of the monies allegedly lost by the genuine trading clients on
the NSEL's platform.
x.
Since the NSEL had also filed various Proceedings and the
Suits, some of them having been decreed also, it was finding
it difficult to file execution proceedings at various Courts.
The NSEL, therefore filed the captioned Writ Petition seeking
directions for the Consolidation of the Proceedings before the
Committee appointed by the Bombay High Court vide the order
dated 02.09.2014 in Notice of Motion No.240 of 2014 in Suit
No.173 of 2014 and seeking other directions.
xi.
This Court on 04.05.2022 for safeguarding of the interests of
the Investors / Claimants passed the following Order: -
"O R D E R
Writ Petition(s)(Civil) No(s). 995/2019
The limited contours of the controversy before
us emanating from the present proceedings is
the safeguarding of the interests of the investors/
claimants.
In respect of the aforesaid, learned counsel for the
petitioner had canvassed before us on 22.02.2022
that the way out would be that the properties attached
by the respondent(s) are sold and monies brought
into Court. This is in the context of decrees passed
262
[2025] 7 S.C.R.
Supreme Court Reports
for the benefit of the petitioner where the same very
properties which were attached were sought to be
utilized to satisfy the claims. He thus, suggested that
once the monies are brought in, even the claims of
the petitioners/investors can be satisfied and one
will know exactly what is the balance amount which
remains as otherwise both the processes are going
on at cross purposes even though the properties
from which recoveries can be made are attached.
We thus, called upon the respondents to look into
the aforesaid notwithstanding that the petitioner may
also be an organization which as been charged,
concerned as we were with the investors' money and
properties remaining attached simplicitor could not be
the solution for investors' money for which decrees
had been passed. It is only on liquidation of those
properties could the monies be distributed to satisfy
the claims of the investors.
We requested the parties to work out a scenario to
sub-serve the aforesaid objective and a synopsis
was filed on behalf of the petitioner setting out the
relevant dates and suggesting solution for speedy
recovery of victims annexing thereto the details of
decrees, arbitral awards obtained by the petitioner
and execution proceedings thereof.
The ground work has been done by the parties and
more or less they were in agreement on most issues.
The other remaining issues have also been ironed
out during the Court proceedings.
In view of the aforesaid, we are inclined to exercise
our powers under Article 142 of the Constitution of
India with the objective of attaining a holistic solution
for speedy recovery of the outstanding amounts to
be distributed to be investors.
The agreed terms have been placed before us which
are being incorporated in this order as under: -
[2025] 7 S.C.R.
263
National Spot Exchange Limited v. Union of India & Ors.
"(i) A high powered committee of a Hon'ble Mr.
Justice (Retd.) [ ], who has consented for the
same, is hereby constituted (hereinafter referred
to as the "Supreme Court Committee"). The
Supreme Court Committee may in its discretion,
hold meetings/hearings at Mumbai.
(ii) The proceedings for execution of all
the decrees/orders/arbitral awards listed in
Annexure-1, particular of which are set out in
Annexure-2, currently pending in various Courts
across the country, are hereby transferred to
the Supreme Court Committee, for speedy
execution thereof.
(iii) Against 5 additional Defaulters, the
Committee appointed by Bombay High Court
has crystallised the liability and the report of the
said Committee is pending acceptance before
Bombay High Court, details whereof are set
out in Annexure-3. In the event the petitioner is
granted decree/order by Bombay High Court in
any or all of these matters, then the petitioner
shall be at liberty to file the proceedings for
execution of such decrees/orders before the
Supreme Court Committee, and the Supreme
Court Committee shall have the power to
execute such decrees/orders.
(iv) In proceedings where the petitioner has
already obtained decrees/orders against the
Defaulters, the petitioner is seeking further
decrees/orders against other persons as well. In
the event the petitioner is granted decree/order
by the Bombay High Court in any or all of these
matters, then the petitioner shall be at liberty to
file the proceedings for execution of such decrees/
orders before the Supreme Court Committee,
and the Supreme Court Committee shall have
the power to execute such decrees/orders.
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(v) The petitioner shall be at liberty to apply
to this Hon'ble Court in case there are further
decrees/orders/arbitral awards obtained by it
against the Defaulters or any other person in
relation to the NSEL payment default for the
purposes of filing execution thereof directly
before the Supreme Court Committee.
(vi) The Supreme Court Committee shall have
all the powers of a civil court executing a decree
or an order or an arbitral award under the Code
of Civil Procedure, 1908 for speedy execution
of the above decrees/orders/abitral awards.
(vii) In execution of the above decrees/orders/
arbitral awards, the Supreme Court Committee
shall be entitled to sell the properties of
the judgment-debtors notwithstanding the
attachment thereof by respondent No.2(ED)
under the PMLA and/or by respondent No.3
(State of Maharashtra) under the MPID Act,
to the extent of recovering the amount of the
decree/order/arbitral award.
(viii) For the purposes of executing decrees/
orders/awards to the extent they are not satisfied
by recovery from the properties attached by the
respondents or any of them as aforesaid, the
Supreme Court Committee shall be at liberty to
apply to this Hon'ble Court for suitable orders
for attaching and/or liquidating properties of
persons against whom decrees have been
passed or of persons against whom the decrees
can be executed as provided in the Code of
Civil Procedure, 1908 or properties of persons
to whom money trail from the judgment debtors
has been traced by the respondents or any of
them.
(ix) The Competent Authority appointed by
respondent No.3(State of Maharashtra) has
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National Spot Exchange Limited v. Union of India & Ors.
already opened an account with (a) Bank of
India (for collection) and (b) AXIS Bank (for
distribution). The sale proceeds so realized shall
be deposited in either of these Bank Accounts at
the discretion of the Supreme Court Committee.
(x) The Competent Authority appointed by
respondent No.3 (State of Maharashtra) under
MPID Act has invited claims from the victims
and verified them to check genuineness and
entitlement thereof.
(xi) The Competent Authority appointed by
respondent No.3 (State of Maharashtra) under
MPID Act shall file a report with the Supreme
Court Committee setting out the names of
the claimants and the amount that is due and
payable to each of them, for passing necessary
orders/directions/reverification, if required for
equitable distribution of the sale proceeds to
the victims from the accounts mentioned in
Clause (ix) above.
(xii) The Supreme Court Committee shall be
entitled to co-opt the services of such experts
(such as Advocates, Chartered Accountants,
Valuers etc.) and support staff as it may consider
necessary for efficient and speedy execution of
task assigned to it.
(xiii) Hon'ble Mr. Justice [ ] shall be entitled
to fix such remuneration for himself and for
other persons co-opted by him as he deems fit
commensurate with the responsibilities assigned
to them.
(xiv) In the first instance, the Competent
Authority appointed by Respondent No.3(State
of Maharashtra) under MPID Act shall bear all
the expenses required to be incurred for the
functioning of the Supreme Court Committee,
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including but not limited to remuneration, fees,
physical infrastructure etc. and shall keep proper
accounts of the same.
(xv) As and when any monies are realised by
the Supreme Court Committee in accordance
with the process set out above, the Competent
Authority appointed by respondent No.3 (State of
Maharashtra) under MPID Act shall be reimbursed
by this Hon'ble Court for the expenses incurred
by it under paragraph (xiv) above on submission
of proper accounts for the same.
(xvi) The Supreme Court Committee shall
have liberty to apply to this Hon'ble Court for
any further orders and/or directions as it may
consider necessary for efficient and speedy
execution of the task assigned to it.
(xvii) Any person aggrieved by an order and/
or direction passed by the Supreme Court
Committee shall be entitled to move this Hon'ble
Court.
(xviii) All the parties and the authorities shall
render all necessary assistance and cooperation
to the Supreme Court Committee.
(xix) Needless to say that respondent No.2(ED)
and/or respondent No.3 (State of Maharashtra)
shall continue to attach further properties of the
defaulters as per the money trail found by them
during investigation and inform the Supreme
Court Committee of such further attachment.
Upon receipt of such intimation, the Supreme
Court Committee shall be entitled to liquidate
such further attached properties of the defaulters
after hearing them, but only to the extent
necessary for satisfaction of the decree/orders/
arbitral awards obtained by the petitioner against
such defaulters."
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National Spot Exchange Limited v. Union of India & Ors.
We may note that insofar as the list of decrees,
orders, awards and attachment against defaulters are
concerned, we are not setting them out as part of the
order though submitted as the annexure annexing
along with the details of the execution proceedings as
Annexure-2. The liability of the defaulters crystallized
by the High Court Committee is pending before the
Bombay High Court has been set out as Annexure-3.
This material can always be placed before the highpowered committee of an Hon'ble Judge appointed
by this Court.
We may note that both the State of Maharashtra and
Enforcement Directorate would naturally like to assist
the Committee in all manners and the Committee will
have the power to seek information from any one and
run its affairs as expeditiously as possible.
On further discussion in the Court, it is agreed that
a single Member Committee may be appointed who
would have the assistance of all concerned.
With the consent of parties, Hon'ble Justice Pradeep
Nandrajog, retired Chief Justice of the Bombay High
Court, whose consent has been taken, is appointed
as the Single Member Committee for the said purpose
to carry out the task. The learned Judge will fix his
own fee. Insofar as the sitting of the Committee is
concerned, it has already been mentioned aforesaid
that it can be at the discretion of the Committee to
hold proceedings in Delhi or Mumbai or for that matter
anywhere else.
The arrangements for the sitting of the Committee
shall be made by the Competent Authority as also
the necessary arrangements for stay of the learned
Judge and all other expenses including travel.
We would like to keep the matter pending and request
the learned Judge to give a status report in about
six months.
List after the status report is received."
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xii. In view of the afore stated Order dated 04.05.2022 passed by
this Court, the Supreme Court Committee comprising of Justice
(Retd.) Mr. Pradeep Nandrajog (hereinafter referred to as the
S.C. Committee) was constituted. The Proceedings for execution
of all decrees/ orders/ arbitral awards listed in Annexure-1 of the
said Order, the particulars of which were set out in Annexure-2
thereof, pending in various Courts across the country were
transferred to the S.C. Committee. The decrees/ orders already
obtained and in respect of which the decree holder had not yet
commenced the execution proceedings were also directed to
be executed by the S.C. Committee. In the proceedings where
decree holder had obtained decrees/ orders and was seeking
further decrees/ orders against other persons as well, and upon
being granted the same by the Bombay High Court, were also
to be executed by the S.C. Committee. The proceedings against
the parties, i.e., the defaulters, against whom the liability had
been crystallised by the Committee appointed by the Bombay
High Court, in the event, the decree holder was granted decrees/
orders by the Bombay High Court, such decrees for execution
were also permitted to be transferred to the S.C. Committee for
their execution. Qua future decrees/ awards or orders obtained
by the decree holder, a liberty was granted to the decree holder
to apply to the Supreme Court for execution of such decrees/
orders by the S.C. Committee.
xiii. As transpiring from the impugned Order dated 10.08.2023
passed by the S.C. Committee, one Modern India Limited,
Shree Rani Sati Investment and Finance Private Limited,
Modern Derivatives and Commodities Private Limited and
F. Pudumjee Investments Company Private Limited had filed
a Suit on the Original Side of Bombay High Court, impleading
Financial Technologies India Limited (now known as 63
Moons Technologies Limited) as the Defendant No.1 and the
NSEL as Defendant No.2, apart from 36 other Individuals and
Companies who were impleaded as the Defendant Nos. 3 to
38. The said Suit was registered as Suit no.173 of 2014. The
NSEL - Defendant No.2 took out third party notices in the said
Suit against its Trading Members who had defaulted in their
funds "Pay - in" obligations, resulting in decrees being passed
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National Spot Exchange Limited v. Union of India & Ors.
against such Trading Members and their lands by the Bombay
High Court in favour of the NSEL. Additionally, in some cases
the Arbitral awards were obtained by the NSEL against some
of the defaulting Trading Members. Therefore, such defaulting
Trading Members of the NSEL were the Judgment Debtors,
on whom the liability was affixed in respect of the Third-party
proceedings in the Suit No. 173 of 2014. In separate actions,
the Enforcement Directorate under the provisions of the PMLA
and the Competent Authority under the provisions of MPID Act
had also attached the properties belonging to the Judgment
Debtors who were the defaulting Trading Members of the NSEL.
xiv. During the course of Execution Proceedings before the S.C.
Committee, a few Financial Creditors of some of the Judgment
Debtors (the Secured Creditors) had filed Applications seeking
intervention on the ground that in the capacity as Secured
Creditors they would have priority of interest of the charge over
the attached properties of the Judgment Debtors.
4.
In view of the afore stated factual matrix, the S.C. Committee raised
an issue as to "Whether the Secured creditors would have priority of
interest over assets attached under the Provisions of PMLA, 2002,
and MPID Act, by virtue of the Provisions of the Securitisation and
Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (hereinafter referred to as the "SARFAESI Act,
2002") and the Recovery of Debts and Bankruptcy Act, 1993
(hereinafter referred to as the "RDP Act")?"
5.
The S.C. Committee addressing the said issue concluded vide
the Order dated 10.08.2023 that given the overriding effect, the
secured property being in the nature of proceeds of crime, as held
by the Attachment orders, no priority of interest can be claimed by
the Secured Creditors against such attached property. As regard
the properties attached under the MPID Act, on which the Secured
Creditors laid their claims, the S.C. Committee further concluded that
the provisions of the MPID Act, would override any claim for priority
of interest by the Secured creditors in respect of the property which
has been attached under the MPID Act.
6.
It further appears that during the course of proceedings before the
S.C. Committee another issue that was raised for determination, was
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"whether properties of the Judgment Debtor and Garnishees attached
under the MPID Act would be available to the said Committee for
execution of decrees against the Judgment Debtor in terms of the
Order dated 04.05.2022 passed by the Supreme Court, in W.P. (C)
No. 995 of 2019, in view of the commencement of Moratorium under
Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC, for
short) , on account of the initiation of Insolvency Proceedings against
the Judgment Debtors." A similar issue also arose with regard to the
commencement of the interim Moratorium under Section 96 of IBC in
respect of the Garnishees in their capacity as personal Guarantors
of a Corporate Debtor.
7.
The S.C. Committee vide the Order dated 08.01.2024 concluded
inter alia that as regards the properties which were attached under
Section 4 of the MPID Act prior to imposition of the respective dates
of Moratorium of the Judgement Debtor or Garnishee under Section
14 or Section 96 of IBC, the property having been vested in the
Competent Authority appointed by the State of Maharashtra, such
properties were not liable to be made part of Insolvency Proceedings,
and could be available to the said Committee for realisation in terms
of the Order dated 04.05.2022 passed by the Supreme Court. It
further concluded that as regards the properties which were sought
to be attached after the date of commencement of Moratorium (if
any) or assets of Judgment Debtor/ Garnishee/ Corporate Debtor
which were not yet attached under the Provisions of the MPID Act,
the decree holder would be entitled to pursue its claim as a Financial
Creditor/ Secured Financial Creditor, as the case may be in such
individual cases under the Provisions of the IBC.
8.
Being aggrieved by the aforestated two Orders dated 10.08.2023 &
08.01.2024 passed by the Supreme Court Committee, some SLPs
came to be filed before this Court. The said SLPs were permitted
to be converted into Interlocutory Applications (IAs) in the present
Writ Petition filed by the NSEL.
SCOPE OF ARTICLE 142
9.
At the outset learned Counsels appearing for the Applicants/
Intervenors have raised the preliminary objections against the order
passed by this Court on 04.05.2022, by submitting that this Court
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National Spot Exchange Limited v. Union of India & Ors.
while exercising powers under Article 142 of the Constitution of India,
had appointed the S.C. Committee and issued directions conferring
upon the said committee wide powers with regard to the execution
of the decrees/orders/awards, which had virtually superseded
the statutory provisions contained in the Acts like SARFAESI Act,
RDB Act, PMLA, IBC, etc. According to them, while exercising the
powers under Article 142, the express statutory provisions cannot
be circumvented or ignored, particularly when the exercise of such
powers comes directly in conflict with what has been expressly
provided in the statute.
10. Article 142(1) is reproduced hereunder for ready reference:
"142. Enforcement of decrees and orders of Supreme
Court and orders as to discovery, etc.-
(1) The Supreme Court in the exercise of its jurisdiction
may pass such decree or make such order as is necessary
for doing complete justice in any cause or matter pending
before it, and any decree so passed or order so made
shall be enforceable throughout the territory of India in
such manner as may be prescribed by or under any law
made by Parliament and, until provision in that behalf is
so made, in such manner as the President may by order
prescribe.
(2) .............."
11. In our opinion, the law with regard to the scope of the exercise of
powers of under Article 142 of the Constitution of India is quite well
settled. In Supreme Court Bar Association Vs.