HC slams Maharashtra govt on 63 Moons’ property attachment

The Bombay High Court (HC) has restrained the Maharashtra government from further attaching immovable properties and investments of 63 Moons Technologies (formerly Financial Technologies) in the ~56 billion payment default at its subsidiary National Spot Exchange Ltd (NSEL).

The two-judge Bench of Justice Ranjit More and Justice Bharati H Dangre observed government agencies including the Economic Offences Wing (EOW) of the Mumbai Police and Enforcement Directorate had attached immovable properties of defaulters, promoters and former employees of the NSEL worth ~85.48 billion till November last year against the defaulted amount of ~56 billion.

The order grants interim relief to 63 Moons and a stay on notifications the Maharashtra government has issued to attach properties of 63 Moons.

In its 25-page order, the high court order stated when the state had other options to attach the properties of brokers/defaulters, it could not be said the investors could be paid only through the properties belonging to 63 Moons.

The high court further ruled: “We are therefore of the prima facie view that the said attachment is arbitrary, unreasonable and unjustified and needs to be excluded at this stage on two counts, viz. 63 Moons itself had made a categorical statement before the Court that the EOW had no objection if the company utilised the funds secured for attachment by the impugned notice dated July 18, 2016, for incurring just expenses, necessary towards running of its day-to-day business including payment of salaries and clearing all statutory dues.”

Meanwhile, counsel appearing for the Maharashtra government argued the agencies were not sure if the realisation was sufficient to meet the defaulted amount after disposing of the attached properties.

On the attachment of ODIN, the widely popular brokerage trading terminal of 63 Moons, the high court order stated, “ODIN and its receivables cannot be a subject matter of attachment” and doing that “by way of attachment by the state government by issuing various notifications would be contrary to the spirit of the enactment.” “Those properties of 63 Moons which have been attached on the account of periodically accrued returns from the properties/bonds as well as the amount earned from the non- ODIN business and the revenue accruing from ODIN need not be brought within the purview of attachment,” the order said.

Senior counsel Mukul Rohatgi, arguing for 63 Moons, submitted to the court the state government had “mis-directed itself and misconstrued” the provisions of the Maharashtra Protection of Interest of Depositors Act, and attached the properties of 63 Moons to the tune of ~22 billion.

The high court also rejected the state government’s plea for a stay on the present order, stating “we are prima facie convinced that the notification issued by the State Government purporting to attach the properties of the petitioner company in the year 2018 is in excess of the defaulted amount and also since we are satisfied that the state government has acted in arbitrary manner in as much as it initially excluded certain attachments from the purview of the notification and subsequently included the same without following the due procedure.”