Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | 1999: ss. 2(c) 2(d) Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act 4 and 5 – |
Content Type | Text |
Resource Type | Law Judgement |
Jurisdiction | India |
Case(s) Referred | Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Allowed |
Headnote | Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999: ss. 2(c), 2(d), 4 and 5 – NSEL, Financial Establishment or not – Respondent holds 99.99% of the shareholding of NSEL company - NSEL started operating as an exchange for spot trading in commodities – It launched contracts for buying and selling of commodities on its trading platform with different settlement periods – Subsequently, there was a fraud involving settlement crises of Rs 5500 crores owed to over 13,000 sellers/investors on the trading platform of NSEL – NSEL defaulted in payment of the outstanding dues – Since it did not have sufficient money or property for attachment u/s. 4, the State attached properties of the respondent which owns 99.99% of the shareholding of NSEL – Petition by the respondents challenging the invocation of MPID Act on the ground that the exchange is not a ‘financial establishment’ u/s 2(c) – High Court quashed the Notification holding that the NSEL only performed the role of a facilitator, in a manner similar to the Bombay Stock Exchange; that NSEL did not receive money with the obligation to return it on maturity; that the fact that VAT is collected by the selling members from the buying members and TDS is not deducted by NSEL indicates that NSEL is a mere pass-through platform; that NSEL did not receive any deposits within the meaning of s.2 (c) since NSEL did not receive the commodities or money to be retained; that NSEL only received transaction and warehouse charges which cannot be considered as a deposit, thus, the NSEL is not a ‘financial establishment’ – On appeal, held: NSEL is a financial establishment – Impugned notifications issued u/s. 4 of the MPID Act attaching the properties of the respondent are valid – NSEL receives ‘money’ in the form of Settlement Guarantee Fund that is returned in money and service – SGF is not covered by the exceptions of the s..2(c) thus, it would fall within the expression ‘deposit’ u/s 2(c) – NSEL offers a multitude of 3services‘ in return for receiving the commodity – Receipt of the commodities and holding the commodities in the accredited warehouses is a ‘deposit’ u/s 2(c) – Thus, the High Court erred in holding that only if the return includes interest, bonus or any other added benefit, it would be a deposit for the purpose of the MPID Act – High Court read the definition of ‘deposit’ narrowly without any reference to the salutary purpose of the MPID Act – Thus, the order passed by the High Court is set aside. s. 2(c) and 2(d) – Definitions of Deposit and Financial Establishment – Interpretation of. s. 2(c) - Deposit under - Settlement Guarantee Fund – Explained. s. 2(c) - Deposit under - Receipt of commodities – Held: Receipt of the commodities and holding the commodities (when the members are put in constructive possession) in the accredited warehouses is a ‘deposit’ u/s. 2(c) of the Act. |
Judge | Hon'ble Dr. Justice D.Y. Chandrachud |
Neutral Citation | 2022 INSC 465 |
Petitioner | The State Of Maharashtra |
Respondent | 63 Moons Technologies Ltd. |
SCR | [2022] 10 S.C.R. 465 |
Judgement Date | 2022-04-22 |
Case Number | 2748 |
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