As per the case facts, a scam involving payment defaults and fraud occurred at a commodity exchange platform. A Supreme Court Committee was appointed to address issues, including the validity ...
2025 INSC 694 WRIT PETITION (CIVIL) NO.995 OF 2019 Page 1 of 76
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL ORIGINAL JURISDICTION
WRIT PETITION (CIVIL) NO.995 OF 2019
NATIONAL SPOT EXCHANGE
LIMITED …PETITIONER(S)
VERSUS
UNION OF INDIA & ORS. …RESPONDENT(S)
J U D G M E N T
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.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 2 of 76
“(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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 3 of 76
Crores vis-à-vis their trading counterparts numbering
about 13,000 traders who traded through its
Members/ brokers.
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.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 4 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 5 of 76
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 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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 6 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 7 of 76
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.
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 8 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 9 of 76
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 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.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 10 of 76
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: -
“(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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 11 of 76
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.
(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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 12 of 76
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 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.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 13 of 76
(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, 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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 14 of 76
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 s uch 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.”
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 15 of 76
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 high -powered
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.”
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 16 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 17 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 18 of 76
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 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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 19 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 20 of 76
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 “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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 21 of 76
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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 22 of 76
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 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:
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 23 of 76
“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. Union of India &
Another
1
, a Constitution Bench elaborately
discussed the plenary powers of this Court under
Article 142 and held as under:
“47. The plenary powers of this Court under
Article 142 of the Constitution are inherent in the
Court and are complementary to those powers
which are specifically conferred on the Court by
various statutes though are not limited by those
statutes. These powers also exist independent
of the statutes with a view to do complete justice
between the parties. These powers are of very
wide amplitude and are in the nature
of supplementary powers. This power exists as
a separate and independent basis of jurisdiction
apart from the statutes. It stands upon the
1
(1998) 4 SCC 409
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 24 of 76
foundation and the basis for its exercise may be
put on a different and perhaps even wider
footing, to prevent injustice in the process of
litigation and to do complete justice between the
parties. This plenary jurisdiction is, thus, the
residual source of power which this Court may
draw upon as necessary whenever it is just and
equitable to do so and in particular to ensure the
observance of the due process of law, to do
complete justice between the parties, while
administering justice according to law. There is
no doubt that it is an indispensable adjunct to all
other powers and is free from the restraint of
jurisdiction and operates as a valuable weapon
in the hands of the Court to prevent “clogging or
obstruction of the stream of justice”. It, however,
needs to be remembered that the powers
conferred on the Court by Article 142 being
curative in nature cannot be construed as
powers which authorise the Court to ignore the
substantive rights of a litigant while dealing with
a cause pending before it. This power cannot be
used to “supplant” substantive law applicable to
the case or cause under consideration of the
Court. Article 142, even with the width of its
amplitude, cannot be used to build a new edifice
where none existed earlier, by ignoring express
statutory provisions dealing with a subject and
thereby to achieve something indirectly which
cannot be achieved directly. Punishing a
contemner advocate, while dealing with a
contempt of court case by suspending his
licence to practice, a power otherwise statutorily
available only to the Bar Council of India, on the
ground that the contemner is also an advocate,
is, therefore, not permissible in exercise of the
jurisdiction under Article 142. The construction
of Article 142 must be functionally informed by
the salutary purposes of the article, viz., to do
complete justice between the parties. It cannot
be otherwise. As already noticed in a case of
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 25 of 76
contempt of court, the contemner and the court
cannot be said to be litigating parties.
48. The Supreme Court in exercise of its
jurisdiction under Article 142 has the power to
make such order as is necessary for doing
complete justice “between the parties in any
cause or matter pending before it”. The very
nature of the power must lead the Court to set
limits for itself within which to exercise those
powers and ordinarily it cannot disregard a
statutory provision governing a subject, except
perhaps to balance the equities between the
conflicting claims of the litigating parties by
“ironing out the creases” in a cause or matter
before it. Indeed this Court is not a court of
restricted jurisdiction of only dispute-settling. It
is well recognised and established that this
Court has always been a law-maker and its role
travels beyond merely dispute-settling. It is a
“problem-solver in the nebulous areas” (see K.
Veeraswami v. Union of India [(1991) 3 SCC
655 : 1991 SCC (Cri) 734] but the substantive
statutory provisions dealing with the subject-
matter of a given case cannot be altogether
ignored by this Court, while making an order
under Article 142. Indeed, these constitutional
powers cannot, in any way, be controlled by any
statutory provisions but at the same time these
powers are not meant to be exercised when
their exercise may come directly in conflict with
what has been expressly provided for in a
statute dealing expressly with the subject.
49. In Bonkya v. State of Maharashtra [(1995) 6
SCC 447 : 1995 SCC (Cri) 1113] a Bench of this
Court observed: (SCC p. 458, para 23)
“23. The amplitude of powers
available to this Court under Article
142 of the Constitution of India is
normally speaking not conditioned by
any statutory provision but it cannot
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 26 of 76
be lost sight of that this Court
exercises jurisdiction under Article
142 of the Constitution with a view to
do justice between the parties but not
in disregard of the relevant statutory
provisions.”
50. Dealing with the powers of this Court under
Article 142, in Prem Chand Garg v. Excise
Commr., U.P. [AIR 1963 SC 996 : 1963 Supp (1)
SCR 885] it was said by the Constitution Bench:
“In this connection, it may be pertinent to point
out that the wide powers which are given to this
Court for doing complete justice between the
parties, can be used by this Court, for instance,
in adding parties to the proceedings pending
before it, or in admitting additional evidence, or
in remanding the case, or in allowing a new point
to be taken for the first time. It is plain that in
exercising these and similar other powers, this
Court would not be bound by the relevant
provisions of procedure if it is satisfied that a
departure from the said procedure is
necessary to do complete justice between the
parties.
That takes us to the second argument urged by
the Solicitor General that Article 142 and Article
32 should be reconciled by the adoption of the
rule of harmonious construction. In this
connection, we ought to bear in mind that
though the powers conferred on this Court by
Article 142(1) are very wide, and the same can
be exercised for doing complete justice in any
case, as we have already observed, this Court
cannot even under Article 142(1) make an order
plainly inconsistent with the express statutory
provisions of substantive law, much less,
inconsistent with any constitutional provisions.
There can, therefore be no conflict between
Article 142(1) and Article 32. In the case of K.M.
Nanavati v. State of Bombay [AIR 1961 SC 112
: (1961) 1 SCR 497] on which the Solicitor
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 27 of 76
General relies, it was conceded, and rightly, that
under Article 142(1) this Court had the power to
grant bail in cases brought before it, and so,
there was obviously a conflict between the
power vested in this Court under the said article
and that vested in the Governor of the State
under Article 161. The possibility of a conflict
between these powers necessitated the
application of the rule of harmonious
construction. The said rule can have no
application to the present case, because on a
fair construction of Article 142(1), this Court has
no power to circumscribe the fundamental right
guaranteed under Article 32. The existence of
the said power is itself in dispute, and so, the
present is clearly distinguishable from the case
of K.M. Nanavati [AIR 1961 SC 112 : (1961) 1
SCR 497] .”
51-54……………………
55. Thus, a careful reading of the judgments
in Union Carbide Corpn. v. Union of
India [(1991) 4 SCC 584] ; the Delhi Judicial
Service Assn. case [(1991) 4 SCC 406 : (1991)
3 SCR 936] and Mohd. Anis case [1994 Supp
(1) SCC 145 : 1994 SCC (Cri) 251] relied upon
in V.C. Mishra case [(1995) 2 SCC 584] show
that the Court did not actually doubt the
correctness of the observations in Prem Chand
Garg case [AIR 1963 SC 996 : 1963 Supp (1)
SCR 885] . As a matter of fact, it was observed
that in the established facts of those cases, the
observations in Prem Chand Garg case [AIR
1963 SC 996 : 1963 Supp (1) SCR 885] had “no
relevance”. This Court did not say in any of
those cases that substantive statutory
provisions dealing expressly with the subject
can be ignored by this Court while exercising
powers under Article 142.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 28 of 76
56. As a matter of fact, the observations on
which emphasis has been placed by us from
the Union Carbide case [(1991) 4 SCC 584]
, A.R. Antulay case [(1988) 2 SCC 602 : 1988
SCC (Cri) 372] and Delhi Judicial Service Assn.
case [(1991) 4 SCC 406 : (1991) 3 SCR 936] go
to show that they do not strictly speaking come
into any conflict with the observations of the
majority made in Prem Chand Garg case [AIR
1963 SC 996 : 1963 Supp (1) SCR 885] . It is
one thing to say that “prohibitions or limitations
in a statute” cannot come in the way of exercise
of jurisdiction under Article 142to do complete
justice between the parties in the pending
“cause or matter” arising out of that statute, but
quite a different thing to say that while exercising
jurisdiction under Article 142, this Court can
altogether ignore the substantive provisions of
a statute, dealing with the subject and pass
orders concerning an issue which can be settled
only through a mechanism prescribed in another
statute. This Court did not say so in Union
Carbide case [(1991) 4 SCC 584] either
expressly or by implication and on the contrary,
it has been held that the Apex Court will take
note of the express provisions of
any substantive statutory law and regulate the
exercise of its power and discretion accordingly.
We are, therefore, unable to persuade
ourselves to agree with the observations of the
Bench in V.C. Mishra case [(1995) 2 SCC 584]
that the law laid down by the majority in Prem
Chand Garg case [AIR 1963 SC 996: 1963
Supp (1) SCR 885] is “no longer a good law”.
12. In Shilpa Sailesh Vs. Varun Sreenivasan
2
, another
Constitution Bench while considering the scope and
ambit of power and jurisdiction of this Court under
2
(2023) 14 SCC 231
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 29 of 76
Article 142(1) of the Constitution of India, after due
deliberations held as under: -
“19. Given the aforesaid background and
judgments of this Court, the plenary and
conscientious power conferred on this Court
under Article 142(1) of the Constitution of India,
seemingly unhindered, is tempered or bounded
by restraint, which must be exercised based on
fundamental considerations of general and
specific public policy. Fundamental general
conditions of public policy refer to the
fundamental rights, secularism, federalism, and
other basic features of the Constitution of India.
Specific public policy should be understood as
some express pre-eminent prohibition in any
substantive law, and not stipulations and
requirements to a particular statutory scheme. It
should not contravene a fundamental and non-
derogable principle at the core of the statute.
Even in the strictest sense [ Some jurists have
opined that the judgments on the powers of this
Court under Article 142(1) of the Constitution of
India can be divided into three phases. The first
phase till late 1980s is reflected in the
judgments of Prem Chand Garg v. Excise
Commr., 1962 SCC OnLine SC 10 : AIR 1963
SC 996 and A.R. Antulay v. R.S. Nayak, (1988)
2 SCC 602 : 1988 SCC (Cri) 372, which inter
alia held that the directions should not be
repugnant to and in violation of specific statutory
provision and is limited to deviation from the
rules of procedure. Further, the direction must
not infringe the Fundamental Rights of the
individual, which proposition has never been
doubted and holds good in phase two and three.
The second phase has its foundation in the ratio
of the judgment of the eleven -Judge
Constitution Bench of this Court in Golak
Nath v. State of Punjab, 1967 SCC OnLine SC
14 : AIR 1967 SC 1643, dealing with the doctrine
of prospective overruling, which held that
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 30 of 76
Articles 32, 141 and 142 are couched in such
wide and elastic terms as to enable this Court to
formulate legal doctrines to meet the ends of
justice, the only limitation thereon being reason,
restraint and injustice. In Delhi Judicial Service
Assn. v. State of Gujarat, (1991) 4 SCC 406,
this Court observes that any prohibition or
restriction contained in ordinary laws cannot act
as a limitation on the constitutional power of this
Court to issue any order or direction to do
“complete justice” in any “cause” or “matter”.
Finally, the moderated approach has its origin
in Union Carbide Corpn. v. Union of India,
(1991) 4 SCC 584, which holds that this Court,
in exercising powers under Article 142 and in
assessing the needs of “complete justice” of a
“cause” or “matter”, will take note of the express
prohibitions in any substantive statutory
provision based on some fundamental
principles of public policy and regulate the
exercise of its power and discretion accordingly.
The judgment of Supreme Court Bar
Assn. v. Union of India, (1998) 4 SCC 409,
applies cautious and balanced approach, to
hold that Article 142 being curative in nature and
a constitutional power cannot be controlled by
any statutory provision, but this power is not
meant to be exercised ignoring the statutory
provisions or directly in conflict with what
isexpressly provided in the statute. At the same
time, it observes that this Court will not ordinarily
discard a statutory provision governing the
subject, except perhaps to balance the equities
between the conflicting claims of the parties to
“iron out the creases” in a “cause or matter”
before it. [See Rajat Pradhan, “Ironing out the
Creases : Re-examining the Contours of
Invoking Article 142(1) of the Constitution”,
(2011) 6 NSLR 1; Ninad Laud, “Rationalising
‘Complete Justice’ under Article 142”, (2021) 1
SCC J-30; and Virendra Kumar, “Notes and
Comments : Judicial Legislation Under Article
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 31 of 76
142 of the Constitution : A Pragmatic Prompt for
Proper Legislation by Parliament”, (2012) 54
JILI 364]. As observed by us, the ratio as
expounded in Union Carbide Corpn. v. Union of
India, (1991) 4 SCC 584 holds good and
applies.] , it was never doubted or debated that
this Court is empowered under Article 142(1) of
the Constitution of India to do “complete justice”
without being bound by the relevant provisions
of procedure, if it is satisfied that the departure
from the said procedure is necessary to do
“complete justice” between the parties. [
See Prem Chand Garg (Prem Chand
Garg v. Excise Commr., 1962 SCC OnLine SC
10 : AIR 1963 SC 996, para 13.]
20. Difference between procedural and
substantive law in jurisprudential terms is
contentious, albeit not necessary to be
examined in depth in the present decision [
However, this aspect has been, to some extent,
examined in paras 24 to 37, 56 and 57 herein.]
, as in terms of the dictum enunciated by this
Court in Union Carbide Corpn. [Union Carbide
Corpn. v. Union of India, (1991) 4 SCC 584]
and Supreme Court Bar Assn. [Supreme Court
Bar Assn. v. Union of India, (1998) 4 SCC 409] ,
exercise of power under Article 142(1) of the
Constitution of India to do “complete justice” in
a “cause or matter” is prohibited only when the
exercise is to pass an order which is plainly and
expressly barred by statutory provisions of
substantive law based on fundamental
considerations of general or specific public
policy.
21. As explained in Supreme Court Bar
Assn. [Supreme Court Bar Assn. v. Union of
India, (1998) 4 SCC 409] , the exercise of power
under Article 142(1) of the Constitution of India
being curative in nature, this Court would not
ordinarily pass an order ignoring or disregarding
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 32 of 76
a statutory provision governing the subject,
except to balance the equities between
conflicting claims of the litigating parties by
ironing out creases in a “cause or matter” before
it. In this sense, this Court is not a forum of
restricted jurisdiction when it decides and settles
the dispute in a “cause or matter”. While this
Court cannot supplant the substantive law by
building a new edifice where none existed
earlier, or by ignoring express substantive
statutory law provisions, it is a problem-solver in
the nebulous areas. As long as “complete
justice” required by the “cause or matter” is
achieved without violating fundamental
principles of general or specific public policy, the
exercise of the power and discretion under
Article 142(1) is valid and as per the Constitution
of India. This is the reason why the power under
Article 142(1) of the Constitution of India is
undefined and uncatalogued, so as to ensure
elasticity to mould relief to suit a given situation.
The fact that the power is conferred only on this
Court is an assurance that it will be used with
due restraint and circumspection. [
See DDA v. Skipper Construction Co. (P) Ltd.,
(1996) 4 SCC 622.]”
13. In view of the above proposition of law laid down by
the Constitution Benches of this Court, there remains
no shadow of doubt that the exercise of power under
Article 142(1) of the Constitution of India being
curative in nature, the Supreme Court would not
ordinarily pass an order ignoring or disregarding a
statutory provisions governing the subject, except to
balance the equities between conflicting claims of the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 33 of 76
litigating parties by ironing out creases in a “cause or
matter” before it. Therefore, even while exercising the
powers under Article 142, the Supreme Court has to
take note of the express provisions of any
substantive statutory law and accordingly regulate
the exercise of its power and discretion to do
complete justice between the parties in the pending
“cause or matter” arising out of such statutes.
Though, the powers of this Court cannot be
controlled by any statutory provisions, when the
exercise of powers under Article 142 comes directly
in conflict with what has been expressly provided in a
statute, ordinarily, such power should not be
exercised. Article 142 cannot be used to achieve
something indirectly what cannot be achieved
directly.
14. In the light of the aforestated legal position with
regard to the scope and ambit of the powers under
Article 142, if the facts of the present case are
appreciated particularly with regard to the
circumstances under which this Court had thought it
proper to exercise the said powers, it appears that
the Court had passed the order on 04.05.2022
keeping in mind the interest of the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 34 of 76
investors/claimants and with the objective of attaining
a holistic solution for speedy recovery of the
outstanding amount to be distributed to the investors.
15. Since the money collected by NSEL from the
investors fell under the definition of “deposit” as per
Section 2(c) of the MPID Act, the State of
Maharashtra invoking the provisions of Section
4(1)(ii) of MPID Act, had attached the properties and
monies of the defaulting promoters, directors,
managers and members of the NSEL by issuing
various notifications. However, the total value of the
attached properties was not sufficient for repayment
to the depositors due to various reasons such as
some of the properties were taken on rent by the
members of NSEL from others, while some
properties were mortgaged with the banks, against
which proceedings under the SARFAESI Act were
going on, and against some of the members of NSEL,
insolvency proceedings were initiated.
16. The Government of Maharashtra therefore having
been satisfied that the attached properties of the
Financial Establishment–NSEL were not sufficient for
repayment, attached the properties of the promoters
of the NSEL i.e., M/s. 63 Moons Technologies
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 35 of 76
Limited, by issuing various Notifications under
Section 4 of the MPID Act, which were subsequently
ratified by the Government of Maharashtra in
exercise of the powers conferred under Section 4(1)
and Section 5 of the MPID Act, vide the Notification
dated 19.09.2018, produced on record along with the
captioned writ petition.
17. From the submissions, it further appears that several
other civil and criminal proceedings were instituted by
the claimants who lost their monies, against the
NSEL, its parent company-63 Moons, 24 defaulters/
Members/brokers, etc. The traders who lost their
monies had also filed civil suits in Bombay High Court
against the NSEL and others. One of such suits was
filed as a Representative suit, being no. 173 of 2014
under Order 1, Rule 8 of C.P.C. in which the Bombay
High Court had appointed a three -member
committee to crystalise the liabilities of the defaulting
members and to act as the Receiver and
Commissioner to deal with the assets of defaulting
members. In the said Representative suit, the NSEL
took out third party notices against its defaulters for
recovery of monies lost by the traders. The NSEL had
also filed separate suits and arbitration proceedings
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 36 of 76
against other defaulters, and had obtained Decrees
and Arbitral awards of about Rs. 3,365 Crores
against the defaulters. Since, it was becoming very
difficult for the NSEL to get such decrees executed
expeditiously because properties of the defaulters
were situated at multiple jurisdictions, the NSEL filed
the captioned writ petition before this Court seeking
consolidation of the Decrees etc. as prayed for
therein.
18. In the backdrop of these proceedings, this Court had
passed the order on 04.05.2022 exercising the
powers under Article 142(1) of the Constitution of
India with the objective of attaining a holistic solution
for the speedy recovery of the outstanding amounts
to be distributed to the investors. As stated earlier,
this Court vide the said Order had constituted the
committee conferring upon it all the powers of civil
court for the speedy execution of the
decrees/orders/arbitral awards, and had further
directed that the S.C. Committee shall be entitled to
sell the properties of the Judgment Debtors
notwithstanding the attachment thereof by the
Enforcement Directorate under the PMLA and/or by
the State of Maharashtra under the MPID Act to the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 37 of 76
extent of recovery the amount of the
decree/order/arbitral award. This Court vide the said
order, thus had transferred the proceedings for
execution of all the decrees/orders/arbitral awards,
which were pending in various courts across the
country, for speedy execution thereof. It was also
clarified therein that against five additional defaulters,
the committee appointed by the Bombay High Court
had crystalised the liability and the report was
pending for acceptance before the Bombay High
Court. Therefore, if the NSEL was granted decree or
order by the Bombay High Court in any of these
matters, then the NSEL shall be at liberty to file
proceedings for execution of such decrees/orders
before the S.C. Committee. The petitioner NSEL was
also granted liberty in the said order to apply to this
Court, in case there were further
decrees/orders/awards obtained by it against the
defaulters for the purpose of filing execution thereof
before the S.C. Committee.
19. It is true that while passing the said order on
04.05.2022 under Article 142(1) of the Constitution of
India, this Court probably would not have
contemplated the possibility of the legal issues, with
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 38 of 76
regard to the conflict of the provisions contained in
the SARFAESI Act, RDB Act, PMLA and MPID Act,
which were subsequently raised before the S.C.
Committee. We do, therefore, find substance in the
submissions made by the learned counsel appearing
for the applicants-Secured Creditors that while
exercising the powers under Article 142, the express
provisions in the other relevant Statutes should not
be ignored, particularly when the exercise of powers
under Article 142, would directly be in conflict with
what has been express provisions in such Statutes.
It is also true that when this Court passed the Order
dated 04.05.2022, it had the potentiality of being in
conflict with other Statutes like SARFAESI Act, RDB
Act, IBC etc. as also the potentiality of adversely
affecting the rights of the Secured Creditors for
enforcing the security interest created in the
properties of the borrowers (in the instant cases the
defaulters of NSEL) under the SARFAESI Act and
RDB Act. However, the said contentions raised by the
Secured Creditors have lost its significance at this
stage, when the said Order dated 04.05.2022 has
already been implemented by constituting the S.C.
Committee and all the proceedings mentioned in the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 39 of 76
order have already stood transferred to the said
Committee for the execution of the
decrees/orders/awards as directed therein. Also, we
cannot be oblivious to the fact that such exercise of
powers under Article 142 was for the speedy
recovery of monies lost by the defaulters and
investors, and for doing the complete justice to the
aggrieved Traders. Nonetheless, the issues with
regard to the interplay and the alleged conflict of the
provisions of the said four statutes having been
raised, and aptly decided by the S.C. Committee, and
now again raised before this Court, we shall deal with
those issues as elicited from the orders dated
10.08.2023 and 08.01.2024 passed by the S.C.
Committee.
QUESTION: (i)
20. So far as the question, as to “whether the Secured
Creditors would have priority of interest over the
assets attached under the provisions of PMLA and
MPID Act, by virtue of the provisions of SARFAESI
Act and RDB Act,” is concerned, it would be beneficial
to first refer to the Objects and Reasons and the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 40 of 76
relevant provisions of the said Statutes, as also of the
Constitution of India.
21. The RDB Act was enacted to provide for
establishment of Tribunals for expeditious
adjudication and recovery of debts due to Banks and
Financial Institutions, and for the matters connected
therewith and incidental thereto, as at the relevant
time, the Banks and the Financial Institutions were
experiencing considerable difficulties in recovering
loans and enforcement of securities charged with
them. The said Act came into force on 24.06.1993.
Relevant provisions thereof read as under:-
“31B. Priority to secured creditors .—
Notwithstanding anything contained in any other
law for the time being in force, the rights of
secured creditors to realise secured debts due
and payable to them by sale of assets over
which security interest is created, shall have
priority and shall be paid in priority over all other
debts and Government dues including
revenues, taxes, cesses and rates due to the
Central Government, State Government or local
authority.
Explanation. —For the purposes of this section,
it is hereby clarified that on or after the
commencement of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), in cases
where insolvency or bankruptcy proceedings
are pending in respect of secured assets of the
borrower, priority to secured creditors in
payment of debt shall be subject to the
provisions of that Code.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 41 of 76
32-33……………..
34. Act to have over-riding effect. - (1) Save
as provided under sub-section (2), the
provisions of this Act shall have effect
notwithstanding anything inconsistent therewith
contained in any other law for the time being in
force or in any instrument having effect by virtue
of any law other than this Act.
(2) The provisions of this Act or the rules made
thereunder shall be in addition to, and not in
derogation of, the Industrial Finance
Corporation Act, 1948 (15 of 1948), the State
Financial Corporations Act, 1951 (63 of 1951),
the Unit Trust of India Act, 1963 (52 of 1963), the
Industrial Reconstruction Bank of India Act,
1984 (62 of 1984) The Sick Industrial
Companies (Special Provisions) Act, 1985 (1 of
1986) and the Small Industries Development
Bank of India Act, 1989 (39 of 1989).”
22. As the long title of the SARFAESI Act suggests, it was
enacted to regulate the securitisation and
reconstruction of financial assets and enforcement of
security interest and to provide for a central database
of security interests created on property rights, and
for matters connected therewith or incidental thereto.
SARFAESI Act came into force w.e.f. 21.06.2002.
Section 26E having been relied upon by the learned
counsels for the Secured Creditors, the same is
reproduced as under:
26E. Priority to secured creditors. --
Notwithstanding anything contained in any other
law for the time being in force, after the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 42 of 76
registration of security interest, the debts due to
any secured creditor shall be paid in priority over
all other debts and all revenues, taxes, cesses
and other rates payable to the Central
Government or State Government or local
authority.
Explanation. --For the purposes of this section,
it is hereby clarified that on or after the
commencement of the Insolvency and
Bankruptcy Code, 2016 (31 of 2016), in cases
where insolvency or bankruptcy proceedings
are pending in respect of secured assets of the
borrower, priority to secured creditors in
payment of debt shall be subject to the
provisions of that Code.
Section 35 thereof providing an overriding effect,
reads as under:
“35. The provisions of this Act to override
other laws. - The provisions of this Act shall
have effect, notwithstanding anything
inconsistent therewith contained in any other
law for the time being in force or any instrument
having effect by virtue of any such law.”
23. So far as PMLA is concerned, as transpiring from its
objects and reasons, since money laundering had
posed a serious threat not only to the financial
systems of the countries but also to their integrity and
sovereignty, some of the international communities
had taken the initiatives to obviate such threats. The
Parliament therefore considering the resolutions and
declarations passed by the General Assembly of
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 43 of 76
United Nations, and to prevent money laundering and
to provide for confiscation of property derived from,
or involved in money laundering and for the matters
connected therewith and incidental thereto, had
passed the PMLA, which came into force w.e.f.
01.07.2005. Section 71 thereof pertaining to the
overriding effect of the Act, reads as under: -
“71. Act to have overriding effect. - The
provisions of this Act shall have effect
notwithstanding anything inconsistent therewith
contained in any other law for the time being in
force.”
24. The MPID Act was enacted by the State of
Maharashtra to protect the interest of depositors of
the Financial Establishments and matters relating
thereto. Some of the provisions of the said Act being
germane for deciding the issues involved in the
present proceedings, the same are reproduced
hereunder: -
Section 2(c) defines “‘deposit”’. The relevant part
thereof reads as under: -
“2. (c) “deposit” includes and shall be deemed
always to have included any receipt of money or
acceptance of any valuable commodity by any
Financial Establishment to be returned after a
specified period or otherwise, either in cash or
in kind or in the form of a specified service with
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 44 of 76
or without any benefit in the form of interest,
bonus, profit or in any other form, but does not
include-
Section 2(d) defines “Financial Establishments”,
which reads as under: -
“2(d) Financial Establishment means any
person accepting deposit under any scheme or
arrangement or in any other manner but does
not include a corporation or a co-operative
society owned or controlled by any State
Government or the Central Government or a
banking company defined under clause (c) of
Section 5 of the Banking Regulation Act, 1949
(10 of 1949);”
Section 3 of MPID Act pertains to the Fraudulent
Default by a Financial Establishment, which reads as
under: -
“3. Fraudulent default by Financial
Establishment.- Any Financial Establishment,
which fraudulently defaults any repayment of
deposit on maturity along with any benefit in the
form of interest, bonus, profit or in any other
form as promised or fraudulently fails to render
service as assured against the deposit, every
person including the promoter, partner, director,
manager or any other person or an employee
responsible for the management of or
conducting of the business or affairs of such
Financial Establishment shall, on conviction, be
punished with imprisonment for a term which
may extend to six years and with fine which may
extend to one lac of rupees and such Financial
Establishment also shall be liable for a fine
which may extend to one lac of rupees.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 45 of 76
Explanation - For the purpose of this section, a
Financial Establishment, which commits
defaults in repayment of such deposit with such
benefits in the form of interest, bonus, profit or
any other form as promised or fails to render any
specified service promised against such
deposit, or fails to render any specific service
agreed against the deposit with an intention of
causing wrongful gain to one person or wrongful
loss to another person or commits such default
due to its inability arising out of impracticable or
commercially not viable promises made while
accepting such deposit or arising out of
deployment of money or assets acquired out of
the deposits in such a manner as it involves
inherent risk in recovering the same when
needed shall, be deemed to have committed a
default or failed to render the specific service,
fraudulently.”
Section 4 pertains to the attachment of properties on
default of return of deposits, which reads as under: -
“4. Attachment of properties on default of
return of deposits. - (1) Notwithstanding
anything contained in any other law for the time
being in force-
(i) where upon complaints received from the
depositors or otherwise, the Government is
satisfied that any Financial Establishment has
failed, -
(a) to return the deposit after maturity or on
demand by the depositor; or
(b) to pay interest or other assured benefit; or
(c) to provide the service promised against such
deposit; or
(ii) where the Government has reason to believe
that any Financial Establishment is acting in the
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 46 of 76
calculated manner detrimental to the interests of
the depositors with an intention to defraud them;
and if the Government is satisfied that
such Financial Establishment is not likely to
return the deposits or make payment of interest
or other benefits assured or to provide the
services against which the deposit is received,
the Government may, in order to protect the
interest of the depositors of such Financial
Establishment, after recording reasons in
writing, issue an order by publishing it in the
Official Gazette, attaching the money or the
property believed to have been acquired by
such Financial Establishment, either in its own
name or in the name of any other person from
out of the deposits, collected by the Financial
Establishment, or if it transpires that such
money or other property is not available for
attachment or not sufficient for repayment of the
deposits, such other property or the said
Financial Establishment or the promoter,
director, partner or manager or member of the
said Financial Establishment as the
Government may think fit.
(2) On the publication of the order under sub-
section (1), all the properties and assets of the
Financial Establishment and the persons
mentioned therein shall forthwith vest in the
Competent Authority appointed by the
Government, pending further orders from the
Designated Court.
(3) The Collector of a District shall be competent
to receive the complaints from his District under
sub-section (1) and he shall forward the same
together with his report to the Government at the
earliest and shall send a copy of the complaint
also to the co ncerned District Police
Superintendent or Commissioner of Police, as
the case may be, for investigation.”
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 47 of 76
Section 7 thereof pertains to the powers of
Designated Court regarding attachment. The same
reads as under: -
“7. Powers of Designated Court regarding
attachment.- (1) Upon receipt of an application
under Section 5, the Designated Court shall
issue to the Financial Establishment or to any
other person whose property is attached and
vested in the Competent Authority by the
Government under Section 4, a notice
accompanied by the application and affidavits
evidence, if any, calling upon the said
Establishment or the said person to show cause
on a date to be specified in the notice, why the
order of attachment should not be made
absolute.
(2) The Designated Court shall also issue such
notice, to all other persons represented to it as
having or being likely to claim, any interest or
title in the property of the Financial
Establishment or the person to whom the notice
is issued under sub-section (1), calling upon all
such persons to appear on the same date as
that specified in the notice and make objection
if they so desire to the attachment of the
property or any portion thereof, on the ground
that they have interest in such property or
portion thereof.
(3) Any person claiming an interest in the
property attached or any portion thereof may,
notwithstanding that no notice has been served
upon him under this section, make an objection
as aforesaid to the Designated Court at any time
before an order is passed under sub-section (4)
or sub-section (6).
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 48 of 76
(4) The Designated Court shall, if no cause is
shown and no objections are made under sub-
section (3), on or before the specified date,
forthwith pass an order making the order of
attachment absolute, and issue such direction
as may be necessary for realisation of the
assets attached and for the equitable
distribution among the depositors of the money
realised from out of the property attached.
(5) If cause is shown or any objection is made
as aforesaid, the Designated Court shall
proceed to investigate the same and in so doing,
as regards the examination of the parties and in
all other respects, the Designated Court shall,
subject to the provisions of this Act, follow the
summary procedure as contemplated under
Order 37 of the Civil Procedure Code, 5 of 1908
and exercise all the powers of a court in hearing
a suit under the said Code and any person
making an objection shall be required to adduce
evidence to show that on the date of the
attachment he had some interest in the property
attached.
(6) After investigation under sub-section (5), the
Designated Court shall pass an order either
making the order of attachment passed under
sub-section (1) of section 4 absolute or varying
it by releasing a portion of the property from
attachment or cancelling the order of
attachment:
Provided that the Designated Court shall not
release from attachment any interest, which it is
satisfied that the Financial Establishment or the
person referred to in sub-section (I) has in the
property, unless it is also satisfied that there will
remain under attachment an amount or property
of value not less then the value that is required
for repayment to the depositors of such
Financial Establishment.”
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 49 of 76
Section 14 of MPID Act provides for the overriding
effect of the Act, which reads as under: -
“14. Act to override other laws. - Save as
otherwise provided in this Act, the provisions of
this Act shall have effect notwithstanding
anything inconsistent therewith contained in any
other law for the time being in force or any
custom or usage or any instrument having effect
by virtue of any such law.”
25. So far as the relevant provisions of Constitution of
India are concerned, Article 246 which pertains to the
subject matter of laws made by the Parliament and
the Legislatures of the States reads as under:
“246. Subject-matter of laws made by
Parliament and by the Legislatures of States
(1) Notwithstanding anything in clauses (2) and
(3), Parliament has exclusive power to make
laws with respect to any of the matters
enumerated in List 1 in the Seventh Schedule
(in this Constitution referred to as the "Union
List").
(2) Notwithstanding anything in clause (3),
Parliament and subject to clause (1), the
Legislature of any State also, have power to
make laws with respect to any of the matters
enumerated in List III in the Seventh Schedule
(in this Constitution referred to as the
"Concurrent List").
(3) Subject to clauses (1) and (2), the
Legislature of any State has exclusive power to
make laws for such State or any part thereof
with respect to any of the matters enumerated
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 50 of 76
in List II in the Seventh Schedule (in this
Constitution referred to as the 'State List').
(4) Parliament has power to make laws with
respect to any matter for any part of the territory
of India not included in a State notwithstanding
that such matter is a matter enumerated in the
State List.”
Article 254 deals with the inconsistencies between
laws made by Parliament and laws made by the
Legislatures of States, which reads as under:
“254. Inconsistency between laws made by
Parliament and laws made by the
Legislatures of States
(1) If any provision of a law made by the
Legislature of a State is repugnant to any
provision of a law made by Parliament which
Parliament is competent to enact, or to any
provision of an existing law with respect to one
of the matters enumerated in the Concurrent
List, then, subject to the provisions of clause (2),
the law made by Parliament, whether passed
before or after the law made by the Legislature
of such State, or, as the case may be, the
existing law, shall prevail and the law made by
the Legislature of the State shall, to the extent
of the repugnancy, be void.
(2) Where a law made by the Legislature of a
State with respect to one of the matters
enumerated in the Concurrent List contains any
provision repugnant to the provisions of an
earlier law made by Parliament or an existing
law with respect to that matter, then, the law so
made by the Legislature of such State shall, if it
has been reserved for the consideration of the
President and has received his assent, prevail
in that State:
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 51 of 76
Provided that nothing in this clause shall prevent
Parliament from enacting at any time any law
with respect to the same matter including a law
adding to, amending, varying or repealing the
law so made by the Legislature of the State.”
ANALYSIS:
26. It is trite that the Court, while interpreting the statutes
which have arguably the conflicting provisions, has to
keep in mind the Federal structure embedded in our
Constitution, as a Basic Structure. As per Article
246(1) of the Constitution, notwithstanding anything
contained in Clauses (2) and (3), the Parliament has
exclusive power to make laws with respect to any of
the matters enumerated in the List-I in the Seventh
Schedule, referred to as “the Union List”. As per
Article 246(2), notwithstanding anything in Clause
(3), the Parliament and subject to Clause (1), the
State Legislature have power to make laws on any of
the matters enumerated in List-III in the Seventh
Schedule referred to as the “Concurrent List”. As per
Article 246(3), subject to Clauses (1) and (2) of Article
246, the Legislature of any State has exclusive
powers to make laws for such State, or any part
thereof, with respect to any of the matters
enumerated in List-II in the Seventh Schedule,
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 52 of 76
referred to as the “State List”. Thus, a three-fold
distribution of legislative power between the Union
and the States made in the three Lists in the Seventh
Schedule of the Constitution read with Article 246,
exhibits the Principle of Federal supremacy viz. that
in case of inevitable conflict between Union and State
powers, the 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. In view of such
distribution of Legislative powers, situations have
arisen where two legislative fields have apparently
overlapped. In such situations, this Court has held
that it would be the duty of the courts to ascertain as
to what degree and to what extent, the authority to
deal with the matters falling within these classes of
subjects exists in each of such legislatures, and to
define the limits of their respective powers.
27. A Constitution Bench in State of West Bengal and
Ors. vs. Committee for Protection of Democratic
Rights, West Bengal and Ors.
3
, has aptly clinched
the issue of distribution of legislative powers between
the Union and the State Legislature, thus-
3
(2010) 3 SCC 571
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 53 of 76
“25. The non obstante clause in Article 246(1)
contemplates the predominance or supremacy
of the Union Legislature. This power is not
encumbered by anything contained in clauses
(2) and (3) for these clauses themselves are
expressly limited and made subject to the non
obstante clause in Article 246(1). The State
Legislature has exclusive power to make laws
for such State or any part thereof with respect to
any of the matters enumerated in List II in the
Seventh Schedule and it also has the power to
make laws with respect to any matters
enumerated in List III (Concurrent List). The
exclusive power of the State Legislature to
legislate with respect to any of the matters
enumerated in List II has to be exercised subject
to clause (1) i.e. the exclusive power of
Parliament to legislate with respect to matters
enumerated in List I. As a consequence, if there
is a conflict between an entry in List I and an
entry in List II, which is not capable of
reconciliation, the power of Parliament to
legislate with respect to a matter enumerated in
List II must supersede pro tanto the exercise of
power of the State Legislature.
26. Both Parliament and the State Legislature
have concurrent powers of legislation with
respect to any of the matters enumerated in List
III. The words “notwithstanding anything
contained in clauses (2) and (3)” in Article
246(1) and the words “subject to clauses (1) and
(2)” in Article 246(3) lay down the principle of
federal supremacy viz. that in case of inevitable
conflict between the Union and State powers,
the Union power as enumerated in List I shall
prevail over the State power as enumerated in
Lists II and III and in case of an overlapping
between Lists II and III, the latter shall prevail.
27. Though, undoubtedly, the Constitution
exhibits supremacy of Parliament over the State
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 54 of 76
Legislatures, yet the principle of federal
supremacy laid down in Article 246 of the
Constitution cannot be resorted to unless there
is an irreconcilable direct conflict between the
entries in the Union and the State Lists. Thus,
there is no quarrel with the broad proposition
that under the Constitution there is a clear
demarcation of legislative powers between the
Union and the States and they have to confine
themselves within the field entrusted to them. It
may also be borne in mind that the function of
the lists is not to confer powers; they merely
demarcate the legislative field. ….”
28. A Three-Judge Bench of this Court in the case of M/s
Hoechst Pharmaceuticals Ltd. and Ors. vs. State
of Bihar and Ors
4
, has succinctly dealt with the issue
of repugnancy as contemplated in Article 254 of the
Constitution of India. Paragraph 67 thereof reads as
under: -
“67. Article 254 of the Constitution makes
provision first, as to what would happen in the
case of conflict between a Central and State law
with regard to the subjects enumerated in the
Concurrent List, and secondly, for resolving
such conflict. Article 254(1) enunciates the
normal rule that in the event of a conflict
between a Union and a State law in the
concurrent field, the former prevails over the
latter. Clause (1) lays down that if a State law
relating to a concurrent subject is ‘repugnant’ to
a Union law relating to that subject, then,
whether the Union law is prior or later in time,
the Union law will prevail and the State law shall,
to the extent of such repugnancy, be void. To
4
(1983) 4 SCC 45
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 55 of 76
the general rule laid down in clause (1), clause
(2) engrafts an exception viz. that if the
President assents to a State law which has been
reserved for his consideration, it will prevail
notwithstanding its repugnancy to an earlier law
of the Union, both laws dealing with a
concurrent subject. In such a case, the Central
Act, will give way to the State Act only to the
extent of inconsistency between the two, and no
more. In short, the result of obtaining the assent
of the President to a State Act which is
inconsistent with a previous Union law relating
to a concurrent subject would be that the State
Act will prevail in that State and override the
provisions of the Central Act in their applicability
to that State only. The predominance of the
State law may however be taken away if
Parliament legislates under the proviso to
clause (2). The proviso to Article 254(2)
empowers the Union Parliament to repeal or
amend a repugnant State law, either directly, or
by itself enacting a law repugnant to the State
law with respect to the ‘same matter’. Even
though the subsequent law made by Parliament
does not expressly repeal a State law, even
then, the State law will become void as soon as
the subsequent law of Parliament creating
repugnancy is made. A State law would be
repugnant to the Union law when there is direct
conflict between the two laws. Such repugnancy
may also arise where both laws operate in the
same field and the two cannot possibly stand
together: See Zaverbhai Amaidas v. State of
Bombay [(1954) 2 SCC 345 : AIR 1954 SC 752
: (1955) 1 SCR 799 : 1954 SCJ 851 : 1954 Cri
LJ 1822] ; M. Karunanidhi v. Union of
India [(1979) 3 SCC 431 : 1979 SCC (Cri) 691 :
AIR 1979 SC 898 : (1979) 3 SCR 254 : 1979 Cri
LJ 773] and T. Barai v. Henry Ah Hoe [(1983) 1
SCC 177 : 1983 SCC (Cri) 143].”
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 56 of 76
29. Again, a Constitution Bench of this Court while
discussing the doctrine of pith and substance in the
case of Kartar Singh vs. State of Punjab
5
, observed
thus: -
“60. This doctrine of ‘pith and substance’ is
applied when the legislative competence of a
legislature with regard to a particular enactment
is challenged with reference to the entries in the
various lists i.e. a law dealing with the subject in
one list is also touching on a subject in another
list. In such a case, what has to be ascertained
is the pith and substance of the enactment. On
a scrutiny of the Act in question, if found, that
the legislation is in substance one on a matter
assigned to the legislature enacting that statute,
then that Act as a whole must be held to be valid
notwithstanding any incidental trenching upon
matters beyond its competence i.e. on a matter
included in the list belonging to the other
legislature. To say differently, incidental
encroachment is not altogether forbidden.”
30. Another Constitution Bench in Rajiv Sarin and
Another vs. State of Uttarakhand and Ors.
6
, has
aptly dealt with the issue as to when the repugnancy
as contemplated in Article 254 would be attracted,
and it held thus: -
“33. It is trite law that the plea of repugnancy
would be attracted only if both the legislations
fall under the Concurrent List of the Seventh
Schedule to the Constitution. Under Article 254
5
(1994) 3 SCC 569
6
(2011) 8 SCC 708
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 57 of 76
of the Constitution, a State law passed in
respect of a subject-matter comprised in List III
i.e. the Concurrent List of the Seventh Schedule
to the Constitution would be invalid if its
provisions are repugnant to a law passed on the
same subject by Parliament and that too only in
a situation if both the laws i.e. one made by the
State Legislature and another made by
Parliament cannot exist together. In other
words, the question of repugnancy under Article
254 of the Constitution arises when the
provisions of both laws are completely
inconsistent with each other or when the
provisions of both laws are absolutely
irreconcilable with each other and it is
impossible without disturbing the other
provision, or conflicting interpretations resulted
into, when both the statutes covering the same
field are applied to a given set of facts. That is
to say, in simple words, repugnancy between
the two statutes would arise if there is a direct
conflict between the two provisions and the law
made by Parliament and the law made by the
State Legislature occupies the same field.
Hence, whenever the issue of repugnancy
between the law passed by Parliament and of
State Legislature are raised, it becomes quite
necessary to examine as to whether the two
legislations cover or relate to the same subject-
matter or different.
34-44. ……..
45. For repugnancy under Article 254 of the
Constitution, there is a twin requirement, which
is to be fulfilled: firstly, there has to be a
“repugnancy” between a Central and State Act;
and secondly, the Presidential assent has to be
held as being non-existent. The test for
determining such repugnancy is indeed to find
out the dominant intention of both the
legislations and whether such dominant
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 58 of 76
intentions of both the legislations are alike or
different. To put it simply, a provision in one
legislation in order to give effect to its dominant
purpose may incidentally be on the same
subject as covered by the provision of the other
legislation, but such partial or incidental
coverage of the same area in a different context
and to achieve a different purpose does not
attract the doctrine of repugnancy. In a nutshell,
in order to attract the doctrine of repugnancy,
both the legislations must be substantially on
the same subject.”
31. Since in the instant case, the issue with regard to the
conflict between the provisions of the laws made by
the Parliament and the law made by the State
Legislature, has been raised, let us examine as to
whether the said legislation i.e., MPID covers or
relates to the same subject matter as covered under
the Central Legislations i.e., SARFAESI Act and RDB
Act as also PMLA.
32. It may be noted that the constitutional validity of the
MPID Act is no longer res integra in view of the
decisions in case of Sonal Hemant Joshi and Ors.
vs. State of Maharashtra and Ors.
7
and in case of
State of Maharashtra vs. 63 Moons Technologies
Ltd.
8
. This Court in 63 Moons Technologies Ltd.
7
2012 (10) SCC 601
8
2022 (9) SCC 457
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 59 of 76
(supra) relying upon the earlier decision in case of
Sonal Hemant Joshi and Ors. (supra), after
discussing the various provisions of MPID Act
particularly with regard to the definitions of “Deposit”
and “Financial Establishment,” held in paragraph 91
and 92 as under: -
“91. The validity of the MPID Act was
specifically dealt with in two decisions of this
Court in State of Maharashtra v. Vijay C.
Puljal [State of Maharashtra v. Vijay C. Puljal,
(2012) 10 SCC 599 : (2013) 1 SCC (Civ) 541 :
(2013) 1 SCC (Cri) 1082] and Sonal Hemant
Joshi v. State of Maharashtra [Sonal Hemant
Joshi v. State of Maharashtra, (2012) 10 SCC
601 : (2013) 1 SCC (Civ) 543 : (2013) 1 SCC
(Cri) 1084] . In both the decisions, this Court
upheld the constitutional validity of the MPID Act
in view of the earlier decision in Baskaran [K.K.
Baskaran v. State, (2011) 3 SCC 793 : (2011) 2
SCC (Civ) 90] . In Soma Suresh Kumar v. State
of A.P. [Soma Suresh Kumar v. State of A.P.,
(2013) 10 SCC 677 : (2014) 1 SCC (Civ) 90 :
(2014) 1 SCC (Cri) 378] , a two-Judge Bench of
this Court upheld the provisions of the Andhra
Pradesh Protection of Depositors of Financial
Establishments Act, 1999 following the earlier
decisions in Baskaran [K.K. Baskaran v. State,
(2011) 3 SCC 793 : (2011) 2 SCC (Civ) 90]
and New Horizon Sugar Mills [New Horizon
Sugar Mills Ltd. v. State of Pondicherry, (2012)
10 SCC 575 : (2013) 1 SCC (Civ) 516 : (2013) 1
SCC (Cri) 1061] .
92. Having discussed the judgments of this
Court on the constitutional validity of the State
legislations governing financial establishments
offering deposit schemes, including the MPID
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 60 of 76
Act, there is no reason for us to reopen the
question. This Court has held that the MPID Act
is constitutionally valid on the grounds of
legislative competence and when tested against
the provisions of Part III of the Constitution.”
33. This Court in Sonal Hemant Joshi and Ors. (supra)
had upheld the constitutional validity of the MPID Act
in view of the decision in case of K.K. Baskaran vs.
State
9
, in which the Court was dealing with the
identical legislation enacted by the State of Tamil
Nadu, namely T.N. Protection of Interest of
Depositors (in Financial Establishments) Act, 1997,
enacted with the object to ameliorate the situation of
the depositors from the clutches of fraudulent
Financial Establishments, who had duped the
investor/public by offering high rates of interest on
deposits, and committed deliberate fraud in
repayment of the principals and interests after
maturity of such Deposits. In the said decision, the
Court had opined that the impugned Tamil Nadu Act
was in pith and substance relatable to the Entries 1,
30 and 32 of the State List (List-II) of Seventh
Schedule. It further held that the Financial
Institutions/Establishments as contemplated in the
9
(2011) 3 SCC 793
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 61 of 76
Tamil Nadu Act did not come either under the
Reserve Bank of India Act or Banking Regulation Act.
It further held that the Tamil Nadu Act was not
focussed on the transaction of banking or acceptance
of deposit, but was focussed on remedying the
situation of the depositors who were deceived by the
fraudulent Financial Establishments. The said Act
was intended to deal with neither the Banks which did
the business of Banking and were governed by the
Reserve Bank of India Act and the Banking
Regulation Act, nor the Non- Banking Financial
Companies enacted under the Companies Act. In the
case of Tamil Nadu Act, the attachment of properties
was intended to provide for an effective and speedy
remedy to the aggrieved depositors for the realisation
of their dues. Hence, the Reserve Bank of India Act,
the Banking Regulation Act or the Companies Act did
not occupy the field which the impugned Tamil Nadu
Act occupied, though the latter might incidentally
have trenched upon the former. The Court in the said
judgment specifically disagreed with the full-Bench
judgment of the Bombay High Court, whereby the
MPID Act was held unconstitutional. Subsequently,
the Court in Sonal Hemant Joshi and Ors. (supra),
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 62 of 76
specifically relied upon the said judgment in case of
K.K. Baskaran and upheld the constitutional validity
of the MPID Act. The said judgment was also relied
upon by the three-Judge Bench in State of
Maharashtra vs. 63 Moons Technologies (supra).
34. In view of the above, there remains no shadow of
doubt that the 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.
35. The PMLA was enacted to implement the
international resolutions and declarations made by
the General Assembly of United Nations, and prevent
money laundering as also to provide for confiscation
of properties derived therefrom or involved in money
laundering. The subject matter of PMLA therefore is
traceable or relatable to the Entry-13 of Union List
(List-I) of Seventh Schedule.
36. So far as the SARFAESI Act is concerned, the
constitutional validity of the said Act was upheld by a
Three-Judge Bench in the case of Mardia
Chemicals Ltd and Ors. vs. Union of India and
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 63 of 76
Ors.
10
. The said Act was enacted by the Parliament
to regulate securitization and re-construction of
financial assets and enforcement of security interest
and to provide for a central database of security
interest created on property rights. The RDB Act was
enacted to provide establishment of Tribunals for
expeditious adjudication and recovery of debts due to
Banks and Financial Institutions and for the matters
connected therewith or incidental thereto. Therefore,
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.
37. As held by the Constitution Bench in Union of India
and Another vs. Delhi High Court Bar Association
and Others
11
, under Entry 45 of List-I, it is Parliament
alone which can enact a law with regard to the
conduct of business by the Banks. Recovery of dues
is an essential function of any Banking Institution. In
exercise of its legislative power relating to Banking,
the Parliament can provide the mechanism by which
10
(2004) 4 SCC 311
11
(2002) 4 SCC 275
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 64 of 76
monies due to the Banks and Financial Institutions
can be recovered.
38. However, merely because the SARFAESI Act and
RDB Act which are enacted in respect of the subject
matter falling in List-I and having been enacted by
Parliament, they could not be permitted to override
the MPID Act, which is validly enacted for the subject
matter falling in List-II – State List. If such an
interpretation is permitted to be made, it would
amount to denuding the State of its legislative power
to enact and enforce legislation, which is within the
exclusive domain of the State, and it would offend the
very principle of Federal Structure set out in Article
246 of the Constitution of India, held to be a part of
the basic structure of Constitution of India.
39. In this regard, a very pertinent observation made by
the majority in the Constitution Bench of five Judges
in ITC Limited vs. Agricultural Produce Market
Committee and Others
12
deserve to be referred to.
In the said case, the contention put forth by the Union
of India was that ‘tobacco’ was covered solely by a
later Special Central Legislation that is the Tobacco
Boards Act, 1975 (List I- Entry 52 – Industries)
12
(2002) 9 SCC 232
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 65 of 76
denuding the State legislation to levy market fee on
such Tobacco under the earlier enacted Bihar
Agricultural Produce Markets Act, 1960 (List II – Entry
24 – Markets). In the said case, the majority held the
view that while maintaining Parliamentary
Supremacy, one cannot give a go-by to the
Federalism which has been held to be basic feature
of the Constitution of India, and thereby whittling the
powers of the State Legislature. The precise
observations made by Sabharwal J., in this regard
are reproduced: -
“58. True, the parliamentary legislation has
supremacy as provided under Articles 246(1)
and (2). This is of relevance when the field of
legislation is on the Concurrent List. While
maintaining parliamentary supremacy, one
cannot give a go-by to the federalism which has
been held to be a basic feature of the
Constitution (see S.R. Bommai v. Union of
India [(1994) 3 SCC 1]).
59. The Constitution of India deserves to be
interpreted, language permitting, in a manner
that it does not whittle down the powers of the
State Legislature and preserves the federalism
while also upholding the Central supremacy as
contemplated by some of its articles.”
In the said Judgment Ruma Pal J., in her concurring
opinion observed in Para 94 as under: -
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 66 of 76
“94. Although Parliament cannot legislate on
any of the entries in the State List, it may do so
incidentally while essentially legislating within
the entries under the Union List. Conversely, the
State Legislatures may encroach on the Union
List, when such an encroachment is merely
ancillary to an exercise of power intrinsically
under the State List. The fact of encroachment
does not affect the vires of the law even as
regards the area of encroachment. [A.S.
Krishna v. State of Madras, AIR 1957 SC 297 :
1957 SCR 399, Chaturbhai M. Patel v. Union of
India, (1960) 2 SCR 362, 373, State of
Rajasthan v. G. Chawla, AIR 1959 SC
544, Ishwari Khetan Sugar Mills (P) Ltd. v. State
of U.P., (1980) 4 SCC 136, 146-47] This
principle commonly known as the doctrine of
pith and substance, does not amount to an
extension of the legislative fields. Therefore,
such incidental encroachment in either event
does not deprive the State Legislature in the first
case or Parliament in the second, of their
exclusive powers under the entry so
encroached upon. In the event the incidental
encroachment conflicts with legislation actually
enacted by the dominant power, the dominant
legislation will prevail.”
40. In view of the above position of law settled by the
Constitution Bench, it is held that 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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 67 of 76
field of operations, provisions of SARFAESI Act or
RDB Act cannot be permitted to override the
provisions of MPID Act, which is a validly enacted
State Legislation, otherwise it would tantamount to
violation of federal structure doctrine envisaged in the
Constitution. The respective legislative powers of the
Union and the States are traceable to Articles 245 to
254 of the Constitution. The State qua the
Constitution is Federal in structure, and independent
in its exercise of legislative and executive power.
Therefore, if provisions of SARFAESI Act or RDB Act
are permitted to override the provisions of MPID Act,
then the legislative powers of the State Legislature
would be denuded which would tantamount to
subverting the law enacted by the State Legislature.
41. It is true that sometimes the overlapping of
legislations enacted with regard to the matters
relatable to different Entries in List-I and List-II in
Seventh Schedule may occur, however in that case
also as held by the Constitution Bench in State of
West Bengal vs. Kesoram Industries Limited and
Others
13
, though, the List-I has priority over List-III
and List-II, and List-III has priority over List-II, the
13
2004 (10) SCC 201
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 68 of 76
predominance of Union List would not prevent the
State Legislature from dealing with any matter within
List-II, even if it may incidentally affect any item in
List-I. In the case at hand, the SARFAESI Act and
RDB Act having been enacted by the Parliament for
the subject matter falling in List-I and the MPID Act
having been enacted by the State Legislature for the
subject matter falling in List-II in the Seventh
Schedule, the latter 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.
42. It was next sought to be submitted by learned
counsels appearing for the Secured Creditors that in
view of Section 26E of the SARFAESI Act, the debts
due to the Secured Creditor have to be paid in priority
over all other debts and all revenues, taxes, cesses
and other rates payable to the Central Government or
State Government or local authority, and therefore,
the security interest of the Secured Creditors in
respect of the properties attached under MPID Act
should be given priority. We do not find any merit in
the said submission. Apart from the fact that Section
26E has come into force with effect from 1
st
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 69 of 76
September, 2016, it gives right to the Secured
Creditor, after the registration of security interest, to
be paid in priority over all other debts and revenues,
taxes etc. payable to the Central Government or State
Government or local authority.
43. In the instant case, the attachment of the properties
over which the Secured Creditors is said to have
security interest, have been attached under Section 4
of the MPID Act. Such properties are believed to have
been acquired by the Financial Establishment i.e.
NSEL either in its own name or in the name of other
persons from out of deposits collected by the
Financial Establishment. All such properties and
assets of the Financial Establishment and the
persons mentioned in the said provision, vest in the
Competent Authority appointed by the Government,
pending further orders from the Designated Court.
Such monies or deposits of depositors/ investors,
who have been 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 Section 26E of the
SARFAESI Act, and hence also the provisions of
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 70 of 76
Section 26E could not be said to have been attracted
to the facts of the case.
44. In that view of the matter, it is held that no priority of
interest can be claimed by the Secured Creditors
against the properties attached under the MPID Act
and that the provisions of MPID Act would override
any claim for priority of interest by the Secured
Creditors in respect of the properties which have
been attached under the MPID Act.
QUESTION (ii): -
45. This takes us to the Second question as to “Whether
the properties of Judgment Debtors and Garnishees
attached under the MPID Act would be available for
the execution of decrees against the Judgment
Debtors in view of the provisions of Moratorium under
Section 14 of the IBC, 2016?”
46. The bone of contention raised by the learned counsel
appearing for the NSEL and the State of Maharashtra
is that the properties of the Judgement
debtor/Garnishees having already stood attached
under the provisions contained in Section 4 of the
MPID Act, much prior to coming into force of the IBC,
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 71 of 76
2016 and there being no retrospective operation of
Section 14 pertaining to Moratorium, such attached
properties under the MPID Act would no longer be
available as the properties of the Corporate Debtor to
be considered for the purpose of Resolution Plan
under the IBC. According to them, on the issuance of
Notification under Section 4 of the MPID Act, the
attached the properties would vest in the Competent
Authority appointed by the State Government, and
therefore such properties would no longer be the
properties of the judgment debtor or of the Garnishee,
and therefore would be outside the scope of operation
and application of IBC. Per contra the learned
counsel for the Judgment Debtor/Garnishees have
contended that the IBC being a complete and
exhaustive Code in itself would override the
provisions of the MPID Act.
47. As stated earlier, the MPID 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.
The constitutional validity of the said Act has been
upheld by this Court in Sonal Hemant Joshi and
Ors. (supra) and in State of Maharashtra vs. 63
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 72 of 76
Moons Technologies Ltd. (supra). As discussed
while answering the first question, it was held that the
MPID Act has been validly enacted by the
Government of Maharashtra for the matters falling in
List-II- State List, and therefore it would prevail in the
State of Maharashtra. On the other hand, IBC has
been enacted to consolidate and amend the laws
relating to re-organization and insolvency resolution
of corporate persons, partnership firms and
individuals in a time bound manner for maximisation
of value of assets of such persons, to promote
entrepreneurship, availability of credit and balance
the interest of all the stakeholders. The subject matter
of IBC being “Bankruptcy and Insolvency”, is relatable
to the Entry 9 of List III-Concurrent List. 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. As per the settled
legal position discussed earlier, 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
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 73 of 76
contained in List-III-Concurrent List of Seventh
Schedule. A beneficial reference of the decision in
case of Innoventive Industries Ltd. vs. ICICI Bank
and Another
14
be made in this regard.
48. In the instant case, there is also no overlap or
inconsistency between the provisions contained in
the IBC and MPID Act. As such, Section 14 of IBC has
the connotation which is very much different from
Section 4 of MPID Act. The proceedings under the
IBC arise out of the Debtor-Creditor relationships of
the parties. As per Section 14 of IBC, which pertains
to the Moratorium, a declaration has to be made to an
order by the Adjudicating Authority prohibiting the acts
mentioned therein. Therefore, Section 14 of IBC is
consequent upon the order passed by the
Adjudicating Authority declaring Moratorium.
49. However, so far as the attachment of properties under
Section 4 of the MPID Act is concerned, it is beyond
the realm of the Debtor-Creditor relationship as
contemplated in the IBC. On the publication of the
Order of Attachment of Properties by the Government
to protect the interest of the Depositors of the
Financial Establishment, such properties and assets
14
(2018) 1 SCC 407
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 74 of 76
of the Financial Establishment and the persons
mentioned in sub-section (1) of Section 4, would
forthwith vest in the Competent Authority appointed
by the Government, pending further orders from the
Designated Court. The procedure and powers
required to be followed by the Designated Court after
the receipt of the application from the Competent
Authority under Section 5, have been prescribed in
Section 7 of the MPID Act. As per the said procedure
contained in Section 7, the Designated Court is
required to issue a notice calling upon the Financial
Establishments or to any other person whose
property is attached and vested in the Competent
Authority, to show cause as to why the Order of
Attachment should not be made absolute. If no
cause is shown or no objections have been raised
before the Designated Court, the Designated Court
can pass the order making the Order of Attachment
absolute and issue such direction as may be
necessary for realisation of the assets attached and
for the equitable distribution among the depositors of
the money realised from out of the properties
attached.
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 75 of 76
50. Thus, a conjoint reading of Section 4, 5 and 7 of the
MPID Act, makes it clear that though Section 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. We therefore
see no inconsistency between the provisions
contained in the MPID Act and the IBC.
51. In absence of any inconsistency having been brought
on record, between the provisions contained in the
MPID Act and in the IBC, Section 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.
52. In that view of the matter, it is held that the 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 S.C. Committee, despite
the provision of Moratorium under Section 14 of the
IBC.
53. For the reasons stated above, the Question No. (i) is
answered in the negative and the Question No.(ii) is
answered in the affirmative. As a consequence,
WRIT PETITION (CIVIL) NO.995 OF 2019 Page 76 of 76
thereof, both the Orders passed by the Supreme
Court Committee on 10.08.2023 and 08.01.2024
stand vindicated and upheld.
54. Let the IAs challenging the orders dated 10.08.2023
and 08.01.2024 passed by the S.C. Committee, be
dealt with and decided, in the light of the findings
recorded in this judgment.
……..…………………………. J.
[BELA M. TRIVEDI]
……..…………………………. J.
[SATISH CHANDRA SHARMA ]
NEW DELHI,
MAY 15
th
, 2025.
In a landmark ruling that significantly impacts complex financial fraud cases, the Supreme Court of India has delivered a crucial judgment concerning the NSEL Scam Verdict. This decision addresses the intricate interplay between various legislative frameworks, particularly regarding the Priority of Creditors India when assets are attached under specialized laws like the Maharashtra Protection of Interest of Depositors (MPID) Act and the Prevention of Money Laundering Act (PMLA). This comprehensive analysis is now available on CaseOn, offering detailed insights into the Court’s reasoning.
The genesis of the writ proceedings traces back to the infamous scam at the National Spot Exchange Limited (NSEL), where the petitioner company defaulted on payments, leading to a fraud aggregating approximately Rs.5,600 Crores. This left about 13,000 traders duped. Subsequent investigations by the Enforcement Directorate (ED) under the PMLA, 2002, and the State of Maharashtra under the MPID Act, 1999, led to the attachment of movable and immovable properties belonging to the defaulters. Given the multitude of civil and criminal proceedings and the difficulty in executing decrees across various jurisdictions, NSEL filed a writ petition seeking consolidation of proceedings. Recognizing the need for a holistic solution and speedy recovery for investors, the Supreme Court, on May 4, 2022, constituted a high-powered Supreme Court Committee (S.C. Committee) under Article 142 of the Constitution of India. This Committee was endowed with powers akin to a civil court to execute decrees, orders, and arbitral awards.
The first pivotal question examined by the S.C. Committee, and subsequently by the Supreme Court, was "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." This issue arose from applications filed by financial creditors who claimed a prior interest in the attached properties.
The second critical question focused on the impact of insolvency proceedings. It asked "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." This became a point of contention due to the commencement of moratoriums against certain judgment debtors under the Insolvency and Bankruptcy Code (IBC).
The initial challenge before the Supreme Court was regarding the ambit of its powers under Article 142. Citing previous Constitution Bench rulings like Supreme Court Bar Association Vs. Union of India & Another and Shilpa Sailesh Vs. Varun Sreenivasan, the Court reiterated that while Article 142 grants plenary and curative powers for doing 'complete justice,' these powers are not unlimited. They cannot be used to 'supplant' substantive law or ignore express statutory provisions, especially when conflicting with what is explicitly provided in a statute. However, the Court acknowledged that its 2022 order constituting the S.C. Committee was aimed at a holistic solution for speedy recovery for aggrieved traders and to 'iron out creases' between conflicting claims.
Both the Recovery of Debts and Bankruptcy (RDB) Act and the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest (SARFAESI) Act were enacted by Parliament. The RDB Act aims for expeditious recovery of debts due to banks and financial institutions, while SARFAESI focuses on securitization, reconstruction of financial assets, and enforcement of security interests. Both acts contain 'notwithstanding' clauses (Section 34 of RDB Act and Section 35 of SARFAESI Act) giving them an overriding effect. Section 31B of the RDB Act and Section 26E of the SARFAESI Act specifically grant priority to secured creditors over other debts and government dues.
The Prevention of Money Laundering Act (PMLA) was enacted by Parliament to combat money laundering and provide for the confiscation of properties derived from or involved in such activities. Section 71 of PMLA also contains an overriding effect clause, stating its provisions shall have effect notwithstanding anything inconsistent in any other law.
The Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act (MPID Act) was a state legislation enacted to protect depositors from fraudulent financial establishments. It defines 'deposit' (Section 2(c)) and 'Financial Establishment' (Section 2(d)) and provides for the attachment of properties (Section 4) believed to be acquired from fraudulent deposits. Section 4(2) states that attached properties vest in the Competent Authority. Section 14 of the MPID Act grants it an overriding effect, similar to the central laws.
The Court delved into Articles 246 and 254 of the Constitution, which govern the distribution of legislative powers between the Union and States and address inconsistencies between their laws. Drawing upon precedents like State of West Bengal and Ors. vs. Committee for Protection of Democratic Rights and Hoechst Pharmaceuticals Ltd. and Ors. vs. State of Bihar and Ors, the Court emphasized the principle of federal supremacy and the doctrine of 'pith and substance.' This doctrine dictates that if a law's essential character falls within one legislative field, incidental encroachment into another field does not invalidate it. Crucially, the Court upheld the constitutional validity of the MPID Act, confirming it falls within the State List (Entries 1, 30, and 32), while SARFAESI and RDB Acts fall under the Union List (Entry 45 - Banking). PMLA relates to Entry 13 of the Union List.
The Supreme Court recognized that the MPID Act was a validly enacted state legislation aimed at protecting depositors from fraudulent financial establishments. Its subject matter, though potentially overlapping, was distinct from the 'banking' domain of SARFAESI and RDB Acts. Applying the principle of federalism, the Court asserted that allowing central laws like SARFAESI and RDB Acts to override the MPID Act would effectively 'denude' the State of its exclusive legislative power in its domain, which forms part of the basic structure of the Constitution. The Court clarified that the monies attached under the MPID Act, being proceeds from fraudulent deposits, cannot be considered a 'debt' as contemplated under Section 26E of the SARFAESI Act. Therefore, the provisions of SARFAESI Act or RDB Act cannot override the MPID Act.
For legal professionals navigating these intricate arguments, CaseOn.in offers invaluable assistance. Its 2-minute audio briefs succinctly break down complex judgments like this one, providing quick insights into the Supreme Court's reasoning on the NSEL Scam Verdict and Priority of Creditors India cases, helping practitioners stay updated efficiently.
Regarding the conflict with the IBC moratorium, the Court found no inherent inconsistency between the MPID Act and the IBC. The properties attached under Section 4 of the MPID Act vest in the Competent Authority appointed by the State Government, subject to orders from the Designated Court. This vesting and subsequent process are distinct from the debtor-creditor relationships addressed by the IBC. The MPID Act's objective is to protect public depositors from fraud, leading to a different mechanism of attachment and realization of assets. Section 14 of the IBC, which imposes a moratorium, is a consequence of an order passed by the Adjudicating Authority in insolvency proceedings. Since the MPID Act's attachment precedes and operates independently of typical IBC mechanisms for debt recovery, the Court held that the properties attached under the MPID Act would indeed be available for the execution of decrees by the S.C. Committee, even in the presence of an IBC moratorium. Section 238 of the IBC, which provides for an overriding effect, would not be attracted in the absence of a direct inconsistency.
Based on its thorough analysis, the Supreme Court ruled definitively on both questions:
Consequently, both the orders passed by the Supreme Court Committee on August 10, 2023, and January 8, 2024, stand vindicated and upheld. The Interlocutory Applications (IAs) challenging these orders are to be decided in light of these findings.
This Supreme Court judgment is crucial for several reasons:
All information provided in this article is for informational purposes only and does not constitute legal advice. Readers should consult with a qualified legal professional for advice pertaining to their specific circumstances.
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