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The Bombay High Court has granted interim relief to 63 Moons Technologies (formerly Financial Technologies) by staying various notifications issued by the Maharashtra Government attaching the properties of 63 moons technologies and its bank accounts, including the IPR of its ODIN software and its receivables.
The interim order passed by Justices Bharati Dangre and Ranjit More is in response to a writ petition filed by 63 Moons challenging Sections 4 and 5 of the Maharashtra Protection of Interest of Depositors (In Financial Establishment) Act, 1999 (MPID Act) as well as several notifications issued by the State Government thereunder. Under section 4 of the MPID Act, when the State Government has reason to believe that any 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, it can issue an order attaching the money or the property acquired by such financial establishment.
Senior counsel Mukul Rohatgi, arguing on behalf of 63 moons, submitted to the Court that the State Government had “mis-directed itself and misconstrued” the provisions of Section 4 of the MPID Act, and attached further properties of 63 moons to the tune of Rs. 2,200 Crores.
The State Government had in 2016, attached certain investments of 63 moons but at the same time, excluded any returns of interests made from it. In 2018, the State Government issued various notifications which had the effect of attaching returns and interests which were earlier excluded. The Court has now stayed those notifications issued by the State Government and now, accrued returns on investments will be available for 63 moons.
Rohatgi argued against the fresh attachment of properties, while the current attachment is already in excess of the amount required to be repaid. The original default amount was Rs. 5,600 crore, of which Rs. 558 crores had been repaid, leaving a default amount of Rs. 4,822 crore. He added that as against the remainder amount of Rs. 4,822 crore, the authorities have attached the properties worth Rs. 8,548 crores which included the property of 63 moons. He contended that the fresh notifications issued in 2018 be set aside in view of the excess attachments already done.
In its 25-page order, the High Court has stated that it found the attachments ‘arbitrary’ because the State Government has “already made attachments to the tune of Rs. 8,548 Crores when the outstanding alleged amount is taken as Rs. 5,600 Crores. Moreover, when the State has other option to attach the properties of the brokers/defaulters, it cannot be said that the investors can be paid only through the properties belonging to 63 moons”
The Court further ruled, “We are, therefore, of the prima facie view that the said attachment is arbitrary, unreasonable and unjustified and needs to be excluded at this stage on two counts viz., 63 moons itself had made a categorical statement before the Court that the EOW had no objection if the company utilised the funds secured for attachment by the impugned notice dated 18th July 2016 for incurring just expenses, necessary towards running of its day-to-day business including payment of salaries and clearing all statutory dues.”
Accordingly, the Court granted a stay on several notifications pertaining to attachment of accrued benefits from ODIN and otherwise.
The larger question on the validity of provisions of the MPID will be taken up at a later stage by the Court.
Here is the list of lawyers who appeared in this matter