TaxTMI 
TaxTMI 
2025 (5) TMI 1373
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....ttached 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 Peti....
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....s of the NSEL, through whom they had traded, on the Exchange Platform. v. On 27.04.2012, the Department of Consumer Affairs, Government of India issued a Show Cause Notice to the NSEL as to why action should not be initiated against it for permitting transactions in alleged violation of exemption granted to it under the FCRA, vide the notification dated 05.06.2007. vi. On 12.07.2013, the Department of Consumer Affairs, directed the NSEL to give an undertaking that no further contracts shall be launched until further instructions, and that all existing contracts shall be settled on due dates. Accordingly, the NSEL gave an undertaking to the Department of Consumer Affairs on 22.07.2013. vii. On 31.07.2013, the NSEL suspended its Exchange operations and called upon its Members to inter alia complete their respective delivery and payment obligations for the outstanding trades as on 31.07.2013. In July 2013, 13,000 persons who traded on the platform of the NSEL claimed to have been duped by about 24 trading Members, who defaulted in payment of their obligations amounting to approximately Rs.5,600/- Crores. viii. An FIR in this regard was registered by....
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.... 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 f....
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....rt 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 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 a....
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....(State of Maharashtra) under MPID Act shall be reimbursed by this Hon'ble Court for the expenses incurred by it under paragraph (xiv) above on submission of proper accounts for the same. (xvi) The Supreme Court Committee shall have liberty to apply to this Hon'ble Court for any further orders and/or directions as it may consider necessary for efficient and speedy execution of the task assigned to it. (xvii) Any person aggrieved by an order and/or direction passed by the Supreme Court Committee shall be entitled to move this Hon'ble Court. (xviii) All the parties and the authorities shall render all necessary assistance and cooperation to the Supreme Court Committee. (xix) Needless to say that respondent No.2(ED) and/or respondent No.3 (State of Maharashtra) shall continue to attach further properties of the defaulters as per the money trail found by them during investigation and inform the Supreme Court Committee of such further attachment. Upon receipt of such intimation, the Supreme Court Committee shall be entitled to liquidate such further attached properties of the defaulters after hearing them, but only to the extent necessary for satisfact....
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....ommittee. The decrees/ orders already obtained and in respect of which the decree holder had not yet commenced the execution proceedings were also directed to be executed by the S.C. Committee. In the proceedings where decree holder had obtained decrees/ orders and was seeking further decrees/ orders against other persons as well, and upon being granted the same by the Bombay High Court, were also to be executed by the S.C. Committee. The proceedings against the parties, i.e., the defaulters, against whom the liability had been crystallised by the Committee appointed by the Bombay High Court, in the event, the decree holder was granted decrees/ orders by the Bombay High Court, such decrees for execution were also permitted to be transferred to the S.C. Committee for their execution. Qua future decrees/ awards or orders obtained by the decree holder, a liberty was granted to the decree holder to apply to the Supreme Court for execution of such decrees/ orders by the S.C. Committee. xiii. As transpiring from the impugned Order dated 10.08.2023 passed by the S.C. Committee, one Modern India Limited, Shree Rani Sati Investment and Finance Private Limited, Modern Derivatives an....
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....no priority of interest can be claimed by the Secured Creditors against such attached property. As regard the properties attached under the MPID Act, on which the Secured Creditors laid their claims, the S.C. Committee further concluded that the provisions of the MPID Act, would override any claim for priority of interest by the Secured creditors in respect of the property which has been attached under the MPID Act. 6. It further appears that during the course of proceedings before the S.C. Committee another issue that was raised for determination, was "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 capacit....
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....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 (1998) 4 SCC 409, 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....
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.... 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 wha....
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....y 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 thos....
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....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 nonderogable 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 an....
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....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....
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....ch 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 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, direct....
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....ngs, 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 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 Bom....
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....ised, 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 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 cont....
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.... 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 resol....
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....nagement 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. 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." Secti....
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....dent or Commissioner of Police, as the case may be, for investigation." 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 t....
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....ther 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 in List II in the Seventh Schedule (in this Constituti....
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....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, 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....
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....ncilable 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 (1983) 4 SCC 45, 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 St....
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....lenged 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. (2011) 8 SCC 708, 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 of the Constitution, a State law passed in respect of a subject-matter comprised in List III....
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....xamine 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. 2012 (10) SCC 601 and in case of State of Maharashtra vs. 63 Moons Technologies Ltd. 2022 (9) SCC 457. This Court in 63 Moons Technologies Ltd. (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....
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....g 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), 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 Techn....
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....ling 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 (2002) 9 SCC 232 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) 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 Con....
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....the State Legislation i.e., MPID Act, merely because the Central Legislations are enacted by the Parliament. Since all these Acts have separate field of operations, provisions of SARFAESI Act or RDB Act cannot be permitted to override the provisions of MPID Act, 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 Industri....
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....ld not be said to be a "debt" contemplated in Section 26E of the SARFAESI Act, and hence also the provisions of 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, 2016 and there being no retrospective opera....
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....e Entries 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 (2018) 1 SCC 407 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 of th....