NCLT Can’t Dilute Consequences Of Criminal Prosecution By Accepting Agreement Executed Between Parties: Bombay High Court

The Bench held that a civil settlement or a scheme of arrangement cannot determine or dilute the consequences of a criminal trial.

Furthermore, the Court reiterated that the release of attached assets for disbursement to victims would not affect the pending criminal charges, which must be taken to their logical conclusion by the prosecuting agencies.

The Division Bench of Justice AS Gadkari and Justice Kamal Khata observed, “Prima facie, it appears that through the mechanism of settlement, the accused persons are attempting, albeit indirectly, to secure exoneration from the alleged offences by which several unsuspecting investors appear to have been duped. We are unable to countenance such a course. The offences alleged are serious in nature and must be taken to their logical conclusion before a competent Criminal Court. In our view, a Civil Court (NCLT) cannot determine or dilute the consequences of criminal prosecution by incorporating or accepting any covenant in a scheme or agreement executed between the parties by consent.”

Senior Advocate Vikram Nankani appeared for the Appellant, Senior Advocate Chetan Kapadia appeared for the NSEL, while Additional Solicitor General Anil C. Singh appeared for the Enforcement Directorate.

The Appellant challenged the Order dated 17th September 2019, passed by the Appellate Tribunal (SAFEMA/PMLA) in New Delhi. This appeal arose from a dispute involving the attachment of movable properties under the Prevention of Money Laundering Act (PMLA).

The Appellant objected specifically to the conditions imposed by the Tribunal for the release of their assets. The Tribunal ordered the Appellant to submit an indemnity bond of Rs. 1095,27,17,055/- along with a formal undertaking. This undertaking stated that if the trial court later found the attached properties to be "proceeds of crime," the Appellant would pay the entire amount to the Union of India (Directorate of Enforcement). The Tribunal gave the Appellant one month to submit these documents.

The Tribunal ruled that if the Appellant complied with these conditions, the attachment on their movable properties—specifically their DEMAT accounts and bond investments—would be cancelled and the assets released.

The Tribunal also allowed the Appellant to ask for a review or approach the Special Court to change these terms if certain other legal orders from the Company Law Board (CLB) or the Economic Offences Wing (EOW) were eventually lifted.

Meanwhile, the Directorate of Enforcement (Respondent No.1) also filed its own appeal against the same Judgment. The Department contested the entire Order, as it disagreed with the Tribunal’s decision to lift the attachment in exchange for an undertaking.

The Court heard the arguments in these appeals over several sessions. During the process, the Court kept in mind the difficulties and grievances faced by thousands of investors of the National Spot Exchange Limited (NSEL). The record showed that NSEL filed applications before the National Company Law Tribunal (NCLT) to organize a meeting of investors and to seek approval for a "Settlement Scheme." The NCLT approved this Scheme but imposed two specific conditions.

First, the NCLT clarified that the approval of the Scheme would not cancel or weaken any existing attachment orders on property issued by any Court or Authority. Second, it ruled that the Scheme would not automatically stop or terminate any ongoing criminal proceedings.

The Senior Counsel for the Appellant informed the Court that the Supreme Court of India upheld the NCLT’s order and dismissed the challenge filed by certain dissatisfied investors.

The Additional Solicitor General, representing the Government, stated that the Department had no serious objection to implementing the NCLT’s order. However, he requested the Court to ensure that the conditions regarding the safety of attached properties were strictly followed.

The NCLT appointed a retired High Court Judge, Justice S.C. Gupte, as the "Monitoring Authority." His role was to oversee the distribution of the settlement money to the eligible creditors listed in the application.

While the Court sympathized with the victimized investors, it expressed disagreement with one specific part of the Settlement Scheme. This clause suggested that after the settlement, various parties and employees would jointly apply to the courts to drop or quash all pending criminal cases.

The Court observed, “Apart from the merits of the case, we have also considered the grievances and plight of the thousands of investors, who are the ultimate victims of the alleged crime…Upon perusal of the scheme, we are unable to agree with Paragraph No.24.6 of the Scheme of Arrangement annexed at Exhibit-A to the Interim Application No.4604 of 2025.”

Accordingly, the Court said that the appeals, interim applications and writ petition do not survive, hence, disposed of.

It concluded, “We reiterate that although the NCLT has clarified the legal position in unequivocal terms, the lifting of attachment over the assets in question and the consequent disbursement of amounts to the investors/victims shall in no manner be construed as dilution of criminal charges against the accused persons in the present crime. The criminal prosecution shall proceed independently and will be taken to its logical end as expeditiously as possible by all prosecuting agencies.”

Previously, the Supreme Court, in April 2022, held that National Spot Exchange Ltd. (NSEL) a full owned subsidiary of 63 Moon Technologies is a financial establishment under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID). The Court set aside the Bombay High Court's order of freeing the attachment of the properties of 63 Moon Technologies and upheld the notifications issued under Section 4 of MPID whereby the properties of NSEL were attached.

Then in May, 2025, the Supreme Court held that the Secured Creditors cannot claim priority of interest against the properties attached under the Maharashtra Protection of Interest of Depositors (in Financial Establishments) Act, 1999 (MPID Act). The Court held thus in a Writ Petition challenging the validity of the Orders passed by the Supreme Court Committee. The genesis of the Writ proceedings, was 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, in the year 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 Crores vis-à-vis their trading counterparts numbering about 13,000 traders who traded through its members/ brokers.

Cause Title: M/s. 63 Moons Technologies Limited v. Union of India and Ors. [Neutral Citation: 2026:BHC-AS:14523-DB]

Appearances:

Appellant/Applicants: Senior Advocate Vikram Nankani, Senior Advocate Chetan Kapadia, Advocate Rahul Sarda, Advocate Vrushabh Vig, Advocate Vikrant Nalavade, Advocate Priyam Sharma, Advocate Crawford Bayley & Co, Advocate Siddharth Puthoor, Advocate Mehta & Padmasey, Advocate Arvind Lakhawat, Advocate Abhijeet Marathe, Advocate Melvyn Fernandes, Advocate Vashi Associates.

Respondents: Additional Solicitor General Anil C. Singh, Additional Public Prosecutor P.P. Shinde, Advocate Chaitanya Pendse, Advocate Aditya Thakkar, Advocate Rajdatt Nagre, Advocate Krishnakant Deshmukh, Advocate Aadarsh Vyas, Advocate Rama Gupta, Assistant Director Arun Khatri (Enforcement Directorate).

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