NATIONAL SPOT EXCHANGE LIMITED versus UNION OF INDIA & ORS.

NATIONAL SPOT EXCHANGE LIMITED versus UNION OF INDIA & ORS.

The Court held that secured creditors cannot claim priority over properties attached under the MPID Act; monies/deposits of investors attached under MPID are not 'debt' within SARFAESI s.26E and therefore s.26E does not apply to MPID attachments; MPID is a valid State enactment within List II and is not overridden by SARFAESI or RDB merely because they are central laws; properties attached under MPID prior to commencement of moratorium under IBC s.14 vest in the Competent Authority and remain available for execution of decrees by the Supreme Court Committee despite s.14 IBC; accordingly the S.C. Committee orders of 10.08.2023 and 08.01.2024 were upheld.

Parties
Petitioner: National Spot Exchange Limited; Respondent: Union of India & Ors.
Jurisdiction
India
Judgment Date
14 May 2025
Procedural Posture
Writ Petition (civil) / Judgment
Outcome
Question (i): No — secured creditors do not have priority over properties attached under MPID; Question (ii): Yes — properties attached under MPID prior to moratorium are available for execution; Orders of Supreme Court Committee dated 10.08.2023 and 08.01.2024 upheld.
Legal Topics
Article 142 Scope, Article 246 Distribution of Legislative Powers, Article 254 Repugnancy, Priority of Secured Creditors (sarfaesi S.26 E; RDB Act), Attachment Under MPID Act S.4, Moratorium Under IBC S.14, PMLA Attachments, Doctrine of Pith and Substance, Federal Structure Doctrine
Constitutional Law Insolvency and Bankruptcy Banking and Finance Criminal Law (money Laundering) Property Law Administrative Law Securities and Commodities Regulation Article 142 Scope +8 more

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Parties

National Spot Exchange Limited

Petitioner

Union of India & Ors.

Respondent

Procedural Posture

Writ Petition (civil) / Judgment

Legal Issues

  1. 1 Whether secured creditors have priority of interest over assets attached under PMLA and MPID by virtue of SARFAESI Act and RDB Act
  2. 2 Whether properties of judgment debtors and garnishees attached under MPID Act are available for execution of decrees despite moratorium under IBC s.14
  3. 3 Whether MPID Act is within State legislative competence and whether it is repugnant to central laws such as SARFAESI, RDB Act or PMLA

Ratio Decidendi

The Court held that secured creditors cannot claim priority over properties attached under the MPID Act; monies/deposits of investors attached under MPID are not 'debt' within SARFAESI s.26E and therefore s.26E does not apply to MPID attachments; MPID is a valid State enactment within List II and is not overridden by SARFAESI or RDB merely because they are central laws; properties attached under MPID prior to commencement of moratorium under IBC s.14 vest in the Competent Authority and remain available for execution of decrees by the Supreme Court Committee despite s.14 IBC; accordingly the S.C. Committee orders of 10.08.2023 and 08.01.2024 were upheld.

Court Disposition

Question (i): No — secured creditors do not have priority over properties attached under MPID; Question (ii): Yes — properties attached under MPID prior to moratorium are available for execution; Orders of Supreme Court Committee dated 10.08.2023 and 08.01.2024 upheld.

Orders

  • Order passed by the Supreme Court Committee on 10.08.2023 upheld
  • Order passed by the Supreme Court Committee on 08.01.2024 upheld