Supreme Court Verdict: NSEL Scam Assets Under MPID Act

In a landmark ruling, the Supreme Court decided that the moratorium under the Insolvency and Bankruptcy Code (IBC) does not block asset attachments under the Maharashtra Protection of Interest of Depositors (MPID) Act. Justices Bela M Trivedi and Satish Chandra Sharma upheld the orders concerning the National Spot Exchange Limited (NSEL) fraud.

The judgement addressed two critical questions related to secured creditors' priority over assets attached under the PMLA and MPID Act. The bench clarified that creditors cannot claim priority due to the SARFAESI and RDB Acts. The ruling emphasizes that properties linked to the NSEL fraud were acquired with depositor funds, reaffirming protection for defrauded investors in Maharashtra.

The case highlights legislative competence and supports the MPID Act's validity, asserting state powers to protect depositors. With substantial claims under the MPID Act, the court ruled that attached assets remain beyond the debtor-creditor realm as envisaged by the IBC, reinforcing the act's public interest purpose.

(With inputs from agencies.)