Recently The Supreme Court’s bench consisting of Chief Justice of India, Justice J.B. Pardiwala, and Justice Manoj Misra, issued a notice to 63 Moons Technologies Ltd. on a contempt-of-court plea filed by the NSEL Investors Action Group. This group represents the interests of thousands of investors who were defrauded in the infamous National Spot Exchange Ltd. (NSEL) scam of 2013, which involved a whopping ₹5,600 crore.

The controversy arose when the investor group raised concerns about a sum of ₹1,700 crore being transferred out of the assets that were previously attached for the recovery of investor dues. The assets had been frozen as part of the ongoing efforts to recover money owed to the victims of the scam. 

Senior Advocate Gopal Sankaranarayanan, representing the NSEL Investors Action Group, passionately argued before the court, questioning how these transfers could take place despite an earlier commitment by 63 Moons to maintain the status quo on their properties. "The court has taken their (63 Moons) statement on record, which states that status quo with respect to the properties will be maintained. How can these transfers take place after that?" Mr. Sankaranarayanan argued, emphasizing the disregard for the top court’s interim orders. The investors fear that the recovery process might be further hindered by these actions.

The investor group’s plea has been fortified by an affidavit submitted by the competent authority, highlighting that 63 Moons made large withdrawals from their bank accounts, closed some accounts, and reinvested certain amounts in fixed deposits, while also withdrawing sums from attached fixed deposits. "If we will ever see the money, we don't know. But 63 Moons has to be made answerable for this”, the investors urged.

The Supreme Court, while issuing the notice, clarified that despite the pendency of the current proceedings, other legal authorities, including the competent authority,  the Bombay High Court, and the Special Court, retain their jurisdiction to trace and secure assets for the benefit of the defrauded investors.

Following the notice, 63 Moons issued an exchange filing, stating that they were not served with any prior notice regarding the proceedings initiated before the apex court. The company expressed its intent to address the allegations during the court proceedings.

This latest development stems from a longstanding legal battle that dates back to 2013. The NSEL scam duped nearly 13,000 investors, leading to the attachment of 63 Moons properties by the Maharashtra government in an attempt to recover the lost funds. The properties were attached because 63 Moons held a 99.99% stake in NSEL, which was the entity responsible for the fraudulent activities. 

Although the Bombay High Court had set aside the state's order of attachment in 2019, arguing that NSEL did not retain commodities or money but merely acted as a facilitator, the Supreme Court set aside this decision in 2022. The apex court upheld the Maharashtra government’s decision, asserting that NSEL’s representation of providing “assured returns” and “services” amounted to fraudulent activity. The Supreme Court further noted that despite receiving deposits, NSEL failed to return them or provide services as promised, justifying the attachment of properties.

As the case progresses, the fate of the investors' recovery remains uncertain. The Supreme Court has set the next hearing for October 4, 2024.

Case Details- NSEL Investors Action Group v. 63 Moons Technologies Ltd.& Ors.

CONMT.PET.(C) No. 678-679/2024 in C.A. No. 2750-2751/2022.

Advocate for Petitioner- Mr. Gopal Sankarnarayanan, Sr. Adv., Ms. Sanjana Saddy, AOR.