Pranav B Prem

The National Company Law Tribunal, Mumbai Bench has approved a one-time settlement scheme worth ₹1,950 crore proposed by the National Spot Exchange Ltd (NSEL) to compensate 5,682 traders affected by the 2013 payment default. The bench comprising Member (Judicial) Sushil Mahadeorao Kochey and Member (Technical) Prabhat Kumar allowed the scheme after finding that it satisfied statutory requirements under Sections 230-232 of the Companies Act and did not conflict with public policy. The Tribunal reiterated that its role is confined to examining legality and cannot substitute the commercial decision of the majority of creditors.

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The proposed arrangement secured overwhelming support from the eligible creditors. Out of 5,682 traders, 3,893 participated in voting conducted through postal ballot and e-voting. Approval stood at 91.35% in value and over 92% in number. Referring to the principle set out in Miheer H. Mafatlal v. Mafatlal Industries Ltd., the Tribunal held that once statutory procedures and majority approval thresholds are met, the commercial wisdom of the creditors is binding, and the Tribunal cannot sit in appeal over it.

The proceedings relate to the 2013 collapse of NSEL, an electronic commodities trading platform. In July 2013, the Department of Consumer Affairs directed NSEL to stop offering one-day forward contracts. Following suspension of trading on July 31, 2013, 24 trading members failed to meet pay-in obligations, triggering a payment default of more than ₹5,600 crore. Subsequent investigations revealed that commodities supporting the trades were either non-existent or overstated, leading to extensive civil, criminal, MPID, and PMLA proceedings.

The settlement proposal, first floated in December 2024 and subsequently approved by the boards of NSEL and its parent company 63 Moons in February 2025, assured minimum recovery of 41.94% for each specified creditor. 63 Moons supported the scheme and emphasised that although its legal exposure in relation to traders’ dues is limited, it agreed to contribute by way of assets under MPID attachment “in the interest of facilitating time-bound resolution” since traders had been awaiting recovery for more than a decade. The NSEL Investors Forum also supported the proposal, calling it “certainty, finality and restitution to investors” after years of inconclusive litigation.

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Objections were raised by the Enforcement Directorate, SFIO, the Economic Offences Wing and certain trader-intervenors. The Enforcement Directorate and the EOW argued that the scheme could undermine statutory proceedings and disturb existing attachment orders. The Petitioner countered that the scheme neither compels release of attached properties nor affects criminal prosecutions, and the Tribunal found merit in the submission after reviewing the clauses of the scheme. The Tribunal further addressed concerns under the MPID Act noting that the scheme “operates independently of criminal proceedings”, and approval of settlement does not dilute the power of statutory authorities or designated courts.

The Serious Fraud Investigation Office contended that the settlement would impede its pending proceedings and indirectly release group companies from liability. The Tribunal rejected the objection after recording that the scheme merely provides a commercial settlement of civil monetary claims and does not withdraw, quash or restrict any criminal case, reiterating that “the approval of the proposed scheme does not discharge the specified persons from any criminal action which may lie against them pursuant to orders of such Court or quasi-judicial / non-quasi-judicial authorities on an application before such forums”

Other objectors claimed lack of jurisdiction, violation of public policy, prejudice to dissenting creditors and extinguishment of rights against brokers. The Tribunal found that such objections did not meet the statutory 5% threshold under Section 230(4) and that the majority creditors had consciously agreed to a binding compromise. It noted that the scheme’s assignment of residual claims to 63 Moons was commercially permissible and consistent with principles of subrogation.

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Having concluded that the settlement scheme is fair, reasonable and compliant with law, the Tribunal sanctioned it, directing that the arrangement shall bind NSEL and all specified creditors. The approval clears the path for distribution of the ₹1,950-crore settlement amount through the escrow mechanism under the supervision of the Monitoring Authority. Disbursement will commence once procedural steps specified in the scheme are completed.

Appearance

For Petitioners: Senior Advocate Janak Dwarakadas along with Advocates Rohit Gupta, Hemant Sethi, Arvind Lakhawat, Manik Joshi, Mantul Bajpai, Vrushabh Vig and Vikrant Nalavade

For NSEL Investors Forum : Senior Advocate Chetan Kapadia along with Advocate Rahul Sarda

For 63 Moons: Senior Counsel Vikram Nankani along with Advocates Amol Bavare, Krishnan Iyer

For the Enforcement Directorate: Advocate Piyush Pande along with Advocate Neha Bhide

For EOW: Senior Counsel Shyam Mehta aling with Advocates Abhishek Karnik, Mahadeo Kirwale

For MPID : Senior Advocate Shyam Mehta along with Advocate Abhishek Karnik

For Bank of Maharashtra : Advocate Arti Singh and Advocate Aakashdeep Singh Roda

For Nirtex Exports and Investments Pvt. Ltd. : Advocate Piyush Raheja along with Advocate Bhuvan Singh

For Geojit Credits Pvt. Ltd. : Advocate Chirag Shah along with Advocate Mayank Mishra and Advocate Akshata Bhogle

For Lotus Refinery Pvt. Ltd. : Advocate Shreyash Chaturvedi

For L.J. Tanna Enterprises : Advocate Nausher Kohli, Advocate Jehan Fouzdar and Advocate Antara Kalambi

For Pico Capital Pvt. Ltd. : Advocate Kunal Mehta along with Advocate Hamza Lakhani and Nikhant Chaudhary

Cause Title: National Spot Exchange Ltd

Case No: C.P. (C.A.A)/104 (MB) 2025 IN C.A.(C.A.A)/65 (MB) 2025

Coram: Member (Judicial) Sushil Mahadeorao Kochey, Member (Technical) Prabhat Kumar