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TMI Blog2025 (5) TMI 1373X X X X Extracts X X X X X X X X Extracts X X X X ..... for the execution of the decrees against Judgment Debtors in view of the Provision of Moratorium under Section 14 of the IBC, 2016; (In view of the Order dated 08.01.2024 passed by the Committee)" 2. The genesis of the Writ proceedings, is 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, on 18.05.2005. 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 WRIT PETITION (CIVIL) NO.995 OF 2019 Page 3 of 76 Crores vis-à-vis their trading counterparts numbering about 13,000 traders who traded through its Members/ brokers. PRELUDE 3. Brief facts germane for deciding the above stated two priority questions of law are as under: - i. The Petitioner - National Spot Exchange Limited (hereinafter referred to as the "NSEL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artment of Consumer Affairs, Government of India issued a Show Cause Notice to the NSEL as to why action should not be initiated against it for permitting transactions in alleged violation of exemption granted to it under the FCRA, vide the notification dated 05.06.2007. vi. On 12.07.2013, the Department of Consumer Affairs, directed the NSEL to give an undertaking that no further contracts shall be launched until further instructions, and that all existing contracts shall be settled on due dates. Accordingly, the NSEL gave an undertaking to the Department of Consumer Affairs on 22.07.2013. vii. On 31.07.2013, the NSEL suspended its Exchange operations and called upon its Members to inter alia complete their respective delivery and payment obligations for the outstanding trades as on 31.07.2013. In July 2013, 13,000 persons who traded on the platform of the NSEL claimed to have been duped by about 24 trading Members, who defaulted in payment of their obligations amounting to approximately Rs.5,600/- Crores. viii. An FIR in this regard was registered by the M.R.A. Marg, Police Station vide C.R. No.216 of 2013, which was transferred to and lodged in the EOW Police on 30.09.2013 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of the petitioner where the same very properties which were attached were sought to be utilized to satisfy the claims. He thus, suggested that once the monies are brought in, even the claims of the petitioners/investors can be satisfied and one will know exactly what is the balance amount which remains as otherwise both the processes are going on at cross purposes even though the properties from which recoveries can be made are attached. We thus, called upon the respondents to look into the aforesaid notwithstanding that the petitioner may also be an organization which as been charged, concerned as we were with the investors' money and properties remaining attached simplicitor could not be the solution for investors' money for which decrees had been passed. It is only on liquidation of those properties could the monies be distributed to satisfy the claims of the investors. We requested the parties to work out a scenario to sub-serve the aforesaid objective and a synopsis was filed on behalf of the petitioner setting out the relevant dates and suggesting solution for speedy recovery of victims annexing thereto the details of decrees, arbitral awards obtained b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lters or any other person in relation to the NSEL payment default for the purposes of filing execution thereof directly before the Supreme Court Committee. (vi) The Supreme Court Committee shall have all the powers of a civil court executing a decree or an order or an arbitral award under the Code of Civil Procedure, 1908 for speedy execution of the above decrees/orders/abitral awards. (vii) In execution of the above decrees/orders/arbitral awards, the Supreme Court Committee shall be entitled to sell the properties of the judgment-debtors notwithstanding the attachment thereof by respondent No.2(ED) under the PMLA and/or by respondent No.3 (State of Maharashtra) under the MPID Act, to the extent of recovering the amount of the decree/order/arbitral award. (viii) For the purposes of executing decrees/orders/awards to the extent they are not satisfied by recovery from the properties attached by the respondents or any of them as aforesaid, the Supreme Court Committee shall be at liberty to apply to this Hon'ble Court for suitable orders for attaching and/or liquidating properties of persons against whom decrees have been passed or of persons against whom the decrees can be e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs and/or directions as it may consider necessary for efficient and speedy execution of the task assigned to it. (xvii) Any person aggrieved by an order and/or direction passed by the Supreme Court Committee shall be entitled to move this Hon'ble Court. (xviii) All the parties and the authorities shall render all necessary assistance and cooperation to the Supreme Court Committee. (xix) Needless to say that respondent No.2(ED) and/or respondent No.3 (State of Maharashtra) shall continue to attach further properties of the defaulters as per the money trail found by them during investigation and inform the Supreme Court Committee of such further attachment. Upon receipt of such intimation, the Supreme Court Committee shall be entitled to liquidate such further attached properties of the defaulters after hearing them, but only to the extent necessary for satisfaction of the decree/orders/arbitral awards obtained by the petitioner against such defaulters." We may note that insofar as the list of decrees, orders, awards and attachment against defaulters are concerned, we are not setting them out as part of the order though submitted as the annexure annexing along with the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same by the Bombay High Court, were also to be executed by the S.C. Committee. The proceedings against the parties, i.e., the defaulters, against whom the liability had been crystallised by the Committee appointed by the Bombay High Court, in the event, the decree holder was granted decrees/ orders by the Bombay High Court, such decrees for execution were also permitted to be transferred to the S.C. Committee for their execution. Qua future decrees/ awards or orders obtained by the decree holder, a liberty was granted to the decree holder to apply to the Supreme Court for execution of such decrees/ orders by the S.C. Committee. xiii. As transpiring from the impugned Order dated 10.08.2023 passed by the S.C. Committee, one Modern India Limited, Shree Rani Sati Investment and Finance Private Limited, Modern Derivatives and Commodities Private Limited and F. Pudumjee Investments Company Private Limited had filed a Suit on the Original Side of Bombay High Court, impleading Financial Technologies India Limited (now known as 63 Moons Technologies Limited) as the Defendant No.1 and the NSEL as Defendant No.2, apart from 36 other Individuals and Companies who were impleaded as the Defend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich has been attached under the MPID Act. 6. It further appears that during the course of proceedings before the S.C. Committee another issue that was raised for determination, was "whether properties of the Judgment Debtor and Garnishees attached under the MPID Act would be available to the said Committee for execution of decrees against the Judgment Debtor in terms of the Order dated 04.05.2022 passed by the Supreme Court, in W.P. (C) No. 995 of 2019, in view of the commencement of Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 (IBC, for short), on account of the initiation of Insolvency Proceedings against the Judgment Debtors." A similar issue also arose with regard to the commencement of the interim Moratorium under Section 96 of IBC in respect of the Garnishees in their capacity as personal Guarantors of a Corporate Debtor. 7. The S.C. Committee vide the Order dated 08.01.2024 concluded inter alia that as regards the WRIT PETITION (CIVIL) NO.995 OF 2019 Page 21 of 76 properties which were attached under Section 4 of the MPID Act prior to imposition of the respective dates of Moratorium of the Judgement Debtor or Garnishee under Section 14 or Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y Parliament and, until provision in that behalf is so made, in such manner as the President may by order prescribe. (2) .............." 11. In our opinion, the law with regard to the scope of the exercise of powers of under Article 142 of the Constitution of India is quite well settled. In Supreme Court Bar Association Vs. Union of India & Another (1998) 4 SCC 409, a Constitution Bench elaborately discussed the plenary powers of this Court under Article 142 and held as under: "47. The plenary powers of this Court under Article 142 of the Constitution are inherent in the Court and are complementary to those powers which are specifically conferred on the Court by various statutes though are not limited by those statutes. These powers also exist independent of the statutes with a view to do complete justice between the parties. These powers are of very wide amplitude and are in the nature of supplementary powers. This power exists as a separate and independent basis of jurisdiction apart from the statutes. It stands upon the foundation and the basis for its exercise may be put on a different and perhaps even wider footing, to prevent injustice in the process of litigation a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a cause or matter before it. Indeed this Court is not a court of restricted jurisdiction of only dispute-settling. It is well recognised and established that this Court has always been a law-maker and its role travels beyond merely dispute-settling. It is a "problem-solver in the nebulous areas" (see K. Veeraswami v. Union of India [(1991) 3 SCC 655 : 1991 SCC (Cri) 734] but the substantive statutory provisions dealing with the subject matter of a given case cannot be altogether ignored by this Court, while making an order under Article 142. Indeed, these constitutional powers cannot, in any way, be controlled by any statutory provisions but at the same time these powers are not meant to be exercised when their exercise may come directly in conflict with what has been expressly provided for in a statute dealing expressly with the subject. 49. In Bonkya v. State of Maharashtra [(1995) 6 SCC 447 : 1995 SCC (Cri) 1113] a Bench of this Court observed: (SCC p. 458, para 23) "23. The amplitude of powers available to this Court under Article 142 of the Constitution of India is normally speaking not conditioned by any statutory provision but it cannot be lost sight of that this C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xistence of the said power is itself in dispute, and so, the present is clearly distinguishable from the case of K.M. Nanavati [AIR 1961 SC 112 : (1961) 1 SCR 497] ." 51-54........................ 55. Thus, a careful reading of the judgments in Union Carbide Corpn. v. Union of India [(1991) 4 SCC 584] ; the Delhi Judicial Service Assn. case [(1991) 4 SCC 406 : (1991) 3 SCR 936] and Mohd. Anis case [1994 Supp (1) SCC 145 : 1994 SCC (Cri) 251] relied upon in V.C. Mishra case [(1995) 2 SCC 584] show that the Court did not actually doubt the correctness of the observations in Prem Chand Garg case [AIR 1963 SC 996 : 1963 Supp (1) SCR 885] . As a matter of fact, it was observed that in the established facts of those cases, the observations in Prem Chand Garg case [AIR 1963 SC 996 : 1963 Supp (1) SCR 885] had "no relevance". This Court did not say in any of those cases that substantive statutory provisions dealing expressly with the subject can be ignored by this Court while exercising powers under Article 142. 56. As a matter of fact, the observations on which emphasis has been placed by us from the Union Carbide case [(1991) 4 SCC 584], A.R. Antulay case [(1988) 2 SCC 602 : 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the statute. Even in the strictest sense [ Some jurists have opined that the judgments on the powers of this Court under Article 142(1) of the Constitution of India can be divided into three phases. The first phase till late 1980s is reflected in the judgments of Prem Chand Garg v. Excise Commr., 1962 SCC OnLine SC 10 : AIR 1963 SC 996 and A.R. Antulay v. R.S. Nayak, (1988) 2 SCC 602 : 1988 SCC (Cri) 372, which inter alia held that the directions should not be repugnant to and in violation of specific statutory provision and is limited to deviation from the rules of procedure. Further, the direction must not infringe the Fundamental Rights of the individual, which proposition has never been doubted and holds good in phase two and three. The second phase has its foundation in the ratio of the judgment of the eleven-Judge Constitution Bench of this Court in Golak Nath v. State of Punjab, 1967 SCC OnLine SC 14 : AIR 1967 SC 1643, dealing with the doctrine of prospective overruling, which held that Articles 32, 141 and 142 are couched in such wide and elastic terms as to enable this Court to formulate legal doctrines to meet the ends of justice, the only limitation thereon being reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13.] 20. Difference between procedural and substantive law in jurisprudential terms is contentious, albeit not necessary to be examined in depth in the present decision [ However, this aspect has been, to some extent, examined in paras 24 to 37, 56 and 57 herein.], as in terms of the dictum enunciated by this Court in Union Carbide Corpn. [Union Carbide Corpn. v. Union of India, (1991) 4 SCC 584] and Supreme Court Bar Assn. [Supreme Court Bar Assn. v. Union of India, (1998) 4 SCC 409], exercise of power under Article 142(1) of the Constitution of India to do "complete justice" in a "cause or matter" is prohibited only when the exercise is to pass an order which is plainly and expressly barred by statutory provisions of substantive law based on fundamental considerations of general or specific public policy. 21. As explained in Supreme Court Bar Assn. [Supreme Court Bar Assn. v. Union of India, (1998) 4 SCC 409], the exercise of power under Article 142(1) of the Constitution of India being curative in nature, this Court would not ordinarily pass an order ignoring or disregarding a statutory provision governing the subject, except to balance the equities between conflicting cla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent case are appreciated particularly with regard to the circumstances under which this Court had thought it proper to exercise the said powers, it appears that the Court had passed the order on 04.05.2022 keeping in mind the interest of the investors/claimants and with the objective of attaining a holistic solution for speedy recovery of the outstanding amount to be distributed to the investors. 15. Since the money collected by NSEL from the investors fell under the definition of "deposit" as per Section 2(c) of the MPID Act, the State of Maharashtra invoking the provisions of Section 4(1)(ii) of MPID Act, had attached the properties and monies of the defaulting promoters, directors, managers and members of the NSEL by issuing various notifications. However, the total value of the attached properties was not sufficient for repayment to the depositors due to various reasons such as some of the properties were taken on rent by the members of NSEL from others, while some properties were mortgaged with the banks, against which proceedings under the SARFAESI Act were going on, and against some of the members of NSEL, insolvency proceedings were initiated. 16. The Government of Mah ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entitled to sell the properties of the Judgment Debtors notwithstanding the attachment thereof by the Enforcement Directorate under the PMLA and/or by the State of Maharashtra under the MPID Act to the extent of recovery the amount of the decree/order/arbitral award. This Court vide the said order, thus had transferred the proceedings for execution of all the decrees/orders/arbitral awards, which were pending in various courts across the country, for speedy execution thereof. It was also clarified therein that against five additional defaulters, the committee appointed by the Bombay High Court had crystalised the liability and the report was pending for acceptance before the Bombay High Court. Therefore, if the NSEL was granted decree or order by the Bombay High Court in any of these matters, then the NSEL shall be at liberty to file proceedings for execution of such decrees/orders before the S.C. Committee. The petitioner NSEL was also granted liberty in the said order to apply to this Court, in case there were further decrees/orders/awards obtained by it against the defaulters for the purpose of filing execution thereof before the S.C. Committee. 19. It is true that while passin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Reasons and the relevant provisions of the said Statutes, as also of the Constitution of India. 21. The RDB Act was enacted to provide for establishment of Tribunals for expeditious adjudication and recovery of debts due to Banks and Financial Institutions, and for the matters connected therewith and incidental thereto, as at the relevant time, the Banks and the Financial Institutions were experiencing considerable difficulties in recovering loans and enforcement of securities charged with them. The said Act came into force on 24.06.1993. Relevant provisions thereof read as under:- "31B. Priority to secured creditors.- Notwithstanding anything contained in any other law for the time being in force, the rights of secured creditors to realise secured debts due and payable to them by sale of assets over which security interest is created, shall have priority and shall be paid in priority over all other debts and Government dues including revenues, taxes, cesses and rates due to the Central Government, State Government or local authority. Explanation. -For the purposes of this section, it is hereby clarified that on or after the commencement of the Insolvency and Bankrupt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of this Act to override other laws. - The provisions of this Act shall have effect, notwithstanding anything inconsistent therewith contained in any other law for the time being in force or any instrument having effect by virtue of any such law." 23. So far as PMLA is concerned, as transpiring from its objects and reasons, since money laundering had posed a serious threat not only to the financial systems of the countries but also to their integrity and sovereignty, some of the international communities had taken the initiatives to obviate such threats. The Parliament therefore considering the resolutions and declarations passed by the General Assembly of United Nations, and to prevent money laundering and to provide for confiscation of property derived from, or involved in money laundering and for the matters connected therewith and incidental thereto, had passed the PMLA, which came into force w.e.f. 01.07.2005. Section 71 thereof pertaining to the overriding effect of the Act, reads as under: - "71. Act to have overriding effect. - The provisions of this Act shall have effect notwithstanding anything inconsistent therewith contained in any other law for the time being in f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or fails to render any specific service agreed against the deposit with an intention of causing wrongful gain to one person or wrongful loss to another person or commits such default due to its inability arising out of impracticable or commercially not viable promises made while accepting such deposit or arising out of deployment of money or assets acquired out of the deposits in such a manner as it involves inherent risk in recovering the same when needed shall, be deemed to have committed a default or failed to render the specific service, fraudulently." Section 4 pertains to the attachment of properties on default of return of deposits, which reads as under: - "4. Attachment of properties on default of return of deposits. - (1) Notwithstanding anything contained in any other law for the time being in force- (i) where upon complaints received from the depositors or otherwise, the Government is satisfied that any Financial Establishment has failed, - (a) to return the deposit after maturity or on demand by the depositor; or (b) to pay interest or other assured benefit; or (c) to provide the service promised against such deposit; or (ii) where the Government has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment should not be made absolute. (2) The Designated Court shall also issue such notice, to all other persons represented to it as having or being likely to claim, any interest or title in the property of the Financial Establishment or the person to whom the notice is issued under sub-section (1), calling upon all such persons to appear on the same date as that specified in the notice and make objection if they so desire to the attachment of the property or any portion thereof, on the ground that they have interest in such property or portion thereof. (3) Any person claiming an interest in the property attached or any portion thereof may, notwithstanding that no notice has been served upon him under this section, make an objection as aforesaid to the Designated Court at any time before an order is passed under sub-section (4) or sub-section (6). (4) The Designated Court shall, if no cause is shown and no objections are made under subsection (3), on or before the specified date, forthwith pass an order making the order of attachment absolute, and issue such direction as may be necessary for realisation of the assets attached and for the equitable distribution among the depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh Schedule (in this Constitution referred to as the "Concurrent List"). (3) Subject to clauses (1) and (2), the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the 'State List'). (4) Parliament has power to make laws with respect to any matter for any part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in the State List." Article 254 deals with the inconsistencies between laws made by Parliament and laws made by the Legislatures of States, which reads as under: "254. Inconsistency between laws made by Parliament and laws made by the Legislatures of States (1) If any provision of a law made by the Legislature of a State is repugnant to any provision of a law made by Parliament which Parliament is competent to enact, or to any provision of an existing law with respect to one of the matters enumerated in the Concurrent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in Lists-II and III, and in case of overlapping between Lists II and III, the latter shall prevail. In view of such distribution of Legislative powers, situations have arisen where two legislative fields have apparently overlapped. In such situations, this Court has held that it would be the duty of the courts to ascertain as to what degree and to what extent, the authority to deal with the matters falling within these classes of subjects exists in each of such legislatures, and to define the limits of their respective powers. 27. A Constitution Bench in State of West Bengal and Ors. vs. Committee for Protection of Democratic Rights, West Bengal and Ors. (2010) 3 SCC 571, has aptly clinched the issue of distribution of legislative powers between the Union and the State Legislature, thus- "25. The non obstante clause in Article 246(1) contemplates the predominance or supremacy of the Union Legislature. This power is not encumbered by anything contained in clauses (2) and (3) for these clauses themselves are expressly limited and made subject to the non obstante clause in Article 246(1). The State Legislature has exclusive power to make laws for such State or any part thereof wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uld happen in the case of conflict between a Central and State law with regard to the subjects enumerated in the Concurrent List, and secondly, for resolving such conflict. Article 254(1) enunciates the normal rule that in the event of a conflict between a Union and a State law in the concurrent field, the former prevails over the latter. Clause (1) lays down that if a State law relating to a concurrent subject is 'repugnant' to a Union law relating to that subject, then, whether the Union law is prior or later in time, the Union law will prevail and the State law shall, to the extent of such repugnancy, be void. To the general rule laid down in clause (1), clause (2) engrafts an exception viz. that if the President assents to a State law which has been reserved for his consideration, it will prevail notwithstanding its repugnancy to an earlier law of the Union, both laws dealing with a concurrent subject. In such a case, the Central Act, will give way to the State Act only to the extent of inconsistency between the two, and no more. In short, the result of obtaining the assent of the President to a State Act which is inconsistent with a previous Union law relating to a concurrent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as contemplated in Article 254 would be attracted, and it held thus: - "33. It is trite law that the plea of repugnancy would be attracted only if both the legislations fall under the Concurrent List of the Seventh Schedule to the Constitution. Under Article 254 of the Constitution, a State law passed in respect of a subject-matter comprised in List III i.e. the Concurrent List of the Seventh Schedule to the Constitution would be invalid if its provisions are repugnant to a law passed on the same subject by Parliament and that too only in a situation if both the laws i.e. one made by the State Legislature and another made by Parliament cannot exist together. In other words, the question of repugnancy under Article 254 of the Constitution arises when the provisions of both laws are completely inconsistent with each other or when the provisions of both laws are absolutely irreconcilable with each other and it is impossible without disturbing the other provision, or conflicting interpretations resulted into, when both the statutes covering the same field are applied to a given set of facts. That is to say, in simple words, repugnancy between the two statutes would arise if there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in two decisions of this Court in State of Maharashtra v. Vijay C. Puljal [State of Maharashtra v. Vijay C. Puljal, (2012) 10 SCC 599 : (2013) 1 SCC (Civ) 541 : (2013) 1 SCC (Cri) 1082] and Sonal Hemant Joshi v. State of Maharashtra [Sonal Hemant Joshi v. State of Maharashtra, (2012) 10 SCC 601 : (2013) 1 SCC (Civ) 543 : (2013) 1 SCC (Cri) 1084] . In both the decisions, this Court upheld the constitutional validity of the MPID Act in view of the earlier decision in Baskaran [K.K. Baskaran v. State, (2011) 3 SCC 793 : (2011) 2 SCC (Civ) 90] . In Soma Suresh Kumar v. State of A.P. [Soma Suresh Kumar v. State of A.P., (2013) 10 SCC 677 : (2014) 1 SCC (Civ) 90 : (2014) 1 SCC (Cri) 378], a two-Judge Bench of this Court upheld the provisions of the Andhra Pradesh Protection of Depositors of Financial Establishments Act, 1999 following the earlier decisions in Baskaran [K.K. Baskaran v. State, (2011) 3 SCC 793 : (2011) 2 SCC (Civ) 90] and New Horizon Sugar Mills [New Horizon Sugar Mills Ltd. v. State of Pondicherry, (2012) 10 SCC 575 : (2013) 1 SCC (Civ) 516 : (2013) 1 SCC (Cri) 1061] . 92. Having discussed the judgments of this Court on the constitutional validity of the State legisl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PID Act was held unconstitutional. Subsequently, the Court in Sonal Hemant Joshi and Ors. (supra), specifically relied upon the said judgment in case of K.K. Baskaran and upheld the constitutional validity of the MPID Act. The said judgment was also relied upon by the three-Judge Bench in State of Maharashtra vs. 63 Moons Technologies (supra). 34. In view of the above, there remains no shadow of doubt that the State of Maharashtra was within its legislative competence to enact the MPID Act, the subject matter of which in pith and substance was relatable to Entries 1, 30 and 32 of the State List (List- II) of the Seventh Schedule of the Constitution of India. 35. The PMLA was enacted to implement the international resolutions and declarations made by the General Assembly of United Nations, and prevent money laundering as also to provide for confiscation of properties derived therefrom or involved in money laundering. The subject matter of PMLA therefore is traceable or relatable to the Entry-13 of Union List (List-I) of Seventh Schedule. 36. So far as the SARFAESI Act is concerned, the constitutional validity of the said Act was upheld by a Three-Judge Bench in the case of Mardia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y market fee on such Tobacco under the earlier enacted Bihar Agricultural Produce Markets Act, 1960 (List II - Entry 24 - Markets). In the said case, the majority held the view that while maintaining Parliamentary Supremacy, one cannot give a go-by to the Federalism which has been held to be basic feature of the Constitution of India, and thereby whittling the powers of the State Legislature. The precise observations made by Sabharwal J., in this regard are reproduced: - "58. True, the parliamentary legislation has supremacy as provided under Articles 246(1) and (2). This is of relevance when the field of legislation is on the Concurrent List. While maintaining parliamentary supremacy, one cannot give a go-by to the federalism which has been held to be a basic feature of the Constitution (see S.R. Bommai v. Union of India [(1994) 3 SCC 1]). 59. The Constitution of India deserves to be interpreted, language permitting, in a manner that it does not whittle down the powers of the State Legislature and preserves the federalism while also upholding the Central supremacy as contemplated by some of its articles." In the said Judgment Ruma Pal J., in her concurring opinion observed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ature. 41. It is true that sometimes the overlapping of legislations enacted with regard to the matters relatable to different Entries in List-I and List-II in Seventh Schedule may occur, however in that case also as held by the Constitution Bench in State of West Bengal vs. Kesoram Industries Limited and Others 2004 (10) SCC 201, though, the List-I has priority over List-III and List-II, and List-III has priority over List-II, the predominance of Union List would not prevent the State Legislature from dealing with any matter within List-II, even if it may incidentally affect any item in List-I. In the case at hand, the SARFAESI Act and RDB Act having been enacted by the Parliament for the subject matter falling in List-I and the MPID Act having been enacted by the State Legislature for the subject matter falling in List-II in the Seventh Schedule, the latter would prevail in the State of Maharashtra in respect of the specific subject matter for which the said Act was enacted, in view of Clause (3) of Article 246. 42. It was next sought to be submitted by learned counsels appearing for the Secured Creditors that in view of Section 26E of the SARFAESI Act, the debts due to the Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing for the NSEL and the State of Maharashtra is that the properties of the Judgement debtor/Garnishees having already stood attached under the provisions contained in Section 4 of the MPID Act, much prior to coming into force of the IBC, 2016 and there being no retrospective operation of Section 14 pertaining to Moratorium, such attached properties under the MPID Act would no longer be available as the properties of the Corporate Debtor to be considered for the purpose of Resolution Plan under the IBC. According to them, on the issuance of Notification under Section 4 of the MPID Act, the attached the properties would vest in the Competent Authority appointed by the State Government, and therefore such properties would no longer be the properties of the judgment debtor or of the Garnishee, and therefore would be outside the scope of operation and application of IBC. Per contra the learned counsel for the Judgment Debtor/Garnishees have contended that the IBC being a complete and exhaustive Code in itself would override the provisions of the MPID Act. 47. As stated earlier, the MPID was enacted in the public interest to curb the unscrupulous activities of the Financial Establishme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned, it is beyond the realm of the Debtor-Creditor relationship as contemplated in the IBC. On the publication of the Order of Attachment of Properties by the Government to protect the interest of the Depositors of the Financial Establishment, such properties and assets of the Financial Establishment and the persons mentioned in sub-section (1) of Section 4, would forthwith vest in the Competent Authority appointed by the Government, pending further orders from the Designated Court. The procedure and powers required to be followed by the Designated Court after the receipt of the application from the Competent Authority under Section 5, have been prescribed in Section 7 of the MPID Act. As per the said procedure contained in Section 7, the Designated Court is required to issue a notice calling upon the Financial Establishments or to any other person whose property is attached and vested in the Competent Authority, to show cause as to why the Order of Attachment should not be made absolute. If no cause is shown or no objections have been raised before the Designated Court, the Designated Court can pass the order making the Order of Attachment absolute and issue such direction as may ..... X X X X Extracts X X X X X X X X Extracts X X X X
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