NCLT cannot examine the validity of actions taken under the MPID Act: Bombay High Court
The Mumbai High Court last week struck down an order from the National Company Law Court (NCLT) in January 2019 unfreezing the bank account of a joint company in connection with the National Spot Exchange Limited (NSEL) case. He said that the NCLT does not have jurisdiction to examine the validity of actions taken under the Maharashtra Protection of Interest of Depositors (in Financial Establishments), or MPID Act.
“… it is only the Designated Court constituted under the MPID Act that will have exclusive jurisdiction …”, said a bench of judges SC Gupte and Judge Madhav Jamdar.
The NCLT had thawed the bank account of Dunar Foods Ltd. The economic crimes wing of the Mumbai police had attached the account in connection with the NSEL case.
The State Bank of India had initiated proceedings against the company under the 2016 Insolvency and Bankruptcy Code, for default on a debt of Rs 758.73 million.
The deputy collector, a competent authority under the MPID Act, filed a motion with the superior court that challenged the NCLT order, saying the court does not have jurisdiction to order the thaw.