NCLAT Refuses To Interfere With NSEL Spot Exchange Settlement, Says NCLT Did Not Exceed Jurisdiction

The National Company Law Appellate Tribunal (NCLAT) at Delhi has recently refused to interfere with an order of the Mumbai bench approving a ₹1,950-crore one-time settlement for traders affected by the 2013 National Spot Exchange Ltd default, holding that the National Company Law Tribunal did not exceed its jurisdiction while sanctioning the scheme.

A bench of Judicial Member Justice Yogesh Khanna and Technical Member Ajai Das Mehrotra observed that a plain reading of the impugned order shows that the National Company Law Tribunal has not exceeded its jurisdiction and has never directed the quashing of criminal cases pending against the company.

"The scheme is only for the class of creditors by virtue of which their entitlement is limited to a particular extent. The scheme does not exercise the powers of criminal or civil court to pass orders on the FIR(s) or criminal cases and it leaves it to the discretion of the concerned court/authorities under the Act(s) to deal with the matters before it. If one read the impugned order, more specifically the following paras, one would find the Ld. NCLT has not exceeded its jurisdiction and has never directed the quashing of the criminal cases pending against the company;", it said. 

The scheme approved by the NCLT applies to 5,682 specified traders and provides for settlement of claims amounting to about Rs 1,950 crore, translating to recoveries of around 42% of admitted claims. Voting on the proposal was conducted through postal ballot and e-voting between April 17 and May 17, 2025. The scheme received approval from 91.35% of creditors in value and over 92% in number.

Before the NCLAT, objectors, including L J Tanna Enterprises and others, argued that the NCLT lacked jurisdiction to approve the scheme as proceedings under the Maharashtra Protection of Interest of Depositors Act were pending. They also contended that the scheme effectively compels dissenting creditors to withdraw or not oppose criminal proceedings arising from the 2013 payment default.

The appellate tribunal rejected these submissions, observing that the NCLT order shows that the tribunal did not direct the quashing of criminal cases.

The NCLAT further clarified that approval of the scheme does not result in automatic discharge from criminal liability. It noted that criminal proceedings would continue to be governed by orders passed by the competent courts and authorities, and that any quashing or discharge would depend on their independent consideration.

The appellate tribunal also noted that the appellants held only 0.26% of the voting share and did not meet the statutory threshold under Section 230(4) of the Companies Act to maintain an objection.

“Hence at the outset we may hold the appellant has no locus standi to object to the scheme but nevertheless we are aware of the fact the scheme of compromise must satisfy the requirement of public interest, fairness and transparency and the Court cannot sanction the scheme that defeats such statutory rights. Thus we need to look into the merits of the scheme too to find if it passes such a test," the bench said.

According to NCLT order sanctioning the scheme, NSEL operated an electronic trading platform for one-day forward commodity contracts. In July 2013, the government directed the exchange to suspend such contracts.

When trading was halted on July 31, 2013, 24 trading members failed to meet their payment obligations, leading to a default of more than Rs 5,600 crore and the initiation of multiple civil and criminal proceedings.

Finding no jurisdictional error in the NCLT's approach, the appellate tribunal dismissed the appeal, allowing the settlement scheme to proceed in terms of the NCLT's order.

For Appellant: Senior Advocate Vaibhav Gaggar with Advocates Rohit Gandhi, Abhishek Nair, Dhruv Dewan, Aananya Daniel, Sanchita Makkar, Shubham Bhati, Hargun S Kalra, V Marwah, Varun Trivedi.

For Respondents: Senior Advocate Arun Kathpalia with Advocates Ranjan Kumar Pandey, Sandeep Bisht, Sahil N, and Diksha for R1; Senior Advocate Abhijeet Sinha with Advocates Ankur Saigal and Shivam Shukla for 63 Moons; Senior Advocate Krishnendu Datta with Advocates Siddharth Mehta, Siddhartha Pythoor, and Alina Merin Mathew.