63 Moons okays settlement in NSEL collapse. There is one more hurdle

The board of 63 Moons Technologies Ltd., the parent of defunct National Spot Exchange Ltd. (NSEL), has approved a one-time settlement even as differences among investors seeking to recoup their money for more than a decade cloud the outcome.

“The Board of Directors in its meeting of 18 February approved the participation and support of the Company to the Scheme of Arrangement between NSEL and the Traders,” 63 Moons said in a filing.

The approval will involve two key steps: the closure of ongoing legal proceedings against 63 Moons; and the assignment of all claims and rights from NSEL traders to the company. That will enable 63 Moons to claim recoveries from defaulters, either through court decrees or asset liquidation.

NSEL will seek approval for the scheme of arrangement at the National Company Law Tribunal (NCLT), Mumbai, which it said, citing legal advice, is the most appropriate forum considering the interest of the parties involved to achieve the settlement.

NCLT’s role and investor consent

This approval by 63 Moons effectively paved the way for a structured resolution mechanism, contingent upon investor consent and NCLT’s approval, said Nilesh Tribhuvann, managing partner at law firm White & Brief-Advocates & Solicitor. “A key aspect of this settlement is the conditional withdrawal of legal proceedings against 63 Moons, which would substantially reduce its litigation risk and financial exposure.”

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The collapse of NSEL in 2013 left investors with unresolved claims totalling about ₹5,500 crore, owed to over 13,000 individuals. Although partial payments have been made over the years, large investors await a full resolution. The settlement, proposed in November 2024, seeks to allocate ₹1,950 crore, or about 42% of the total ₹4,650 crore owed to investors, pending the necessary majority consent.

“The NCLT’s role will be critical in evaluating the scheme’s legal tenability, particularly in ensuring that the proposed settlement aligns with insolvency principles, contractual obligations, and investor protection frameworks,” Tribhuvann said.

“Ultimately, the outcome of this settlement will not only impact the parties directly involved but could also set a precedent in financial market dispute resolution, influencing how large-scale investor claims and systemic financial crises are addressed within India’s legal and regulatory ecosystem,” he said.

However, all investors have not agreed to the settlement. Mint reported on 10 December that while NSEL Investors Forum (NIF) claimed broad support, another group of NSEL investors, called the National Investor Action Group (NIAG), purportedly withdrew its consent for the OTS.

According to NIF, it has backing from investors representing about 64.5% in value of the outstanding claims, totalling over ₹3,000 crore. To successfully implement the settlement, consent of investors holding at least 75% of the outstanding dues is required.

A formal vote was held between 11 November and 9 December 2024, with the NIF expressing confidence that it would secure majority support. According to its statement, only 1.71% of investors, representing ₹79.47 crore, withdrew their consent—a factor already accounted for in the tally. Despite the disagreements over the settlement process, NIF said that many investors who initially withdrew their support have since reconsidered. The investors will again be called to give their consent before the judicial forum.

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Still, the NIAG’s withdrawal, along with the opposition to accessing attached funds, has clouded the settlement’s outcome. However, NSEL emphasized that the settlement amount was determined after mutual discussions, with sufficient assets—estimated at ₹2,500 crore—currently attached under the MPID Act to cover the agreed amount.

63 Moons has clarified that it requires ₹25 crore per month for operational costs until the settlement process is concluded, justifying its request for access to attached assets. The company assured that these funds are secure and that the full settlement will be guaranteed once the necessary legal processes are completed.

“The NCLT will have to assess whether the scheme ensures equitable treatment and does not unfairly prejudice dissenting investors,” White & Brief’s Tribhuvann said. “Given the mixed response from investor groups, potential legal challenges remain.”