The Bombay High Court has ordered the release of a residential property in Chandigarh that had been attached under the Maharashtra Protection of Interest of Depositors (MPID) Act in connection with the National Spot Exchange Limited (NSEL) case. The Division Bench held that the authorities failed to establish any direct connection between the property and the alleged investor funds, making the continued attachment unsustainable.
Background of the Case
The appeal was filed by Seema Sharma, who challenged a Special MPID Court's order dated November 25, 2021 refusing to release her residential property from attachment. The property had been attached through government notifications issued during the investigation into the NSEL matter. Seema Sharma argued that she was neither an accused in the criminal case nor connected with the affairs of Lotus Refineries Private Limited, a borrower company allegedly linked to the NSEL transactions. She maintained that the house had been purchased in her name through a housing loan from Punjab National Bank and not from proceeds of any alleged crime.
During the hearing, her counsel submitted that the attachment had been ordered without properly verifying ownership and without showing that the property was acquired using investor money. The bank also supported the release of the property, pointing out that it had financed most of the purchase through a secured housing loan and had already initiated recovery proceedings under the SARFAESI Act after loan default.
Court's Observations
After examining the record, the Bench found that a substantial portion of the property's purchase price and construction cost had been funded by Punjab National Bank through a housing loan secured by a mortgage over the property.
The judges also noted that the forensic audit referred to a transfer of ₹55 lakh from the appellant's husband. However, they recorded that more than that amount had already been recovered and deposited with the Economic Offences Wing. Importantly, the investigation and forensic audit did not attribute any role to Seema Sharma in the alleged offences or demonstrate any flow of funds from Lotus Refineries Private Limited towards the purchase of the property.
Observing the absence of evidence connecting the house to the alleged investor money, the Bench said,
"In absence of any material establishing a nexus between the subject property and the investor's funds, the attachment of the entire property cannot be sustained."
The Court further observed that merely because the appellant's husband was a co-borrower under the housing loan did not alter the nature of her ownership or justify attachment of the entire property. It also clarified that earlier proceedings concerning de-freezing of a bank account or procedural defects in previous applications had no bearing on the present appeal.
Court's Decision
Allowing the appeal, the Bombay High Court quashed the Special Judge's order dated November 25, 2021 and also set aside the attachment notifications issued under the MPID Act in respect of the Chandigarh property.
The Bench directed that the property be released from attachment and disposed of the connected interim application, without passing any order as to costs.
Case Details
Case Title: Seema Sharma v. State of Maharashtra & Ors.
Case Number: Criminal Appeal No. 86 of 2022
Judge: Justice A. S. Gadkari and Justice Kamal Khata
Decision Date: 21 July 2026
