SEBI recovery can proceed despite earlier depositor-protection attachment, Madhya Pradesh High Court rules

The petitioner challenged SEBI’s attachment order dated 10 October 2024 and a consequential sale notice dated 21 August 2026, which scheduled an auction of its 16.053-hectare agricultural property

The petitioner contended that the same property had already been attached by the Competent Authority under Section 4 of the Madhya Pradesh Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000, and that proceedings to make the attachment absolute remained pending before the Special Court

The petitioner’s application to the Special Court seeking protection from the proposed auction was dismissed because SEBI was not a party to those proceedings

SEBI opposed the petition, relying on its recovery powers under Section 28A of the SEBI Act, 1992

Whether an earlier attachment under the Madhya Pradesh Nikshepakon Ke Hiton Ka Sanrakshan Adhiniyam, 2000 bars SEBI from attaching and proceeding to recover against the same property under Section 28A of the SEBI Act, 1992

Whether the pending proceedings to confirm the State-law attachment, or the Special Court’s dismissal of the petitioner’s application, establish grounds to quash SEBI’s attachment order and sale notice

Section 28A(3) of the SEBI Act provides that, notwithstanding any other law, recovery by a Recovery Officer under Section 28A(1), pursuant to non-compliance with a direction issued by SEBI under Section 11B, shall have precedence over any other claim against the person concerned

Applying Solidaire India Ltd. v. Fairgrowth Financial Services Ltd., (2001) 3 SCC 71, the Court stated that where special enactments with overriding provisions operate in the same field, their legislative schemes, subject matter, and chronology inform which provision prevails to the extent of inconsistency

National Spot Exchange Ltd. v. Union of India, (2025) 8 SCC 393, held in the context of the MPID Act and secured-creditor claims under the SARFAESI and RDB Acts that properties attached under the MPID Act vested in the Competent Authority, subject to the Designated Court’s orders; its holding did not establish an absolute bar against every subsequent statutory recovery mechanism

Judicial review under Article 226 ordinarily requires a jurisdictional error, breach of a mandatory statutory provision, violation of natural justice, or another legally sustainable ground

The Court treated Section 28A(3) as a later, express statutory provision granting precedence to qualifying SEBI recovery, and held that the earlier attachment under the 2000 Adhiniyam did not, by itself, disable the Recovery Officer or invalidate subsequent proceedings

It distinguished National Spot Exchange because that case concerned secured creditors asserting priority under the SARFAESI and RDB Acts over property attached under the MPID Act, not SEBI’s exercise of its distinct recovery power under Section 28A

The State-law attachment remained subject to the Special Court’s orders, but its confirmation was pending and had not created an absolute right excluding SEBI’s recovery process

Nor did the dismissal of the petitioner’s application before the Special Court establish a jurisdictional defect in SEBI’s proceedings

The petitioner therefore had not shown a sufficient basis for relief under Article 226

It declined to quash the attachment order dated 10 October 2024 or the sale notice dated 21 August 2026 and dismissed the petition as devoid of merit