India, March 30 -- A court under the Maharashtra Protection of Interest of Depositors (MPID) Act has ruled that money from the Rs.5,600-crore National Spot Exchange Ltd. (NSEL) scam was used to repay bank loans and may have to be returned to investors. The court rejected the banks' argument that these repayments were made in the "ordinary course of business."

The case stems from the 2013 NSEL fraud, where several trading firms, including PD Agroprocessors, raised money through deals that promised fixed returns. These trades were later found to be unsupported by actual stock, leading to defaults and losses of Rs.5,600 crore for more than 13,000 investors.

If the money recovered from PD Agroprocessors and its directors, who together owe a...