Mumbai Capital

HC asks FTIL to file amended writ in NSEL merger case

The Bombay High Court has directed Financial Technologies India Ltd (FTIL) to file an amended writ petition in the matter related to the merger of the company with National Spot Exchange Ltd (NSEL), while posting the case for hearing on Friday.

The directions were given by the Bench comprising Chief Justice DH Waghela and Justice MS Sonak after FTIL said it wanted to amend the petition since the government had passed the final merger order in February.

On February 12, the government ordered the merger of Mumbai-based NSEL, which is embroiled in a Rs 5,600-crore settlement scam, with Jignesh Shah-promoted FTIL. The government said the merger would be applicable from March 31, 2015. Simply put, all the liabilities of NSEL as on March 31, 2015, would shift to the account books of FTIL. NSEL as a corporate entity would cease to exist post the merger. This is the first time the government has ordered a merger between two private entities under Section 396 of The Companies Act, 1956. The government had issued a draft merger order on October 21, 2014.

FTIL had challenged the draft order in the High Court (HC), which ruled that the company could file its objections with the government and move court if the latter passes an adverse order.

The case was earlier heard by a Bench headed by Justice SC Dharmadhikari, who had posted the matter to Thursday. The court had set a deadline of February 15 for the government to pass the final order. FTIL, however, was given 15 days to challenge the order in the HC.

FTIL has been opposing the merger and has even challenged the constitutional validity of the draft order. If the merger goes through, FTIL will have to face the numerous legal proceedings filed against NSEL.

FTIL owns 99.99 per cent stake in NSEL, a spot exchange that was launched for facilitating trading in commodities. On July 31, 2013, the government ordered the exchange to suspend trading activities after it was found that the exchange was offering so-called ‘paired contracts’ that were not allowed by law.

Post the suspension of trading, it was found that contracts amounting to almost Rs 5,600 crore were outstanding.

This is the first time the govt has ordered a merger between two private entities

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Printable version | May 12, 2021 2:36:54 AM |

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