NSEL merger: FTIL ‘highly disappointed’ with govt order; to challenge in court

NSEL merger: FTIL ‘highly disappointed’ with govt order; to challenge in court

FPJ BureauUpdated: Friday, May 31, 2019, 06:10 PM IST
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New Delhi : Terming the government’s order to merge NSEL with itself as “highly disappointing”, Financial Technologies (FTIL) said it will challenge the decision. Jignesh Shah-led FTIL further said this order would have an adverse impact on the company as well as have “wider ramification on corporate India”, reports PTI.

The Ministry of Corporate Affairs (MCA) came out with the final order on merging of crisis-hit National Spot Exchange Ltd (NSEL) with parent company FTIL. This is the first case of the government ordering merger of two private companies invoking a rarely used clause in the companies law.

As per the order, the entire business and undertaking of NSEL and FTIL including all their properties, movable and immovable assets, machinery and fixed assets, leases, tenancy rights, advances, book debts, outstanding monies, recoverable claims, agreements, licenses, mortgages and charges, etc, would be transferred to the merged company. The amalgamation would be effected from March 31, 2015 for the accounting purposes, it said.

“… any suit, prosecution, appeal or other legal proceedings which may be required to be filed against the dissolved company shall be filed against the resulting company,” the order said.

FTIL held 99.9998% stake in NSEL. “We will challenge the merger order before the High Court at the earliest, and are confident that justice will be done,” FTIL MD Prashant Desai said. The company had challenged the draft order of MCA in the Bombay High Court. “As per Bombay High Court’s earlier order, there is an automatic stay of two weeks on the operation of the merger order,” he said. “The passing of the merger order today – while matters are sub-judice – is highly disappointing,” he added.

FTIL Chairman Venkat Chary said that the merger order is not only adverse to FTIL, but has much wider ramifications for corporate India. He said this order will hit investment climate in the country as it seeks to destroy the concept of “Limited Liability”.              “The precedent set today, will be misused by vested interests across India to file PILs seeking merger of financially weak or insolvent companies with their solvent parent or group companies, on the ground of public interest,” he noted.

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