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Shares of 63 Moons Technologies today plunged 5 per cent to hit the lower circuit limit after the Bombay High Court dismissed its plea against the government's order for merging NSEL with the company.
The company said it will approach the Supreme Court, while chairman Venkat Chary said the merger order by the Ministry of Corporate Affairs (MCA) "through an executive fiat is devastating for corporate India".
On the BSE, the stock of 63 Moons Technologies -- formerly known as Financial Technologies India (FTIL) -- plunged 5 per cent and got stuck in its lower circuit limit of Rs 131.10.
Similarly, on the NSE, the stock fell to its lower circuit limit of Rs 131.20, down 5 per cent from the previous closing price.
"The Honourable Bombay High Court has dismissed our writ petition. However, it has granted 12-week stay on the operation of the merger order," a company statement said.
It further said that "we will be moving the Supreme Court during this 12-week period. We have full faith in the judiciary and continue to believe that ultimately the truth and justice shall prevail."
In a separate statement, Chary said that Bombay High Court's "upholding of the merger order of NSEL with 63 moons passed by the MCA through an executive fiat is devastating for corporate India".
Terming it as a "Black Day" in the history of Corporate India, Chary said, this order has a serious impact on the limited liability concept that is the corner stone of the Indian corporate sector, by lifting the corporate veil by an executive order and without running a full evidence-led adjudication.
"This is a worrisome development for corporate India as the aftermath is likely to be chaotic, impacting investment flow into India by way of domestic investments, FDIs, FIIs and also the spirit of entrepreneurship, so vital for the country's economic development as investors will always be scared to invest in parent companies with subsidiary companies," he added.
Chary further said that even in the case of consensual merger of two government companies, the principle of natural justice, constitutional validity and stake holder voting (which are shareholders, creditors and employees) are taken into account; while in this case, where two private companies are involved, the rule book seems to have been thrown away by the MCA and shareholder compensation is also ignored.
"This will have a devastating impact on the Company Law and its foundations. This situation will result in a serious loss of confidence and of investment, and will raise questions as to whether we are really ruled by the company law and limited liability principles," he added.
On February 12, the Corporate Affairs ministry had directed the merger of scam-hit National Spot Exchange Ltd (NSEL) with parent firm FTIL, in a first-ever order to merge the two private companies.
In the wake of Rs 5,600-crore payment crisis at NSEL, the ministry had sought merger of the bourse with FTIL as well as replacement of existing FTIL management.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)