Investor group moves CLB in FTIL case

Hearing adjourned to September 8 in board supersessionmatter

NSEL Investors Action Group (NIAG), one of the several entities representing the victims of Rs 5,600-crore payment crisis in the National Spot Exchange (NSEL), has moved an intervention petition in the Company Law Board. 

The petition was filed in the ongoing case between the union government and Financial Technologies (FTIL) over superseding latter's board. Among other reliefs, the petition sought a stay on FTIL's move to pay dividends to its shareholders saying that this would shrink the resources available to NSEL investors in the event of the proposed merger between FTIL and NSEL is completed by the government. 

After hearing the parties, the CLB adjourned the hearing to September 8. The government and FTIL can file replies in the meantime. According to a Madras High Court order, the CLB was supposed to hear the main matter on a continuous basis between September 2 and September 11. 

However, in a subsequent move the Bombay High Court set October 31 as deadline for the final decision by the Union Ministry of Corporate Affairs in the merger matter. Following this, the government is said to be keen on taking up the supersession issue only after the decision on the merger as both matters are interlinked. 

One of the main arguments of FTIL was that the government's attempt to replace the Board of FTIL was to ensure that there was no opposition to the proposed merger. This, it contended was against the principles of natural justice. An application is likely to be moved in the Madras HighCourt seeking postponement of the CLB hearing to November.