The high court here on Monday extended a stay on a merger of National Spot Exchange Ltd (NSEL) and its earstwhile parent, Financial Technologies India Ltd (FTIL), till February 4 next year. It asked the ministry of corporate affairs (MCA) to submit a reply on the matter by January 23.
Judge V M Kanade also issued a contempt of court notice to NSEL Investors Forum, which had asked him to recuse himself from the case as his son had appeared for NSEL defaulter PD Agro.
Kanade asked the counsels of the Forward Markets Commission (FMC) and MCA whether they had any objection to his taking up the matter and offered to recuse himself. However, both the counsels said they had faith in him.
Earlier, Abhishek Manu Singhvi, the FTIL counsel, had argued the government had issued the draft order for the merger under section 396 of the Companies Act. This, he added, had been used only on four earlier occasions, to merge government companies, not private ones. He also said the merger had to be approved by the boards of both companies, as well as the central government.
The ministry’s proposal of a merger was aimed at hastening the repayment of Rs 5,600 crore to the investors. NSEL had defaulted on this sum in July last year. FTIL says it fears a merger will transfer the default by its subsidiary to its books.
The ministry’s draft order followed a recommendation in this regard by the FMC and the department of economic affairs. The ministry had sought comment on the proposal.