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NCLT declares Jignesh Shah not fit & proper for FTIL or any other board

Chennai bench of tribunal names nine others along with Shah, asks Govt to appoint three nominee directors to FTIL board

T E Narasimhan & Gireesh Babu  |  Chennai 

Jignesh Saha, NSEL scam
Jignesh Shah

The (NCLT)'s Chennai bench has declared Jignesh Shah, alleged to have been involved in the Rs 56-billion scam, and nine others 'not fit and proper' as directors of any company. The order was issued in a matter related to Financial Technologies Ltd (FTIL), which has now been renamed

also ordered the Government to nominate three directors to the Board.

The order follows a petition filed by the Government of India against the company and its directors in a case related to the scam. The Government has sought relief on five counts. These include declaring Shah and others as not fit and proper to be directors or hold any other office of or any other company, declaring them as acting in an oppressive manner against and NSEL, and directing the petitioner (Government) to replace the existing directors with its nominee directors on the FTIL Board.

The Order was passed by the Coram consisting of by CH. Mohd Sharief Taqiq, member (Judicial) and S Vijayaraghava, member (Technical), NCLT, Chennai.

In the order, the coram said Shah and others have conducted themselves in a manner prejudicial to the public interest and the interests of the respondent (63 moons, NSEL, MCX).

As has been discussed, the actions of the respondents (Shah, the company and others) have shaken public confidence in the Indian Commoditiy markets. Their failure tp exercise due diligence has resulted in the suspension of trade in and has had/ will have adverse effects on the members and others stakeholders of the FTIL also.

has ordered the Government to nominate not more than three directors to the FTIL Board, to take care of the interests of all stake holders and also to protect FTIL's investments in its subsidiaries.

Responding to the order, S Rajendran, MD & CEO, 63 moons said, “We are happy to note that has rejected MCA’s prayer to supersede the Board of 63 moons in connection with the payment defaults that occurred at one of our subsidiaries, (NSEL) in 2013.”

However, in respect of past directors and addition of new directors, he said, “While we are still analysing the order, on a quick review, it appears to be full of factual inaccuracies and inherent contradictions.”


“The NCLT Order has applied Section 388B (of the Act, 1956) and other sections against some of the past directors, such as Manjay Shah and Dewang Neralla, who were not even on Board of NSEL. Strangely, in Jignesh Shah's acse, Section 388B has been applied on the basis of material beyond the original petition filed by in 2015. Of the three FTIL directors, only was on the board of NSEL and neither have Section 397 proceedings been initiated against NSEL nor has Section 388B been upheld against any other directors of NSEL, including other directors of FTIL who were also on NSEL Board. This complete contradiction is one of the many unexplained and unsubstantiated inconsistencies in the Order,” said Rajendran.

“We are examining all legal options,” said Rajendran.

Section 388B empowers the tribunal to determine whether or not a person is fit to be a director of a company.

The had issued a draft order of amalgamation on October 21, 2014, to merge NSEL with in public interest to facilitate speedy recovery of dues from the defaulters at these two has filed a writ petition challenging the constitutional validity of the move.

The final amalgamation order made on February 12, 2016, under Section 396 of the Companies Act, 1956, amalgamating the (NSEL) and 63 moons Technologies Ltd. This was challenged by the company in Bombay High Court, which was dismissed later. This decision has been challenged by in the Supreme Court.

First Published: Sat, June 09 2018. 22:54 IST
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