The Supreme Court on Tuesday set aside the Centre’s decision to merge National Spot Exchnge (NSEL) with Financial Technologies India (FTIL), now known as 63 Moon Technologies, as it was against Section 396 of the Companies Act. Section 396 of the Companies Act deals with compulsory amalgamation of firms ordered by the central government in public interest.
A two-judge Bench of Justice Rohinton Fali Nariman and Justice Vineet Saran set aside a Bombay High Court judgment that had upheld the Centre’s order on amalgamating the two companies. The Centre had, in 2016, decided to issue a final order for the merger. The Centre had then said the merger was being done in public interest.
Following the judgment by the top court, while the company’s Chairman Emeritus and Mentor said that truth had finally prevailed, Chairman Venkat Chary said that justice had finally prevailed.
“The company has been articulating in the past that the merger will serve no purpose for the stakeholders of either NSEL or FTIL but to benefit only a few people with vested interests. As such our stand has been fully vindicated,” FTIL’s managing director S Rajendran said in a statement.
FTIL, or 63 Moon Technologies as it is now known, holds 99.99 per cent stake in NSEL.
Of the 99.99 per cent, nearly 45 per cent is held by Jignesh Shah and his family, while the other 43 per cent is held by the public. The other 5 per cent is held by institutional investors.
The firm had approached the apex court to appeal against a Bombay High Court ruling, which had upheld the Centre’s merger order. A court-appointed panel last year confirmed claims of only Rs 620 crore from 4,697 entities, lower than the Rs 5,600 crore from about 13,000 claimants.
NSEL was incorporated in the year 2005 as an electronic trading platform for trading of commodities. Founded by Financial Technologies, it was directed by the government to halt trading after it was found that the bourse broke rules by allowing the sale of commodities that were not backed by real goods at warehouses.
The probe led to the arrest of Shah. Consequently, the commodity market regulator ordered the firm to sell its holdings in all exchanges, including the Multi Commodity Exchange of India. The crisis also led to the government merging the commodities and capital markets regulators.
With inputs from Bloomberg