Terming the government's order to merge NSEL with itself as "highly disappointing", Financial Technologies (FTIL) today said it will challenge the decision.
Jignesh Shah-led FTIL further said this order would have an adverse impact on the company as well as have "wider ramification on corporate India".
The Ministry of Corporate Affairs (MCA) today came out with the final order on merging of crisis-hit National Spot Exchange Ltd (NSEL) with parent company FTIL.
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FTIL held 99.9998 per cent stake in NSEL, as per the order.
"We will challenge the merger order before the High Court at the earliest, and are confident that justice will be done," FTIL Managing Director Prashant Desai said in a statement.
The company had challenged the draft order of MCA in the Bombay High Court. "As per Bombay High Court's earlier order, there is an automatic stay of two weeks on the operation of the merger order," he said.
"The passing of the merger order today - while matters are sub-judice - is highly disappointing," he added.
FTIL Chairman Venkat Chary said that the merger order is not only adverse to FTIL, but has much wider ramifications for corporate India.
He said this order will hit investment climate in the country as it seeks to destroy the concept of "Limited Liability".
"The precedent set today, will be misused by vested interests across India to file PILs seeking merger of financially weak or insolvent companies with their solvent parent or group companies, on the ground of public interest," he noted.
The government's merger order has placed the interest of trading clients higher than that of the shareholders of a listed company. "MCA has also chosen to ignore the thousands of representations made by the shareholders, its creditors and hundreds of employees of FTIL and NSEL," the company said.
This order breaches the constitutional rights of 63,000 shareholders of FTIL, it added.
The merger of NSEL with FTIL was recommended by the erstwhile commodities market regulator FMC after Rs 5,600 crore payment default surfaced on the spot exchange, the recovery of which is still on from 24 defaulters.
