63 moons technologies (formerly FTIL) has decided to move the Supreme Court against the Bombay High Court verdict upholding an MCA order directing the merger of scam-hit NSEL with FTIL.
“The Bombay High Court has dismissed our writ petition. However, it has granted a 12-week stay on the operation of the merger order. We will move the Supreme Court during this period. We believe that ultimately truth and justice shall prevail,” a 63 moons spokesperson said.
The Bombay High Court on Monday dismissed a petition filed by 63 moons technologies (formerly Financial Technologies (India) Ltd) opposing the Ministry of Corporate Affairs’ order.
In February 2016, the Ministry had passed a final order directing the merger of scam-hit NSEL with FTIL. The draft order was issued in October 2014. It was the first case of the government ordering the merger of two private sector companies (under Section 396 of Companies Act, 1956).
The final order came a day after a high-level meeting chaired by the then Economic Affairs Secretary Shaktikanta Das reviewed the steps taken to recover money in the ₹ 5,574-crore payment crisis that erupted at NSEL — part of Jignesh Shah-led FTIL group —in July 2013.
A merger of NSEL with FTIL would result in the latter assuming all the liabilities of the scam-hit spot exchange, which is now a subsidiary of FTIL.
Following the final MCA order, FTIL had challenged the constitutional validity of Section 396.
Venkat Chary, Chairman, 63 moons technologies, said the High Court’s merger order is devastating for corporate India.
Terming it as a “Black Day” in the Corporate India’s history, he said the order would have a serious impact on the limited liability concept, the cornerstone of the Indian corporate sector, by lifting the corporate veil by an executive order and without running a full evidence-led adjudication.
Even in the case of consensual merger of two government companies, the principle of natural justice, constitutional validity and stakeholder voting (which are shareholders, creditors and employees) are taken into account. In this case, where two private companies are involved, the rule book seems to have been thrown away by the MCA and shareholder compensation is also ignored, he said.
“This will have a devastating impact on company law and its foundations. This situation will result in a serious loss of confidence and of investment, and will raise questions as to whether we are really ruled by the company law and limited liability principles,” he said.
Shares of 63 moons technologies fell 5 per cent at the National Stock Exchange to close at ₹131.20 a share on Monday.
(With inputs from our Mumbai Bureau.)