Corporate India Saved - Setting Aside The FTIL-NSEL Merger Order

Recently, the Apex Court order set aside a Bombay High Court judgment approving the merger of crisis hit NSEL with parent company, 63 Moons Technologies Limited, formerly known as FTIL, in public interest under Section 396 of the Companies Act

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India Incorporated heaved a collective sigh of relief after the Supreme Court (SC) on April 30, 2019, in a landmark judgment, dismissed a Bombay High Court (HC) ruling approving a Ministry of Corporate Affairs (MCA), Government of India, move, to merge the National Spot Exchange Limited (NSEL) with its parent company, 63 Moons Technologies Limited.

The apex court set aside the 222-page Bombay High Court order dated December 4, 2017. The MCA had passed the order largely on the basis of the Grant Thornton Report and the flawed “Not Fit & Proper” recommendation from the erstwhile commodity markets’ regulator, Forward Markets Commission (FMC), under the pretext of public interest.

In the event, the Supreme Court set aside the Bombay High Court order dated December 4, 2017. The MCA had passed the order based on the flawed recommendation from by the erstwhile commodity markets regulator, Forward Markets Commission (FMC), under the pretext of “public interest”. If the merger order would have been passed, it would have irreversibly impaired the concept of public interest, set a dangerous precedent for the corporate world and hurt business sentiments of both domestic as well as foreign investors alike.

How NSEL Went Under

It was in July 2013 that a `5,600-crore payment default crisis surfaced at NSEL after about two dozen counterparties defaulted in payment obligations. After all investigating agencies such as the Economic Offences Wing (EOW), the Central Bureau of Investigation (CBI) and the Enforcement Directorate (ED), carried out detailed investigations, they stated that not a single paisa went to NSEL, FTIL or its founder Jignesh Shah.