Will Jignesh Shah’s FTIL Receive An Impartial Decision In The NSEL Case?

It has been a while, or say a few years, since Jignesh Shah’s Financial Technologies (India) Limited, now 63 moons technologies, came under the radar of the government for the National Spot Exchange Limited (NSEL) case. It is also worth mentioning that nothing substantial has been discovered by the regulatory bodies in the said case. The forced merger of FTIL and NSEL was ordered by the Ministry of Corporate Affairs.

A 63 moons representative spoke, “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.”

The company had filed a petition opposing the Ministry’s order which was rejected by the Bombay High Court last week. Initially a draft order in 2014, the Ministry confirmed the order to merge the two companies in 2016. Under the Section 396 of Companies Act, 1956, this was the first case of joining two private companies by the government.

The merger will hold Jignesh Shah’s FTIL responsible for the payment default amounting to Rs. 5600 crore. While the 13,000 investors still await settlements for their losses, the merger would mean a huge setback for the corporate sector of India as suggested by the CEO of 63 moons technologies – Venkat Chary. According to him, what is the foundation of the corporate sector of India – the limited liability concept will witness a negative impact. He believes that implementing such an order without adhering to the proof legal procedure will be disturbing for companies in the future. “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”, said Venkat Chary.

It remains to be seen whether Jignesh Shah’s FTIL comes out clean out on the other side as is rather evident as per the developments in the case so far.