The Supreme Court of India on Tuesday set aside the central government’s decision to merge National Spot Exchange Ltd (NSEL) with Financial Technologies India Limited (FTIL), now known as 63 Moon Technologies Limited, as it was against the Section 396 of Companies Act. Section 396 of the Companies Act deals with the compulsory amalgamation of companies ordered of 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 which had upheld the central government’s order on amalgamating the two companies. The central government had in 2016 decided to issue a final order for merger of NSEL with FTIL under Section 396 of the Companies Act, 1956. The government had then said that 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, the company’s 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 interest. 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 is the 99.99 per cent shareholder of 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. On July 31, 2013, NSEL, the subsidiary of FTIL, had defaulted on payments of nearly Rs 5,600 crore to nearly 13,000 investors following which trading on the spot exchange was suspended. NSEL was incorporated in the year 2005 as an electronic trading platform for trading of commodities.