NEW DELHI: The Supreme Court on Tuesday set aside the government’s final order for merger of scam-hit National Spot Exchange Ltd (NSEL) with 63 Moons Technologies, formerly Financial Technologies India Ltd (FTIL). NSEL was incorporated in 2005 as an electronic trading platform for trading of commodities. On July 31, 2013, NSEL had defaulted on payments to the tune of Rs 5,600 crore to nearly 13,000 investors, following which trading on the spot exchange was suspended.
NSEL has since been ordered not to enter into any fresh contracts by the Forward Markets Commission (FMC), which has since been integrated into the Securities and Exchange Board of India (SEBI). The Ministry of Corporate Affairs (MCA) in February 2016 passed a final order directing the merger of scamhit NSEL with FTIL. The draft order was issued in October 2014.
It was the first case of the government ordering merger of two private sector companies under Section 396 of the Companies Act 1956. The 63 Moons Technologies had last year (along with other applicants) filed multiple Special Leave Petitions in the Supreme Court, challenging a Bombay High Court verdict upholding the MCA order. The apex court has allowed an appeal against the Bombay High Court order upholding the merger decision.
“We have allowed the appeal,” said a bench of Justice Rohinton Fali Nariman and Justice Vineet Saran in their judgment. The Supreme Court on Tuesday held that the merger doesn’t satisfy the criteria of ‘public interest’ and laid down a set of guidelines on what ‘public interest’ would amount to. Reacting on the judgment, 63 Moons Technologies said that the company has been articulating in the past that the merger will serve no purpose for the stakeholders of either NSEL or FTIL, but will only benefit “a few people with vested interests”. It said that as such, its stand has been fully vindicated.
“Justice has finally prevailed in the reasoned and well-articulated judgment of the Supreme Court, which has upheld the rule of law by laying down the elaborate criterion for what is public interest and due process,” said Venkat Chary, chairman, 63 Moons Technologies.
MARKET RESPONSE
Shares of 63 Moons Technologies rose 10 per cent after the Supreme Court’s judgment deferring the merger of NSEL with 63 Moons