Home / Companies / NSEL-FTIL merger: Govt gets time till 31 December to pass final order

Mumbai: The Bombay high court has granted time until 31 December to the ministry of corporate affairs (MCA) to pass the final order in the merger of the National Spot Exchange of India Ltd (NSEL) with Financial Technologies (India) Ltd (FTIL).

The government had filed an affidavit on Thursday seeking an extension of the 30 October deadline, saying that it is not possible to pass the order within the deadline as FTIL and NSEL have submitted “voluminous documents" that will take time to be considered before a final order is passed.

The bench comprising justices S.C. Dharmadhikari and B.P. Colabawalla agreed to the government plea while posting the matter to be heard on 15 January.

In its affidavit, the government has also stated that both FTIL and NSEL insisted on the inspection of certain original documents that further delayed the process as the documents were in the custody of the investigating agencies.

Mint has a copy of the affidavit filed by the government.

“...Respondent No. 1 (MCA) has very limited time available with it to examine and consider the representations submitted by the petitioner (FTIL) and NSEL. The Applicant/Respondent No 1 has made every effort to comply with the timelines prescribed by this Hon’ble Court. However, a delay has been caused due to the insistence by the Petitioner/NSEL for inspection of original documents which were not in the custody of Respondent No 1. Further, after the hearings the Petitioner/NSEL have submitted voluminous documents which will need to be considered by Respondent No 1. As a result of these factors, Respondent No 1 has insufficient time to pass its final order by 30 October 2015," says the affidavit.

On 7 August, the high court had directed the government to pass the final order by 30 October while clearly stating that “no further extension will be granted".

In the draft order issued on 21 October 2014, the government said it proposed to merge the two entities in public interest, forcing FTIL to assume all the liabilities of the commodities bourse and also making it a party to all the contracts and agreements entered into by NSEL.

FTIL owns 99.99% of NSEL, on which trading was suspended on 31 July 2013 after the detection of a 5,574 crore payments crisis, which later turned out to be a case of fraud.

FTIL, promoted by entrepreneur Jignesh Shah, filed the petition in the Bombay high court, challenging the constitutional validity of section 396 of the Companies Act, 1956, under which the government proposed to merge the two entities in public interest.

The merger was recommended by commodities market regulator Forward Markets Commission and has also been demanded by investors affected by the fraud at NSEL. FMC has now been merged with capital markets regulator Securities and Exchange Board of India.

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