This is the first case of the government ordering merger of two private companies invoking a rarely used clause in the companies law.
The final order was passed a day after a high level meeting chaired by Economic Affairs Secretary Shaktikanta Das that reviewed the steps taken to recover money in the Rs 5,574 crore payment crisis that erupted at NSEL — part of Jignesh Shah-led FTIL group — in late 2013.
Reacting to the development, Financial Technologies (India) Ltd (FTIL) said the final order is “highly disappointing” and it places the interest of trading clients higher than that of the shareholders of a listed company.
“Ministry of Corporate Affairs has also chosen to ignore the thousands of representations made by the shareholders, its creditors and hundreds of employees of FTIL and NSEL,” it said in a statement. The draft order, passed in October 2014, has been challenged by FTIL in the court.
“The merger shall result in making NSEL and FTIL one single entity wherein all assets and liabilities of NSEL will become assets and liabilities of the resulting company (FTIL). Adequate safeguards have been provided in the final order with regard to the litigations pending,” the final order said.