The Bombay High Court has extended the deadline till February 15 for the Union Ministry of Corporate Affairs (MCA) to pass the final order for the merger of the National Spot Exchange Ltd (NSEL) with the Financial Technologies India Ltd (FTIL).
Hearing an application filed by the government, the Bench comprising Justices SC Dharmadhikari and BP Colabawala said time until February 15 is being granted, but with the condition that there will be no further extension. In October, the court had set December 31 as the deadline.
The Bench did not accede to the government’s request to extend the deadline till February 29 and posted the matter for hearing on February 16, which means the government will have to pass the final order within the new deadline.
The deadline extension was being sought as the bureaucrat heading the committee, looking into this matter, underwent a heart surgery and thereafter went on leave from November 5. According to the government’s petition, Pritam Singh, Additional Secretary, MCA, has been advised three months’ rest.
“The said additional secretary was the officer under whom the Committee of Officers heard the submissions of the representative of both the companies — FTIL and NSEL — and he has been unavailable in the discharge of his duties, which has resulted in him not being available for passing the said order,” said the government petition, a copy of which is available with The Hindu .
The proposed merger of NSEL with FTIL has become a sensitive matter as the latter has been aggressively opposing it.
FTIL has questioned the Constitutional validity of Section 396 of the Companies Act, under which the merger has been proposed. Entities that lost money in the settlement scam at NSEL are pushing for it to come through.
The Rs 5,600-crore NSEL scam came to light on July 31, 2013, when the exchange suspended trading in most of its contracts. By August, trading was completely suspended on the exchange, in which FTIL owns 99.99 per cent stake. On August 21, 2014, the MCA issued a draft order proposing to merge NSEL with FTIL, a public-listed entity. The merger would force FTIL to assume all liabilities of the Mumbai-based spot exchange. It would also make FTIL a party to the ongoing litigations involving NSEL.
The merger was proposed by the erstwhile commodities market regulator, Forward Markets Commission (FMC), which was merged with the Securities and Exchange Board of India (SEBI) in September.
NSEL has been under the scanner of various regulatory bodies like SEBI, income tax, Enforcement Directorate, and the Economic Offences Wing of the Mumbai Poilce. Incidentally, FTIL has been barred from holding a stake in any exchange in the country.
High Court rejected
the Centre’s plea
for more time citing
non-availability of
signing authority
