In a first-ever order to merge two private companies, the government directed the merger of scam-hit National Spot Exchange Ltd with its parent Financial Technologies on Friday.
Under the latest order, confirming the draft ruling issued back in October 2014, all the assets and liabilities of NSEL would be transferred to Financial Technologies (India) Ltd (FTIL).
Terming the Corporate Affairs Ministry’s move as “highly disappointing”, FTIL said it would challenge the order.
“The merger shall result into making NSEL and FTIL as one single entity wherein all the 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 and devolving of liabilities and assets arising out of pending proceedings,” the 47-page final order said.
The amalgamation would be effected from March 31, 2015 for the accounting purposes, the order noted.
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 has been 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.
The Bombay High Court had given time till February 15, 2016, to the government for finalising the final merger order after FTIL had challenged the draft one.
Inputs from various stakeholders and investigating agencies that probed the scam were also considered.
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According to the Enforcement Directorate, it has traced “proceeds of crime” amounting to Rs 3,973.83 crore to 25 defaulters and it had attached assets worth Rs 837.01 crore belonging to 12 defaulters.