Bombay HC dismisses FTIL's petition against govt order to merge with NSEL

Published On: 04, Dec 2017 | Source:

The today dismissed a petition filed by the erstwhile Financial Technologies (India) Ltd (FTIL) challenging a 2016 decision of the Union ordering its with its subsidiary, Ltd (NSEL).

"The petition is dismissed," said a division bench of Chief Justice Manjula Chellur and Justice M S Sonak.

The court, however, extended for 12 weeks an interim stay granted last year to the order passed by the Union Ministry of Corporate Affairs on February 12, 2016.

Soon after the order was passed, FTIL, now known as 63 Moons, had approached the high court.

The had said it was passing the order under section 396 of the Act, after a Rs 5,600 crore payment default rocked in July 2013.

Section 396 gives power to the central to merge in public interest.

argued that with the order, the sought to make responsible for the liabilities of the fraud-hit commodities bourse,

counsels argued that use of section 396 in this way was illegal, considering that the liability of was yet to be established.

"If the power to amalgamate is being used to mulct (extract money from) shareholders and stakeholders of a parent company with putative liabilities of a subsidiary, it could only be done after existence of such a liability is established upon adjudication," an lawyer had argued.

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