Challenging a Bombay High Court ruling, 63 Moons Technologies Ltd has decided to move the Supreme Court against the ‘forced’ merger with scam-hit National Spot Exchange Ltd (NSEL), the company told stock exchanges on Monday.
“The Hon’ble Bombay High Court has dismissed our writ petition. However, it has granted a 12-week stay on the merger order. We will be moving the Supreme Court during this period,” the company said.
Shares of 63 Moons, formerly Financial Technologies India Ltd (FTIL), were down 5% on the Bombay Stock Exchange to close at Rs 131.10 apiece. Over the past one year, the stock had witnessed a high of Rs 166 and had touched a low of Rs 53.80.
In February 2016 the Ministry of Corporate Affairs had held FTIL, the erstwhile parent firm of the spot exchange, responsible for the liabilities of NSEL in the Rs 5,600 crore ($870 million) payment default case, and ordered a merger between the two.
The company had challenged the order in the Bombay High Court. Subsequently, the writ petition by 63 Moons was dismissed by the court, prompting the forced merger of the two private entities in “view of larger public interest”.
NSEL is a wholly-owned subsidiary of the Jignesh Shah-led FTIL. The liabilities of the commodity bourse have been pegged Rs 5,269 crore, which, according to the MCA order, needs to be absorbed by FTIL.
The fraud committed at NSEL came to light in July 2013, when the exchange abruptly suspended trading in all contracts, resulting into a payment default. Following this, the exchange was forced to suspend trading and eventually down its shutters, leaving over 11,000 investors in the lurch.
The scam led to regulatory and government interventions and, eventually, also resulted in the government announcing the merger of Forward Markets Commission (FMC) with the Securities and Exchange Board of India (SEBI).
The merger between the two regulators was the first such major case wherein the functions of FMC and Sebi were brought under one umbrella. The relatively more frequent practice, worldwide, is the creation of a new regulatory authority.
In the Union Budget for 2015-16, finance minister Arun Jaitley had announced the merger of FMC and SEBI, effective September 2015.
The measures for the commodity derivatives market also have their roots in various speculative activities affecting the market, including that of NSEL.
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