Financial Technologies India Ltd's (FTIL) board has unanimously opposed a petition filed by the Ministry of Corporate Affairs (MCA) to Company Law Board (CLB) which seeks “removal and supersession” of the FTIL board.
In a filing to the stock exchanges, the board of directors said that the move by MCA is a 'clear attempt' to render ineffective and, in fact, defeat FTIL’s challenge and opposition to the proposed amalgamation of NSEL (National Spot Exchange Ltd) with FTIL.
“After deliberating on the matter and also considering that the issue is totally prejudice, mala fide and not in the interest of FTIL, its board, its employees, its shareholders and other stake holders, we have decided to contest all issues raised by Union of India vigorously as per the law of the law of the land," said Venkat Chary, acting chairman of FTIL, in a filing to stock exchanges.
FTIL is now looking to file a petition before the Bombay High Court or CLB or any other appropriate forum, as it deems fit, it said in the statement.
In October last year, MCA had issued a draft order to merge NSEL with its parent firm FTIL to ensure faster recovery of dues for entities hit by the Rs 5,600-crore fraud. At present, NSEL is promoted by FTIL, which is backed by Blackstone and CVCI.
Earlier this month, FTIL challenged the draft order in the Bombay High Court. The court ordered status quo and said that it will look into the case after the order is passed by the government.
FTIL has about Rs 2,000 crore cash and Rs 475 crore in debt, after it was forced to sell its stake in MCX, MCX-SX and SMX, among others, the letter showed.
If the merger happens, FTIL will have to assume all the liabilities of NSEL and become party to all the contracts and agreements entered into by NSEL.
The government, however, has said the order by MCA would be finalised only after it considers feedback from stakeholders and the public.
(Edited by Joby Puthuparampil Johnson)