NSEL says proposed merger with Financial Tech is ‘bad’ in intent, law

The crisis-ridden National Spot Exchange Ltd (NSEL) on Wednesday strongly opposed its proposed ‘forced’ merger with Financial Technologies (India) Ltd, stating that the draft merger order issued by the Corporate Affairs Ministry was “bad in intent, bad in law and would yield negative outcomes” for the economy.

In a three-hour-long oral hearing before a Ministry panel, NSEL’s top brass and its battery of lawyers asserted that it was never the intention of Section 396 (provision under which draft merger order was issued) to cover forced/hostile mergers. Parliament’s intent was not to cover forced mergers, but only consenting ones, they submitted.

“We got a very patient hearing from the panel. They seemed to be agreeing with what we were saying. After today’s hearing and going by what we have conveyed to the Panel, we feel that it would be difficult for government to issue a final merger order,” Prakash Chaturvedi, Managing Director & CEO, told BusinessLine after the hearing.

NSEL had submitted its views to the two-member panel comprising a senior official each from the Corporate Affairs and the Law Ministries.

The Bombay High Court had directed the Corporate Affairs Ministry to issue the final order by end of this month. “They questioned us on the satisfaction aspect. We submitted to them that the purpose of Section 396 was for facilitating mergers with consent and not for forced/hostile mergers. They seem to agree with our views,” Chaturvedi said.

In the FTIL-NSEL matter, there is no consent with 99.5 per cent of the shareholders having legally opposed it, Chaturvedi said, adding that “It is bad in law if you force a merger where there is no 90 per cent consent.”

The NSEL top brass is also understood to have conveyed to the panel that the government machinery was having an “unholy bias towards defaulters” and was doing little to take action against defaulters and recover money from them.

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