The Corporate Affairs Ministry (MCA) will give separate “brief oral hearings” to Financial Technologies (India) Ltd (FTIL) and crisis-hit National Spot Exchange Ltd (NSEL) as to why they were opposed to the draft merger order issued by the Government in October last year.

While the top officials of FTIL have been called for an oral hearing on Tuesday, a similar exercise is slated for Wednesday in respect of NSEL, sources said.

The MCA decision to hear both the parties was in line with the directive issued by the Bombay High Court in February and later in August.

FTIL is opposing the Government’s proposed move to merge NSEL with the company (FTIL), contending that forced merger violated the concept of limited liability, which is the fundamental principle of corporate jurisprudence.

Also, the forced amalgamation of NSEL with FTIL is without even seeking the consent of the stakeholders, including shareholders and creditors, of both the companies, according to the FTIL’s submission made before the Bombay High Court.

Not in public interest

The amalgamation also does not serve any public interest, as it undermines the interest of over 63,000 legitimate shareholders of FTIL against the purported number of 13,000 trading clients on NSEL platform, the veracity of which is still to be ascertained, FTIL had submitted.

In its submission to the MCA, 99.55 per cent of the total FTIL shareholders representing 79.58 per cent of the equity capital of the company have objected the merger with the company.

Under Section 396, consent of 100 per cent shareholders and 90 per cent creditors are essentials for merger of two companies

The Bombay High Court has given the government time until October 30 to pass a final order on the proposed merger of NSEL with FTIL. A bench comprising justices SC Dharmadhikari and GS Kulkarni said it will hear the petition challenging the applicability of section 396 on November 19.

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