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Financial Technologies (India) Limited (FTIL), which is now known as 63 moons, has tendered an unconditional apology for receiving ₹31 crore as part of a business settlement in 2013 from its embattled subsidiary, National Spot Exchange Limited (NSEL).
The case relates to an illegal transfer of fund by NSEL to FTIL, despite a Bombay High Court order that restrained the former from selling or transferring any of its assets after it failed to settle trade worth ₹5,600 crore on its platform.
Show-cause notice issued
Last November, the Bombay High Court issued a show-cause notice to FTIL for contempt of court. The court will consider FTIL’s apology, along with a separate affidavit, to be filed by NSEL on February 22.
NSEL was involved in three different business, including electronic trading platform for forward contract of one-day, trading platform for e-series contracts in bullion, and procurement service to corporate and government agencies. The money transferred to FTIL was part of a procurement, which was never under any dispute, said NSEL in its affidavit filed late last month. FTIL said that NSEL had sourced cotton for National Agricultural Cooperative Marketing Federation of India by using working capital raised from HDFC Bank through a corporate guarantee agreement of ₹31 crore signed by FTIL.
After the settlement crisis in NSEL, HDFC Bank had invoked the corporate guarantee of FTIL. Subsequently, NSEL had received ₹65 crore from Nafed for fulfilling the cotton procurement contract and transferred ₹31 crore due to FTIL in 2013.
FTIL said it was under the impression that the court orders restricting NSEL from transferring assets pertained to cash generated from e-series contracts in bullion business and the electronic trading platform of commodities business, and that it does not include procurement business.
However, by way of abundant caution and due deliberations, FTIL had returned ₹31 crore to NSEL on January 25, 2019.
If the court comes to the conclusion that orders have been breached, FTIL said the breach as alleged was ‘inadvertent’ and ‘unintentional’.
Further, it said it had tendered an unconditional and unqualified apology for breach of orders passed by the court and pleaded discharge of the show-cause notices.
Incidentally, various investigating agencies have been struggling for the last five years to recover ₹5,600 crore defaulted on the spot exchange platform.
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