‘We’ll move the apex court on NSEL merger issue’

KR Srivats New Delhi | Updated on January 18, 2018

63 moons technologies (formerly Financial Technologies (India)) TIL) was recently put in a corner with the Bombay High Court on December 4 dismissing its petition challenging the government’s order to merge its scam-hit subsidiary National Spot Exchange (NSEL) with itself in public interest.

In the capital for the first time since this historic Bombay High Court verdict, Venkat Chary, Chairman of 63 moons technologies and also former Chairman of Forward Markets Commission, shares the company’s plans, going forward, and his perspective on the order. Excerpts:

How do you see the Bombay High Court order for 63 moons technologies?

I would describe it as a miscarriage of justice. We are definitely going to move the Supreme Court challenging this order well before the expiry of the 12-week stay period. Our civil application could happen well before February 26.

What are the main grounds of challenge?

The main ground of challenge will be that hearing was not given to even a single person of the 59,000 obstructors (FTIL shareholders, creditors) to the merger. While FTIL and NSEL were heard, none of FTIL’s shareholders or creditors were heard. We will convey that the principle of natural justice was not respected.

However, MCA’s stand was that it was all orchestrated?

The law clearly states that you have to hear them. Even the Bombay High Court said so in an order. You could have easily called a token number of, say 10 persons. So, on that ground of very substantial principle of natural justice not being respected, their order should fail.

What are the other grounds for challenge?

The aspect of public interest. Much of the 222-page judgment has been on the emphasis of public interest or their interpretation of public interest. What the provision says is merger should be essential in public interest. The “essentiality of public interest” is not mentioned or addressed at all in the order.

So, what according to you is public interest?

If the expression public interest refers to general welfare of the public, it cannot be protected by merging FTIL and NSEL at this point in time. The judgment has erred in not understanding this fact.

It has erred in considering that the interest of the so-called investors, whom Justice Abhay Thipsay of the Bombay High Court described as bogus traders, is the interest of the investing public and as such, is the interest of the general public (para 270 of the impugned judgment).

Any other grounds of challenge?

Yes. FTIL was considered as not “fit and proper” and compelled to sell its 26 per cent holding in MCX; 25 per cent in IEX. Now, how is that the system is forcing merger of NSEL with an entity that was considered as not fit and proper.

Earlier, you (FTIL) was not fit and proper to hold stake in any exchange.

Now by view of this you (FTIL) are required to take over (merging) an entire recognised exchange (NSEL). This is a paradox.

It is also incorrect to contend that forcing the NSEL merger with FTIL will “restore public confidence” in financial markets. In the span of last four years, both commodity and equity markets have zoomed. So, where is the question of restoring public confidence.

What about the economic interest aspect?

Yes, that will also be a matter of challenge.

They say a shareholder is just a shareholder and no economic interest. We will challenge that also. In the interpretation of Section 396, we feel economic interest is included. No compensation has been provided for the shareholder of FTIL for the proposed forced merger of NSEL with FTIL. How can you exclude economic interest in a merger situation?

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Published on January 18, 2018
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