The proposed merger of the crippled commodities spot exchange NSEL with its parent FTIL got a shot in the arm today with the Bombay High Court lifting the stay order it had passed last November, and asking the government to pass the final order.
The division bench headed by Justice V M Kanade directed the corporate affairs ministry to proceed with the final order under the provision of the Companies Act and said it will look into the case after the final order was issued.
“The government will hear all the parties and their contentions within 30 days and pass an order within four weeks of the hearing,” said the bench, adding it is keeping open the option for Financial Technologies to challenge any adverse order passed by the government.
The court also said that the government’s final order will be kept in abeyance after passing and would be subject to the clearance of the court.
The direction came after government counsel Ranjit Kumar sough revocation of status quo order, saying FTIL’s decision to dispose of its assets such as Bourse Africa and hiving off its trading software Odin had violated the status quo.
Kumar also told the court that the government will pass final order only after hearing all the parties. He said the court should direct FTIL to not dispose of its assets.
Commodity market regulator Forward Markets Commission (FMC) had late last year proposed to merge NSEL with FTIL, as demanded by investors following the Rs 5,600 crore payment crisis at the exchange.
The FMC move came after it felt that the workforce and financial strength of NSEL has been depleted and so it was “financially and physically incapable of effecting any substantial recovery from the defaulting members”.
FTIL challenged the move in the Bombay High Court, which ordered the status quo on the draft order.
Jignesh Shah-promoted FTIL owns 99.99 percent in NSEL on which trading was suspended after the repayment crisis came about.