In a letter on August 18, the Forward Markets Commission (FMC) had recommended to the corporate affairs ministry to take over the management of FTIL "so that the affairs of FTIL can be managed in a professional way by bringing in an institutionalized framework" and "to ensure that FTIL takes responsibility to resolve the payment crisis at NSEL at the earliest". If FMC's recommendations are implemented, it would be the first corporate takeover by the government since that of Saytam in 2009.
Confirming the suggestions, FMC chairman Ramesh Abhishek said the regulator had also recommended the ministry in that letter to consider the "merger/amalgamation of NSEL with FTIL in public interest so that the human/financial resources of FTIL are also directed towards facilitating speedy recovery of dues from the defaulters at NSEL.
The FTIL shares lost 4.64% at Rs 186.90 each on Monday, underperforming a 0.37% fall in the Sensex.
While the corporate affairs ministry last week issued a draft order for the merger of NSEL with FTIL, invoking for the first time a clause in the Companies Act for a forced merger in the private sector due to "public interest", it's yet to issue any order on the takeover. Sources said the ministry is also mulling offering compensations to affected investors in the NSEL scam and may even appoint a chartered accountant to start the process.
After the merger, FTIL would take over all the liabilities of NSEL, including payments due to be paid to investors and others. FTIL has opposed such an order and said it is taking appropriate steps in consultation with its legal counsel.
However, although the ministry is weighing the other proposal of the regulator on takeover, it's not yet clear how the government would go about it, especially when the the very matter whether FTIL has committed any irregularities and the extent of liability of FTIL for operations of NSEL and consequently whether the corporate veil should be lifted is sub-judice in various proceedings in the Bombay high Court.
Interestingly, in June, the law ministry had reportedly rejected a similar proposal by the corporate affairs ministry for a takeover of FTIL. However, sources said some important factors, including the investigation report by the economic offences wing of the Mumbai police, were not earlier highlighted in the letter by the corporate affairs ministry when it had sought the law ministry's opinion. So, the legal opinion may vary this time around, they added.
When contacted, legal affairs secretary PK Malhotra said he hasn't yet received the latest proposal from the corporate affairs ministry for a legal opinion.