NSEL-FTIL merger call likely to create pangs of discontent

Privileges of limited liability emasculated in one blow!

As the course of law is yet to dispose, why did the government propose the merger? Is it some kind of hurry or prejudice? These are the questions raised by several media houses besides the business fraternity. There’s a lobe of hope still flickering as the business community and media guilds resonate their concerns over government’s NSEL-FTIL merger order.

Like the most, one of the excerpts from an article featured in Economic Times on 23^rd October, 2014, reads that, “Merger Violates Limited Liability”; it specifically states –“This kind of governmental activism will not help the traders who are owed money to recover their dues, but will taint India’s record on respecting the basic principle of limited liability. The move will, in all probability, also amount to contempt of court, as the Bombay High Court is already seized of the matter and is in the process of recovering the amount from defaulters.”

Devoid of dispute, the defaulting traders’ blameworthiness has been established! As much veracity lies in the crisis that unfolded, mugging trading clients, there’s as much credibility in the Economic Offences Wing (EOW) of Mumbai Police having identified defaulters and frozen their assets- almost the entire amount. It was further fortified by the committee formed by the Bombay High Court, chaired by a former high court judge, in order to diligently function and initiate money recovery efforts from the defaulters. Thus when the feisty approach can be reflected in redeeming the seized assets, why the government cannot expedite it on priority basis than condoning the importance of limited liability.

“This kind of governmental activism will not help the traders who are owed money to recover their dues, but will taint India’s record on respecting the basic principle of limited liability. The move will, in all probability, also amount to contempt of court, as the Bombay High Court is already seized of the matter and is in the process of recovering the amount from defaulters.”(Source – ET, 23^rd Oct ’14)

Abiding by the law - the proceeds in the court of law happens to be sub-judice, which, in all fairness, is supreme. Also, no linkage of FTIL promoters or the company in neither the whole crisis nor any money trail has been established; therefore, unwavering focus, plausibly, should be on recovery than anything else. So, is it prejudice triggering radical activism of this magnitude? Numerous questions have been raised; predominantly, if FTIL should be substituted for NSEL, and make its investors face the brunt and suchlike. In any circumstance, it is bound to have a cascading effect on the ‘corporate India’, Investments and economy, as a whole. Does it make us ponder over it pensively?