Extended to yet ‘Next’ – NSEL - FTIL merger proceeds will stay as is where is - till Feb 4.

Status quo continues. Bombay HC has extended the stay on government’s NSEL-FTIL merger order till 4 February, 2015.

Perhaps new hopes elevated; the position is still as it is where it was; if it will mark a sublime beginning of the conclusion, is the question. Contrary to the unanimous views that emanated from a vast majority of the business fraternity and media spigots, the government has been steadfast in calling for an unwarranted merger of NSEL with FTIL, on 23 October, 2014. This caused a maelstrom of happenings all over, quaking business moorings and economy at large.

As scheduled, the hearing took place on 22 December, 2014, before Justice VM Kanade. The NSEL Investors Forum (NIF) was issued a notice for contempt of court; as the said forum had made allegations against the said Justice that he could be biased as his son had appeared for a nominee director of PD Agroprocessors, who is one of the defaulters in NSEL.

Who’s to judge whose integrity? Has faith in the judiciary among people dwindled, or is it just prejudicing to doubt eminence? But to affirm that justice is alive and omnipotent, the faith of both Forward Markets Commission’s (FMC) and Ministry of Corporate Affair’s (MCA) counsels in the judge was evident and audible in the court. They confirmed their acquiescence to it, reflecting their conviction and trust when they were asked if they had any objection, by the judge offering to recuse himself, if they had any.

On previous hearings, FTIL’s counsel Abhishek Manu Singhvi contended saying that the draft order for the amalgamation was issued under section 396 of the Companies Act and extended his argument stating that the merger needs to be approved by the boards of both the companies in question, along with the approval of ROC and Official Liquidator’s (OL) nod.

With hindsight, it was a recommendation by FMC and the department of economic affairs that triggered a shockwave which was followed by the government’s draft order for merger. The aim maybe to haste the merger, but it is, as debated all over, bound to dilapidate the scene adversely, and it is inimical for the economy and entrepreneurial growth at large. FTIL’s argument has been that the uncalled-for amalgamation will unavoidably transfer the default of NSEL to FTIL.

The fallout will prove to be "wet blanket" resulting in haplessness, plaguing the scene with waning interest among existing stakeholders, employees of the parent company, besides dismaying new investors across-the-board.  

Deal culminated – FTIL clinches agreement with sale of 1.65 shares to Rakesh Jhunjhunwala

Further developments in FTIL’s shares sale process! A transaction that was initiated last month has been finally clinched; Further 1.65 lac shares have been sold by FTIL to Rakesh Jhujhunwala for Rs. 2.47 lac in MCX-SX stock exchange. This is believed to have completed the departing process. This was pursuant to the agreement signed by FTIL towards selling its whole 5% stake, including 2.7 crore equity shares and 56,24,60,000 warrants for Rs. 88.41 crore.

This was also revision to the original agreement, in response to the clarification requirement of BSE last week, particularly, on the stake sale that took place in November, 2014.  

Also, there were separate warrant purchase agreements that were entered into, by FTIL, with Edelweiss Commodities Services, Viral Parikh, Trust Investments, Derive Investments, Nemish Shah, Dhanesh Sumatilal Shah, Kalpraj Dharamshi, Renuka Shah, Uday Shah, Madhuri Kela, Madhu Vadera Jayakumar and Capital & Research.

As per the clarification to BSE, an unsupported error in communication, on 25 November, 2014, appeared stating the company exited entirely from MCX-SX. Thus making amends, FTIL clarified that now the whole culmination has taken place with this further sale of shares to Jhunjhunwala. The excerpts from FTIL’s clarification stated, "...nominal 165,000 equity shares were missed out due to decimal calculation which was subsequently sold to Rakesh Jhunjhunwala by entering into an amendment agreement completing the sale of total share of 2,71,65,000 on the basis of the present capital of MCX-SX.”

Thus, with this deal, FTIL has totally exited from MCX-SX. 

(Source - http://economictimes.indiatimes.com/markets/stocks/news/financial-technologies-india-ltd-sells-1-65-lakh-shares-of-mcx-sx-to-rakesh-jhunjhunwala/articleshow/45415330.cms

http://www.business-standard.com/article/markets/ftil-sells-additional-1-65-lakh-mcx-sx-shares-to-jhunjhunwala-114120800243_1.html) 

Proceeds pushed for next – Bombay HC adjourns NSEL-FTIL merger hearing

FTIL’s quest for pivots to save numerous stakes has been a determined effort. The Bombay Court, on 27 November, 2014, adjourned the NSEL-FTIL merger issue till 22 December, 2014. The merger draft order came as a stinker from the Ministry of Corporate Affairs (MCA) on 22^nd October, 2014, which was swilled by many from the business community and several of the media mouth pieces and vents ever since, calling it unwarranted and uncalled for. The swarming views were - the pragmatic shortcomings from the amalgamation will wear away the fundamentals of limited liability; it may also affect the corporate business moorings adversely, apart from discouraging new and enthusiastic investors and traders. In entirety, it may be detrimental to the economy as a whole.  

Apparently, the adjournment, if construed specifically, means the hearing has been deferred till 22 December, 2014; momentarily, it can be seen as the idea is devoid of enough reasoning, as the basis of Article 396 and ‘public interest’ nomenclature can’t be held to be entirely realising. Thus no parity can be drawn in this case. Also, as per a former argument by Abhishek Manu Singhvi, counsel for FTIL, at Supreme Court, section 396 of the Companies Act, 1956, has been exercised, with a thoroughgoing approach, maximum four times, on government companies – that too, with their consent. While in this case, the rummage for expedited merger implementation is on two private companies; needless to say, without their consent, which is unprecedented. Implicitly, the motive seems to be ‘hurried implementation’, which, as per several views and reviews, will emasculate the sanctity of limited liability, affecting the interests of stakeholders, viz. employees and shareholders of FTIL, largely. Therefore, it hasn’t been taken in good taste, for the most part.

It’s been a dour demeanour of FTIL; at first, challenging government’s order for merger of NSEL with FTIL. Then tenaciously striding ahead to protect the sanctity of ‘limited liability.’ Earlier, FTIL had moved Bombay HC against the government’s order. Vehemently put by FTIL, against several arguments – the matter is currently sub-judice before the Bombay HC; thus liability through piercing the corporate veil does not arise.

Myriad voices and arguments against the order were put forward by the business community as well as the media fraternity, to galvanise the matter to reach the authoritative and law dispensing ears. Their objective, seemingly, was to converge fortitudes of the stakeholders, future investors and entrepreneurs at large.

As per the excerpts, mentioned in quotes in the news edit of Economic Times, on 13^th Nov., 2014, reads – “The issue of lifting the corporate veil is, thus, already sub-judice before this court. The petitioners crave leave to refer to and rely upon the papers and proceedings, including various interlocutory applications and orders passed by this Hon-'ble Court, in the said suits."

Now, FTIL is all the more determined to protect the interests of the corporate India, along with those of 60,000 shareholders and 1000 employees. On 21^st October, 2014, questions have been raised on the Ministry Corporate Affairs’ impugned order of enforced amalgamation of the crisis-hit NSEL with FTIL. FTIL solicited in the petition that the government’s order was “bad in law and needs to be quashed.”