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The Bombay High Court on Monday stayed a scheduled Company Law Board (CLB) hearing on Tuesday on a petition of the Ministry of Corporate Affairs (MCA) seeking supersession of the current board of directors of Financial Technologies India (FTIL). The court said it would hear the matter on Wednesday and till then no action could be taken by anybody.
In its petition before the CLB, the ministry accused the FTIL board of mismanagement and fraud, which has been contested by FTIL strongly. In a board meeting held on Sunday to discuss the issue, and based on the board resolution, the company challenged the move before the Bombay High Court, which will hear the case on Wednesday.
The ministry has said in the petition to the company law board that it was necessary to file the petition ‘‘to expedite the recovery process of creditors of the NSEL and prevent any further attempt being made by the FTIL board members along with others and prevent them from fraudulent sale of assets of the FTIL’’.
The company said in a press release that considering the larger interest of 63,000 stake holders of FTIL, the company had challenged MCA’s move in the Bombay High Court. However, on Monday, FTIL’s share price on BSE and NSE hit the upper circuit of 20 per cent to close at Rs 214.05.
The FTIL said that MCA’s action to remove its board was unjust and done at a time when four suits, including the ministry’s draft order proposing to merge crisis-ridden spot exchange subsidiary NSEL with itself and other cases pertaining to regulators declaring FTIL not fit to run an exchange, have been challenged in the high court and, hence, the MCA’s move is sub-judice.
The Bombay High Court had stated that FTIL and its lenders had to file a reply to the MCA by March 4, stating why NSEL should not be merged with FTIL. It said if the government eventually passed an order on the NSEL-FTIL merger it would not be implemented for two weeks, during which FTIL could approach the high court. FTIL, on its website, has urged its shareholders to oppose the merger with NSEL.
“After deliberating on the matter and also considering that the issue is totally prejudiced, mala-fide and not in the interest of FTIL, its board, its employees, its shareholders and other stakeholders, we have decided to contest all issues raised by the Union of India vigorously as per the law of the land,” said Venkat Chary, acting chairman of FTIL in a press release.
Meanwhile, a senior MCA official said, “According to the Companies Act, 2013, when it comes to public interest issues, we can supersede a company's board. We have initiated the process in this regard.” The official refused to comment on the FTIL’s argument. “Let the matter take its due course,” he said.
In its petition before the CLB, the ministry accused the FTIL board of mismanagement and fraud, which has been contested by FTIL strongly. In a board meeting held on Sunday to discuss the issue, and based on the board resolution, the company challenged the move before the Bombay High Court, which will hear the case on Wednesday.
The ministry has said in the petition to the company law board that it was necessary to file the petition ‘‘to expedite the recovery process of creditors of the NSEL and prevent any further attempt being made by the FTIL board members along with others and prevent them from fraudulent sale of assets of the FTIL’’.
The company said in a press release that considering the larger interest of 63,000 stake holders of FTIL, the company had challenged MCA’s move in the Bombay High Court. However, on Monday, FTIL’s share price on BSE and NSE hit the upper circuit of 20 per cent to close at Rs 214.05.
The FTIL said that MCA’s action to remove its board was unjust and done at a time when four suits, including the ministry’s draft order proposing to merge crisis-ridden spot exchange subsidiary NSEL with itself and other cases pertaining to regulators declaring FTIL not fit to run an exchange, have been challenged in the high court and, hence, the MCA’s move is sub-judice.
The Bombay High Court had stated that FTIL and its lenders had to file a reply to the MCA by March 4, stating why NSEL should not be merged with FTIL. It said if the government eventually passed an order on the NSEL-FTIL merger it would not be implemented for two weeks, during which FTIL could approach the high court. FTIL, on its website, has urged its shareholders to oppose the merger with NSEL.
“After deliberating on the matter and also considering that the issue is totally prejudiced, mala-fide and not in the interest of FTIL, its board, its employees, its shareholders and other stakeholders, we have decided to contest all issues raised by the Union of India vigorously as per the law of the land,” said Venkat Chary, acting chairman of FTIL in a press release.
Meanwhile, a senior MCA official said, “According to the Companies Act, 2013, when it comes to public interest issues, we can supersede a company's board. We have initiated the process in this regard.” The official refused to comment on the FTIL’s argument. “Let the matter take its due course,” he said.
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