It’s
the first time that a subsidiary company is being forcefully merged with its
parent company, through an executive fiat overruling the judiciary which
defeats the fundamental edifice of Limited Liability under the Indian Companies
Act, 1956.
The
areas of concerns involving this case are multiple-- from legislative and
fiscal purview—to public interest. The claim by MCA that the move aims to
alleviate the 13,000 trading clients of NSEL is based on untenable grounds.
Based
on MCA’s own circular dated April 20th, 2011, it is a known fact that for any
merger to materialize permission of 100% shareholders and 90% creditors needs
to be obtained. By forcing the merger on 63,000 shareholders without so much as
giving them a chance to consent/object to the amalgamation, MCA has not only
goes against its own circular but also article 14 of the constitution.
The
two companies are autonomous bodies with 63 moons (formerly FTIL) showing cash
reserve of Rs. 2000 crore, on the other hand, other, owning a liability of Rs.
5600 crore. The merger is likely to erode the net worth of 63 moons and may
render it unviable. Such merger cannot be considered as the best recourse in
any case.
What
is even more baffling is that at a time when we are projecting ‘Make in India’,
how would we rationalize such executive high-handedness. Such a step will
affect investor sentiments thereby hurting the nation’s interests as well.
It
is completely unfair to make shareholders of 63 Moons pay for the sins of
defaulters. It is difficult to grasp the hurry and rationality behind the
merger when we should clearly be chasing the actual defaulters.
In
these circumstances, while investigations and various legal proceedings are
pending, any action based on the FMC's recommendations towards merging NSEL
with 63 moons, will irreparably prejudice and harm all stakeholders and slow
down the on-going recovery process.
Reference:
Shantanu Guha Ray:(2016): ‘The Target Book’: New Delhi: Publisher: AuthorsUpFront
0 comments:
Post a Comment