NCLT: Jignesh unfit to be director of any firm
The National Company Law Tribunal (NCLT) Chennai Bench declared Jignesh Shah and nine others, who were allegedly involved in the ~56-billion National Spot Exchange Ltd (NSEL) scam, as not fit to be directors of any company. The order, which was obtained on Saturday, came in a matter related to Financial Technologies Ltd (FTIL), now called 63Moons Technologies.
T E NARASIMHAN& GIREESH BABU write
The National Company Law Tribunal (NCLT) Chennai bench declared Jignesh Shah and nine others, who were allegedly involved in the ~56-billion National Spot Exchange Ltd (NSEL) scam, as not fit to be directors of any company.
The order, which was obtained on Saturday, came in a matter related to Financial Technologies Ltd (FTIL), now called 63Moons Technologies.
The NCLT also ordered the central government to nominate three directors on FTIL’s Board.
The order came after a petition was filed by the Centre against the companies and its directors in a case related to the scam.
The government sought relief, which includes declaring Shah and others as not fit to hold the post of director or another other position in FTIL or any other company as they acted in an oppressive manner against FTIL and NSEL. The government also wanted the FTIL directors replaced by government nominees.
The order was passed by the coram comprising Ch. Mohd Sharief Tariq, member (judicial) and S Vijayaraghava, member (technical), NCLT, Chennai.
In the order, the coram said Shah and others had conducted themselves in a manner prejudicial to public interest and the interests of the respondent companies (63Moons, NSEL and MCX). It added that the actions of the respondents (Shah, the companies and others) have shaken public confidence in the commodities markets.
The failure of Shah and nine others in exercising due diligence has resulted in the suspension of trade in NSEL and is likely to have adverse effects on the members and other stakeholders of FTIL also.
NCLT has ordered the government to nominate not more than three directors on the board of FTIL to take care of stakeholders’ interest and protect the investment of FTIL, which it made in its subsidiaries.
Responding to the order, S Rajendran, MD & CEO, 63Moons, said “We are happy to note that the NCLT rejected the ministry of corporate affair’s prayer to supersede the board of 63Moons in connection with the payment defaults that occurred at one of our subsidiaries, NSEL, in 2013.”
In respect to the past as well as new directors, he said, “While we are still analysing the order. It appears to be full of factual inaccuracies and inherent contradictions.”
“We are completely astonished to note that the NCLT order has applied Section 388B and such sections against some of the past directors who were not even on the board of NSEL, that is, Manjay Shah and Dewang Neralla.
Also, strangely in the case of Jignesh, Section 388B has been applied on the basis of material beyond the original petition filed by the ministry of corporate affairs in 2015. Shockingly, out of the three directors of FTIL, only Jignesh was on the board of NSEL and no Section 397 proceedings were initiated against NSEL. Also, Section 388B wasn’t upheld against any other director of NSEL including some directors of FTIL, who were also on the NSEL board. This complete contradiction is one of the many unexplained and unsubstantiated inconsistencies of the order,” said Rajendran.
The NSEL payments crisis actually happened because of a well-crafted political conspiracy during the UPA 2 era. It is nothing but continued targeting of Shah. This started in the earlier UPA government by a powerful minister and his network of loyal bureaucrats, who failed in their duty and misled the government, he alleged.
“We are examining all legal options,” said Rajendran. The ministry of corporate affairs issued a draft order of amalgamation on October 21, 2014, to merge NSEL with 63Moons in public interest in order to facilitate speedy recovery of dues from the defaulters of these two companies. 63Moons Technologies filed a writ petition challenging the constitutional validity of the move.
The final amalgamation order came on February 12, 2016, under Section 396 of the Companies Act, 1956, amalgamating NSEL and 63Moons.
This was challenged by the company in the Bombay High Court, which dismissed it. This decision has been challenged by Jignesh in the Supreme Court.