June 14, 2018

#FIL-NSELMerger: Jignesh Shah, nine others deemed unfit from being directors in companies: NCLT


Jignesh Shah and nine other directors are pronounced as ‘not fit and proper’ for holding the Directors post for any company including 63 Moons (formerly known as Financial Technologies India Ltd) and its subsidiary National Spot Exchange Ltd (NSEL). The declaration came in from the Chennai bench of the National Company Law Tribunal (NCLT).

Shah, the Founder of Financial Technologies (India) Ltd—now known as 63 Moons, is among those alleged to have been involved in the Rs 5,600-crore payment crisis at the National Spot Exchange Ltd (NSEL) .

As per the order, the 10 named persons should not be holding the directorship in any other company. The order also permits the government to nominate up to three directors to the board of 63 Moons to take care of the interest of all stakeholders and also to protect the interest of investment of 63 Moons in its subsidiaries.

Justifying the order against the 10 entities, the NCLT bench said, "The respondents (Shah and certain others) have conducted themselves in a manner prejudicial to the public interest and the interest of the respondent companies...The actions of the respondents have shaken the public confidence in the Indian commodity markets . The failure of the said respondents in exercising due diligence has resulted in the suspension of trade in NSEL and has had/will have adverse effects on the members and other stakeholders of FTIL also."

“The order has also given a clean chit to the current board of 63 moons of any alleged misconduct or wrongdoing against the interest of its shareholders,” 63 Moons MD and CEO S. Rajendran said in the statement.

Rajendran also said that he was shocked to note that the NCLT order has applied Section 388B and such sections against some of the past directors who were not even on NSEL board. “... strangely in case of Jignesh Shah, Section 388B is applied on the basis of material beyond the original petition filed by Ministry of Corporate Affairs in 2015,” the statement said.

The company said it is examining all legal options.

A plea challenging the order was rejected by the Bombay High Court and the court’s ruling has been challenged before the Supreme Court.

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