Defaulters always believe that they will be untouched when scams involving them are uncovered by the Government agencies. If the Finance Ministry, SEBI and RBI are joining forces to bring the culprits to book, then financial defaulters must start counting their days.
Scams which run to over thousands of crores, affect all stakeholders – especially, the common man who is caught in the financial quagmire. However, with the change in the Government’s approach, the Government agencies now have a firm footing. The perfect example in this case is the National Spot Exchange Limited (NSEL) payment crisis. SEBI has cracked the whip and questioned the other stakeholders involved in the Rs 5600 cr payment crisis. In the NSEL case which seeks a fresh perspective to get to the other side of the story—this could just be the kick start towards justice. A lot of how the case has panned out centres on the management being made to look guilty while the real perpetrators escaped attention. While jurisdictional issues have played a role in culprits escaping around the corner, other underhand forces also seem at play. But things may just be changing! Forward Markets Commission, which led the inspection all this while, is now better equipped under the SEBI umbrella. SEBI and FMC in fact have never been as well-integrated to dig into the matter. That may just be the silver lining for Jignesh Shah’s 63 moons technologies limited which has stood up to just about everything—from broker transgressions to public judgement and executive overreach—and looks for a fair hearing. 63 moons group has good reasons to call into question the decision to merge 63 moons with NSEL by the centre. Not only does it appear laced with sentiments of executive overreach, it is a fundamental violation of Limited Liability, one of the critical components to ‘Make in India.’ Looking at the larger picture, a merger between two private companies could set a bad precedent in Corporate India – it will spook the foreign investors and create a sense of fear among the top business houses. Well, no corporate house wants to witness such a fate for them-selves. But is the Government listening? I wonder! Reference - ShantanuGuhaRay:(2016): ‘The Target Book’: New Delhi: Publisher: AuthorsUpfront
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NSEL is not only a case of flouted rules but also about inefficiency of the system to penetrate deeper to catch hold of wrongdoers.
That leads back to another outlandish order passed in the case--the forced merger between NSEL and 63 moons against every established norm of corporate governance. Not only does that leave 63k shareholders in the lurch, the baffling verdict opens up an easy escape route to NSEL defaulters and pushes 63 moons into paying up Rs. 5600 crore for NSEL discrepancies. This “subtle” attempt of letting real culprits get shielded under the cover of corporate jurisprudence is unforgivable. The forced merger in the name of public interest is an outlandish example on a global level of how incompetent and infertile Indian markets are for investment –more so at the time when PM’s brainchild ‘Make in India’ seeks foreign investments. It is a matter of grave concern that defaulters will be set free. It is alarmingly dangerous as the system chasing down innocents who should not be paying for someone else’s wrongdoings. There needs to be a change to trigger necessary steps and actions. On the recommendations of the FMC, the Ministry of Corporate Affairs initiated a move in October 2014 for a merger of NSEL with 63 moons. Although October 17-19, 2014 were holidays, the otherwise “lazy and laidback” government officials worked throughout this period to collate information to draft the merger order as Krishnan was to leave the Finance Ministry on October 20 owing to his transfer. He is now the Additional Secretary in the Department of Land Resources.
The speed at which the draft merger order was processed after the FMC’s recommendation raises eyebrows behind the ill-brained motives behind the move. While we still hope for justice and fair play in the sub-judice NSEL crisis, only time will tell who the real culprits were. This order has challenged the constitutional validity of Section 396 of the Companies Act, 1956. Moreover, 63 moons has challenged this order before the Bombay High Court. While considering the pros and cons of this forced merger, it is evident that the merger will destroy the concept of “limited liability”. It may also lead to global and local investors losing confidence in investing, given that 63 moons has FDI and FII investments. It will further set a precedent to an array of PILs seeking merger of companies facing financial problems with their solvent parent companies. The forced merger will also have an adverse impact on 63 moon’s market capitalization. It may erode its net-worth by buckling the unproven and sub-judice liabilities of more than Rs. 5,000 Cr of NSEL onto 63 moons. This will directly harm thousands of 63 moon's shareholders along with hundreds of its employees, creditors, vendors and other stakeholders, which is against the spirit and purpose of Section 396. It is unhealthy to pass on third-party unproven liabilities with a view to adversely affect the stakeholders of the parent company, its creditors and employees. Reference - ShantanuGuhaRay:(2016): ‘The Target Book’: New Delhi: Publisher: AuthorsUpfront The Board of NSEL consisted of six non-executive directors drawn from different experiences in the agriculture economy and ecosystem. The day to day functioning of the management of the exchange was carried out by the one & only Executive Director, i.e. the Managing Director and Chief Executive Officer under the Rules, Regulations and Bye-Laws of the Exchange.
Reference:http://www.nationalspotexchange.com/Truth_About_NSEL.htm For more information check 63 Moons Reviews. |
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