Jignesh Shah, chairman and chief executive officer of Financial Technologies (India) Ltd. Photo: Bloomberg.
New Delhi:The National Company Law Tribunal (NCLT) has barred Jignesh Shah and nine others from holding directorship in 63 Moons Technologies as well as any other company.
Shah, the founder of Financial Technologies (India) Ltd—now known as 63 Moons, is among those alleged to have been involved in the Rs5,600-crore payment crisis at the National Spot Exchange Ltd (NSEL).
Besides, the tribunal has said the government can nominate up to three directors to the FTIL board to take care of the interest of all stakeholders as well as protect the company’s investments in its subsidiaries.
The latest ruling pertains to a petition filed by the corporate affairs ministry seeking relief on various counts against the backdrop of the NSEL scam.
In a 36-page order, dated 4 June, an NCLT Chennai bench said Shah and nine others are “not fit and proper persons” to hold the office as director or any other office connected with the conduct and management of FTIL and NSEL.
Also, they are “not eligible for appointment as directors in any other company,” it said. According to the tribunal, these individuals have conducted themselves in a manner prejudicial to the public interest. “... 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 (Respondent 29) and has had/will have adverse effects on the members and other stakeholders of Respondent 1 (FTIL) also,” the order said.
In a statement, 63 Moons said that in respect of past directors and new directors’ addition, it was “still analysing the order... on a quick review, it appears to be full of factual inaccuracies and inherent contradictions”.
The petition alleging oppression and mismanagement should be made by the members/ shareholders of the company, subject to certain provisions under Section 399 of the Companies Act, 2013, the NCTL order said.
“Since the petitioners cannot be treated as a member for the purpose of petition under Section 397 and 398, the reliefs sought for under Section 397 and 398 are not sustainable,” the order said.
The ministry had sought that it should be declared that 27 respondents in the matter, including Shah, were/ are acting in an oppressive manner against FTIL and NSEL.
“We are extremely happy to note that NCLT has rejected Ministry of Corporate Affairs’ prayer to supersede the board of 63 moons in connection with the payment defaults that occurred at one of our subsidiaries, NSEL in 2013.
“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... We are examining all legal options and we are very sure that ultimately truth shall prevail and justice will be done,” the statement said.
Section 388B of the Companies Act, 1956 pertains to cases against managerial personnel. Following the NSEL scam, the ministry had sought merger of FTIL and NSEL.
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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