NCLAT Rejects Centre's Plea To Supersede 63 Moons Technologies Board [Read Order]
The NCLAT dismissed the appeal filed by the directors of 63 Moons Technologies involving a default of Rs. 5600 crores on the platform of its subsidiary, National Spot Exchange Limited (NSEL). The Appellate body however gave a clean chit to some of the directors of the board as they were appointed as 'Directors' much after the date of mismanagement i.e. 31st July, 2013. Upholding...
The NCLAT dismissed the appeal filed by the directors of 63 Moons Technologies involving a default of Rs. 5600 crores on the platform of its subsidiary, National Spot Exchange Limited (NSEL).
The Appellate body however gave a clean chit to some of the directors of the board as they were appointed as 'Directors' much after the date of mismanagement i.e. 31st July, 2013.
Upholding the NCLT Chennai bench order, Chairperson S J Mukhopadhaya and Justice Bansi Lal Bhat however refused the plea of the Central government to supersede the composition of the board under Section 397 of the Companies Act, 1956 and maintained that the Centre could nominate three directors to protect the interest of all stakeholders of 63 Moons Technologies Limited and its subsidiaries.
Promoters Jignesh Shah, Divang Narela and one more company director were disqualified and would be ineligible to serve on boards of any company. The Bench added:
"In these background, the Respondent No.1- '63 Moons Technologies Limited' and Respondent No.2-Mr. Jignesh Prakash Shah or other Respondents who were functioning against one or other post in '63 Moons Technologies Limited' cannot say that they had no knowledge about 'National Spot Exchange Limited' who has 100% shareholding in NSEL. The report of the forensic audit conducted on 21st September, 2013 shows the damning facts and figures as to the real operations of 'National Spot Exchange Limited' (29th Respondent). It shows that they are not a commodity exchange, but an illegal financing scheme, and that no commodities were really in stock"
Earlier, the Central Government in exercise of its powers under Section 27 of the 'Forward Contracts (Regulation) Act, 1952' by an earlier notification had exempted, subject to certain conditions, all forward contracts of one day's duration for the sale and purchase of commodities traded on NSEL exchange. In gross violation of undertaking given by NSEL and Government exemption condition, NSEL had offered contracts with long term settlement periods including T+18, T+25 and T+36, where, "T" represented the trade day and the numbers 18, 25 and 36 represent the period within which the deliveries of commodities would be completed and the transactions squared off.
Mr. S. N. Mukherjee, Senior Advocate, For Appellant
Ms. Pinky Anand, Additional Solicitor General for Respondents
Company Appeal (AT) Nos. 185-186, 187-188, 189-190, 192, 196-197, 198-199, 200-201, 202-203, 204-205, 206-207, 208, 209 of 2018
[Read Order]