Merger in public interest (S.237)

Question 1

When is Merger under public intrest done?

Answer 1

merger under this section is done according to the satisfaction of the central government.

Question 2

State a merger which is done under public intrest

Answer 2

NSEL and FTIL merger

Question 3

what are the facts of the merger?

Answer 3

1. NSEL is a wholly owned subsidiary co. of 63 moons tech ltd (later named as FTIL)
2. NSEL is created to provide commodity exchange according to the forward mrket commission
3. 13k investors who invested in the company were scammed of 5600 crores
4. scam came into light in 2012
5. In 2013 NSEL was merged with FTIL u/s 396 of CO. act 1956.(merged under public intrest).

Question 4

Disputed by FTIL in Bombay HC

What are the contention of the petitioner ?

Answer 4

1. a compulsory merger can not be done in this case a helathy co. is merging with unhealthy company.
2. Intrest of shareholders of the CO. is not being taking into consideration

Question 5

NSEL ANd FTIL merger

What did Bombay HC held?

Answer 5

1. it approved the merger on the grounds of recovery.
2. Economic aspect of FTIL shareholder should not be considered
3. No mention of compensation or payment to shareholder of FTIL.
4. But compensation is mentioned under sectionS.237(3) .

Question 6

How did bombay HC define public intrest?

Answer 6

it defined it as an act of recovery mechanism for recoverning financial and also for restore the confidence of investors.