In Brief
The Supreme Court set aside a compulsory amalgamation order of 63 Moons Technologies (formerly FTIL) with National Spot Exchange (NSEL) passed under Section 396 of the Companies Act, 1956. While Section 396 is protected by Article 31A from constitutional challenge, the Court held that the Central Government's order must still comply with the statutory prerequisites. The Court found that the 'essential' public interest condition was not satisfied because the emergency situation requiring quick recovery had largely resolved by the time the final order was made. The Court also held that compensation must be assessed for FTIL's shareholders despite no increase in share count, as their economic interest was materially harmed. The order was therefore ultra vires and violated Article 14 for failure to assess compensation."
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