SC quashes Jignesh Shah bankruptcy orders

New Delhi: The Apex Court has given a major relief to Jignesh Shah -- better known as ‘exchange man’ because of his penchant for floating private stock exchanges.

The Supreme Court on Wednesday struck down the orders of the Mumbai Bench of the National Company Law Tribunal to force the closure of his company, La-Fin Financial Services Private Limited, under the Insolvency & Bankruptcy Rules.

IL&FS Financial Services Ltd had tried to force the closure of his company which had fathered his Multi-Commodity Exchange India Limited and MCX Stock Exchange Limited , for refusing to buy back their shares in August 2012 as per an undertaking given in August 2009.

In a 40-page judgment, the Bench of Justices Rohinton Fali Nariman, R Subhash Reddy and Surya Kant struck down the judgments of both NCLT and appellate tribunal on the ground that the winding up petition was time-barred.

It noted that the winding up petition was filed on October 21, 2016 which is beyond the limitation of three years since the date of default in La-Fin's refusal to buy back the shares was August 19, 2012.

The Apex Court noted that the winding up petitions first filed before the Bombay High Court and then before the NCLT nowhere mention that La-Fin is otherwise commercially insolvent.

Allowing the appeals of Jignesh Shah and Pushpa Shah, both being the shareholders of La-Fin, the court noted that the statutory notice given in November 2015 also did not refer to any facts regarding the commercial insolvency of La-Fin to allow its liquidation, nor the fall of its assets was explained.

In a recent interview, Jignesh Shah, who had to exit all his exchange businesses after a massive Rs 5600-crore payment default in his spot exchange NSEL (National Spot Exchange Limited) in 2013, had said that he had become a target of political and corporate conspiracy.

He had underscored his faith in the judiciary to redeem his crushed business, noting that he was unlike other businessmen who fled to London after defaulting on bank loans.