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Industry body Assocham has urged Finance and Corporate Affairs Minister Arun Jaitley to reconsider the proposed forced amalgamation of NSEL with its parent FTIL.
The proposed forced amalgamation through an administrative order issued under the company law would set a "very dangerous precedent" in India's corporate sector, as it ignores the valuable rights granted under law to the various stakeholders of a company, the chamber has said.
The draft merger order will have far reaching negative ramifications and repercussions on the corporate world and the investment climate in India, according to Assocham.
The Centre must leave it to the judiciary to decide on the matter, in the larger interest of trade and industry, said the Assocham letter to Jaitley.
In Assocham's view, a company cannot be held to be liable for alleged events at its subsidiary and/or for any alleged liability of its subsidiary, unless and until adjudicated by a court of law.
It will destroy the concept of "limited liability" which is the fundamental principle of corporate jurisprudence, the chamber has said.
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