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Financial Technologies-India (FTIL) on Wednesday urged the Bombay High Court to grant it an interim relief against the order issued by the Forward Markets Commission (FMC) directing the Jignesh Shah-controlled entity to bring down its holding from 26% to 2% in the Multi Commodity Exchange (MCX).
The bench, headed by Chief Justice Mohit Shah, however, refused to grant any relief while adjourning the matter till Thursday. The matter will now be clubbed with two PILs already filed in the high court.
Senior advocate Janak Dwarkadas, appearing on behalf of FTIL, said any such stake sale would be “irreversible” in nature and, so, an interim stay till a final decision is taken by the court should be granted. He further assured the bench that FTIL is ready to give an undertaking that will not block any board resolution, provided MCX does not alter its capital structure.
“There are around 70,000 shareholders in FTIL... if the promoters dilute the stake now and the court later finds them not guilty... the sale would be irreversible,” argued Dwarkadas, highlighting the fact that currently FTIL does not have any representation on the board of MCX as all the three directors resigned before FMC declared them unfit to be a part of any commodity bourse.
Opposing any such interim relief, the FMC counsel said that FTIL cannot claim to be unaware of the happenings at National Spot Exchange (NSEL), in which it owns a 99.99% stake. Last year, NSEL suspended trading in all contracts, thereby leading to a settlement crisis amounting to nearly R5,600 crore.
“We are not holding them guilty, we are just saying that they are not fit to run any stock exchange. It cannot be argued by them (FTIL) that Shah was not aware of what was going on,” said senior advocate Iqbal Chagla. “To say that FTIL knows nothing of what was happening in its subsidiary company would not be correct,” he said.
Apart from the interim relief, the petition seeks to quash the FMC order that held FTIL not ‘fit and proper’ to hold over 2% in MCX.