FTIL's plea to stay FMC order rejected by SC

FMC recently deemed FTIL as not fit and proper to hold stakes in any exchange after the NSEL crisis

The Supreme Court on Friday rejected a plea of Financial Technologies (FTIL) to stay the Forward Markets Commission (FMC) order that it was not “fit and proper” to run any exchange. FTIL later withdrew its petition at the SC.

FMC had also directed FTIL to divest all its shares over a two per cent stake in the Multi Commodity Exchange (MCX), promoted by FTIL, and in any other commodity exchange. The company’s other petition, challenging the Securities Appellate Tribunal (SAT) order that endorsed an order of the Securities and Exchange Board of India (Sebi) to divest its shares in bourses was admitted for a hearing.

The SC bench of judges Vikramjit Sen and C Nagappan noted FTIL's petition against the FMC order was posted for hearing before the high court at Mumbai in May, and that may be expedited.

Incidentally, FTIL had entirely sold its stake in MCX last July, as well as those in other exchanges. All these developments were a sequel to the payments scandal at National Spot Exchange (NSEL), also promoted by FTIL. Jignesh Shah, the then chairman of FTIL, was also barred from holding a management position in any exchange.

Counsel A M Singhvi for FTIL argued the order to divest shares had a cascading effect and other regulators had passed ‘copycat’ directions. This forced the company to sell shares at distress rates. He contended FMC had no statutory power to pass such an order.

Sebi counsel Shyam Divan noted FTIL had already complied with the order of FMC and so, there was no need for an interim stay. The high court had already rejected the prayer and the main petition will be decided there. The judges then allowed FTIL to withdraw its petition.