High court to hear FT, Shah plea on 'fit & proper' issue on Jan 8

FT and its former officials told the court that the FMC order was premature as the investigation by several agencies was still pending

The Bombay High Court on Saturday asked Financial Technologies India Ltd (FTIL) to report to it if any action was taken to enforce the Forward Markets Commission (FMC)’s order which had held FTIL and its promoter Jignesh  Shah not “fit and proper” to run an exchange. FTIL had approached the court challenging the FMC order. The court fixed the next hearing as January 8.

In its order, FMC had also declared Joseph Massey, a former managing director and chief executive officer (CEO) of the Multi-Commodity Exchange-Stock Exchange (MCX-SX) and a former director of MCX, and Shreekant Javalgekar, a former managing director and CEO of the MCX, not fit to “hold any management position in any exchange recognised by the government of India and FMC”.

The petition was mentioned by FTIL counsel Janak Dwarkadas before a bench headed by Chief Justice Mohit Shah, which asked the market regulator to file a reply by January 6.  

The petition has requested the quashing of the FMC order that held FTIL not “fit and proper” to hold anything more than 2 per cent shareholding in the MCX. FTIL has 26 per cent shareholding in MCX as an anchor investor. The petition has also asked for interim relief to the extent of granting a stay on the FMC order until the matter is finally decided by the HC.

The Securities and Exchange Board of India (Sebi) had issued a show-cause notice to the MCX-SX. The FMC also shared the order with the economic offences wing (EOW) of the Mumbai police for necessary action.

FTIL and ex-officials of the group company told the court that the order was premature, as investigations by several agencies were pending.

According to the revised commodity market guidelines, the promoter and the board members of any recognised exchange should prove themselves to be “fit and proper” after the exchange completed five years of operation.

“FTIL as the anchor investor in MCX does not carry a good reputation and character, record of fairness, integrity or honesty to continue to be a shareholder,” the FMC order said.