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The Supreme Court on Thursday granted status quo to Financial Technologies (FTIL) against the order of the Central Electricity Regulatory Commission (CERC), the power sector regulator, which had ordered FTIL to divest its entire stake in Indian Energy Exchange (IEX) by July 20.
FTIL has already entered into a share purchase agreement to sell 16.6% stake in IEX to a group of investors. However, that sale is yet to be completed. FTIL holds 26.6% stake in IEX.
The CERC order on the expropriation of FTIL shares in the IEX by directing IEX to transfer FTIL entire shareholding into trust account has been stayed with the Supreme Court granting status quo the CERC order.
The CERC issued the order on June 26, 2015, directing FTIL to transfer its entire shareholding in the Trust Demat Account of IEX by July 2, 2015. Interestingly, the Company Law Board (CLB) on July 30 had asked FTIL not to sell any assets.
The CERC order was based on the order of the commodity derivatives markets regulator the Forward Markets Commission (FMC) which declared FTIL not "fit and proper" for its Rs 5600 crore payment crisis in its subsidiary National Spot Exchange Ltd (NSEL). The FMC's order also followed similar order by the equity markets regulator the Securities and Exchange Board of India (SEBI).
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FTIL believes that CERC's order of declaring FTIL not fit and proper, calling upon FTIL to divest IEX shares and the order directing FTIL to transfer is without power and jurisdiction. It was argued on behalf of FTIL that there was a fundamental issue of jurisdiction in respect of the order passed by the CERC.
FTIL's application also stated that a forced transfer would affect the interests of the shareholders of a public listed company who are more than 63,000 in number. The supreme court direction protects the interests of over 63,000 shareholders of FTIL.
According to FTIL, the honourable judge was of the view that status quo needed to be granted in the matter, particularly in the light of the fact that on earlier occasion the apex court issued notices to CERC in FTIL's appeal on the fit and proper order and the order for divestment of shares.
