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The high court here will consider on Friday the plea of Financial Technologies (FT) against the move by Multi Commodities Exchange (MCX) to auction the former’s equity holdings in the latter, on an order from the commodity market regulator, the Forward Markets Commission (FMC).
In the wake of the scam in the National Spot Exchange, an FT subsidiary, the regulator declared the latter unfit to be anchor investor in any other commodity exchange. Accordingly it directed the 26 per stake held by FT in MCX be brought below two per cent. While FT protested, saying FMC lacked the authority to give such a direction, the latter ordered MCX to implement the order or be penalised. MCX proceeded to obey, upon which FT went to court.
MCX decided FT’s voting rights extinguished; it also proceeded to change its Articles of Association to give effect to the new FMC norms. It has told its shareholders to approve by postal ballot, with FT not allowed to vote; the result to be declared by June 18. FT wants the court to stay this and also the implementation of FMC’s new norms. it has, goes its contention, itself already initiated a transparent process to sell its stake in MCX and such action by FMC or MCX could hurt the valuation it could get for its stake. It has argued FMC’s powers to issue such norms are not legally valid.
An FT spokesperson said, “The plea is inter alia challenging the extinguishment of voting rights, MCX’s rights to transfer to an escrow account and selling the shares held by FTIL. The hearing of the plea is on Friday. The process of divestment of shares of MCX is in progress and we are hopeful of completing the process within reasonable time.”
Meanwhile, on Wednesday, hearings went on for almost the entire day on the bail pleas of Jignesh Shah, the head of FT, and of Shreekant Javalgekar, ex-director, taken into custody in the NSEL scam. These were inconclusive and the further hearing will be on the coming Monday.
