The Bombay High Court today rejected the plea of Financial Technologies India Ltd (FTIL) and its promoter Jignesh Shah to stay the order of Forwards Market Commission asking them to bring down its shareholding in Multi Commodity Exchange of India Ltd (MCX) from 26 per cent to 2 per cent.
A bench headed by Justice Abhay Oka refused to grant interim relief to FTIL after FMC objected, saying this would not be in public interest.
The bench was hearing a petition filed by FTIL and its promoter challenging the recent FMC order which ruled that both were not fit to run any stock exchange in the country and asked for reducing its shareholding in MCX to 2 per cent.
The court had earlier clubbed all the PILs filed by the investors in the Rs. 5500 crore scam involving National Spot Exchange Ltd, also founded by Shah.
FTIL Counsel Janak Dwarkadas made a statement before the court assuring that Shah and FTIL would not exercise control over MCX either through the shareholding or through the Board.
However, FMC, replying to such assurance, said that its order of reducing FTIL’s shareholding in MCX should not be stayed as this would not be in public interest.
Dwarkadas also said that the 26 per cent shareholding of FTIL in MCX would not cause any prejudice to shareholders. Criminal cases filed against NSEL were pending and probe was in progress. In the midst of these developments, such an order passed by FMC was not proper, he said.
FTIL argued that it was being targeted by FMC, though investigating agencies has not held them guilty so far.
FTIL counsel said the FMC had merely held that Shah and his company were not fit enough to run any stock exchange but the market regulator had not directly ordered them to reduce the shareholding in MCX.
FMC counsel Iqbal Chhagla said, “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 (in the scam-tainted organisation).”
“To say that FTIL knows nothing of what was happening in its subsidiary company would not be correct,” he said.
However, FTIL Counsel said that it cannot be argued that if one director (Shah) had the knowledge (of the scam), others also had the same knowledge.