Two days after being declared ‘not fit and proper’ to operate a commodity exchange, Jignesh Shah, the promoter of the troubled National Spot Exchange, filed a writ petition in the Bombay High Court on Friday to quash the commodity market regulator Forward Markets Commission’s order.
Seeking an immediate stay on the order, the writ petition contested FMC’s jurisdiction to pass the same. It alleged that the regulator had not followed the principles of natural justice and allegedly also questioned the authenticity of data relied upon to conduct a forensic audit on NSEL and MCX.
In its 80-page ruling issued on Wednesday, the Commission had said Jignesh Shah, Joseph Massey and Shreekant Javalgekar – former directors of the troubled NSEL – were not ‘fit and proper’ to hold any management or board position in any recognised commodity exchange.
It had also directed Financial Technologies, the parent company of NSEL, to reduce its stake in MCX to two per cent from 26 per cent now.
The FMC order had also named Shah as the biggest beneficiary of the Rs 5,600-crore NSEL scam. It said that due to the huge profits of Rs 125 crore earned by NSEL last fiscal, the value of Shah’s shares in FTIL shot up manifold giving him the benefit of a spectacular windfall.
Contending FMC’s observations, Shah’s petition said FTIL’s market cap increased only when NSEL was making losses. Jignesh Shah never bought or sold shares in the last five years and hence there was no question of any gain, the petition noted. The petition further alleged that since the NSEL had not given any dividend or bonuses to shareholders, the question of benefiting from NSEL’s profit did not arise.
NSEL’s profit of Rs 125 crore was disclosed on May 30, 2013 when FTIL declared its consolidated quarterly results for the first time. The petition said that from that day till July-end, when the NSEL crisis broke out, FTIL’s market cap had fallen even as the Sensex rose.
The case is expected to come up for hearing on Saturday.
suresh.i@thehindu.co.in