In a major setback for Financial Technologies (India) Ltd (FTIL), the Bombay High Court on Friday rejected its interim plea to stay the Forward Markets Commission’s order declaring the Jignesh Shah-led company ‘unfit’ to run commodity exchanges.
Reacting to the development, legal sources in FTIL said the Court would continue to hear the writ petition seeking a stay on the commodities market regulator’s order and the case is slated to be taken up again on March 12.
“In the meanwhile, we may move the Supreme Court separately against the High Court order rejecting the interim plea,” an official said.
The bench, headed by Justice Abhay Oka and MS Sonak, was hearing a petition filed by FTIL and its promoter Shah.
FMC had recently ruled that both FInancial Technologies and Shah were not fit to run commodity exchanges in India.
Without prescribing a time frame, the FMC also directed the promoters to reduce their holding in Multi Commodity Exchange (MCX) to 2 per cent from 26 per cent. FMC had passed the order after National Spot Exchange Ltd, another group company of FTIL, failed to settle trade worth ₹5,600 crore executed on its platform. The exchange shut operations abruptly in August last year.
In its 80-page order, FMC termed Shah “the highest beneficiary of the fraud perpetrated at the NSEL exchange”.
Victory for FMCThe Bombay High Court order comes as a major victory for the FMC as FTIL challenged the jurisdiction of the regulator to pass such an order.
Incidentally, FTIL has set up a committee, including two non-executive independent directors —Venkat Chary and S Rajendran – legal adviser Berjis Desai and FTIL’s whole-time director Dewang Neralla, to identify a strategic partner and reduce stake according to the FMC direction.
The board of directors of the company has given four-month’s time to the committee to execute its plan.
Following the FMC order, FTIL has already received show-cause notices from the electricity regulator, Central Electricity Regulatory Commission, Bahrain Financial Exchange and SEBI.