State-run trading firm MMTC has moved the Company Law Board (CLB) against a stake sale by its co-promoter Indiabulls in Indian Commodity Exchange (ICEX) to Reliance Exchangenext, alleging that the deal was "illegal" -- a charge refuted by all 3 parties.
Indiabulls and MMTC were the main promoters of ICEX with 40% and 26% holdings, respectively, when the exchange was set up in 2008.
Indiabulls later sold 26% stake from its holding to Reliance Exchangenext (R Next), which is part of Anil Ambani-led Reliance Group.
MMTC has requested the CLB to declare sale of stake by Indiabulls Financial Services to R Next as "null and void" and direct a "reversal of transfer" of these shares.
When contacted, all the three concerned parties -- ICEX, Indiabulls and R Next -- asserted that all the rules were followed in the deal and necessary approvals were taken.
A senior Indiabulls official told PTI that all the rules were followed and necessary regulatory approvals were taken for the transaction. He also asserted that the shares were transferred to R Next in compliance with all the clauses of the shareholder agreement.
Rajnikant Patel, R Next Director and ICEX's CEO and President, also said that "R Next has acquired 26% stake in ICEX in accordance with applicable laws and after obtaining requisite regulatory approval."
In the petition, MMTC has requested the CLB to declare the appointment of Rajnikant Patel and RD Barman, two nominees of R Next on the board of ICEX, as "invalid".
MMTC has submitted that there was a lock-in period of 3 years on stake sale as per ICEX's article of association and alleged that the transaction was against the guidelines of commodity market regulator Forward Markets Commission (FMC).
It further alleged that "in order to execute such transfer and induct R Next as the anchor investor, Indiabulls made false and misleading representation to the FMC to the extent that the induction of R Next had no objection from the shareholders of ICEX, including MMTC."
"The officials of Indiabulls went as far as giving false and fabricated excerpts of the minutes of the board meeting of ICEX to the FMC, so as to give a false impression that all the shareholders has consented to the induction of R Next," MMTC has said in its petition.
Apart from MMTC and Indiabulls, other major investor in the the commodity exchange are Indian Potash, Kribhco, IDFC and Abhinay Trading.
The petition may come up for the hearing next week.