 "Allegations false, concocted and without merit: MCX")
The notification according recognition to MCX was not published in the Maharashtra state gazette, as required under FCRA, till 2012, whereas the exchange was functioning since 2003.
The aforesaid allegation is false. It is based on a concocted and wrong interpretation of statutory provisions; and is without any merit or substantiation.
The crucial requirement under Forward Contract (Regulation) Act, 1952, ("FCRA"), is the grant of Recognition to an association and the publication of the Recognition in the Gazette of India, to legitimise its activities.
MCX was granted recognition vide notification for recognition, published in the Central Gazette in Part II Section 3 Sub-Section (ii) of the Gazette of India Extraordinary dated 26th September, 2003. It was also forwarded by the Under Secretary to the Government of India, Ministry of Consumer Affairs, New Delhi to the Chief Secretary, Government of Maharashtra with a request "that the Notification may be published in the State Government Gazette". The said letter dated 26th September 2003 along with Notification (attached herewith) was also marked to the Chairman of Forward Markets Commission (FMC) and the Managing Director of MCX.
During the due diligence conducted prior to MCX's Initial Public Offer (IPO) in February 2012, it was found that the aforesaid Maharashtra State Government Gazette publication was not available.
On enquiring with the Government Press of Maharashtra, MCX found that the Gazette Notification was not published as requested by the Central Government vide its letter dated 26th September 2003.
Moreover, as there is no time period laid down for the publication of the said Notification in the State Gazette, MCX forwarded the said letter dated 26th September, 2003, to the Director Printing Press and Publication, Government of Maharashtra, with a covering letter dated 25th February, 2012 requesting it to comply with the request of the Central Government along with the necessary charges for the Publication. Accordingly, the Government Press, Maharashtra, after examination of the issue, published the Notification on 01-07 March 2012 under Serial No. 551, 551A.
As per section 6(4) of FCRA, stated herein below, our Recognition is effective from the date of publication in the Gazette of India which is New Delhi, Friday, September 26, 2003 (F.No.12/3/IT/2003).
"Every grant of recognition under this section shall be published in the Gazette of India and also in the Gazette of the State in which the principal office of the recognised association is situated, and such recognition shall have effect as from the date of its publication in the Gazette of India, (Emphasis applied)."
Thus, under Section 6(4) of the FCRA, it is clear that the commencement and conduct of business of the Exchange (from the date of publication in the Gazette of India) is legal if the aforesaid recognition is published in the Gazette of India, which was done on 26th September 2003. And accordingly MCX commenced its operations and is currently operating in due compliance with the requirements of the FCRA.
The publication of the notification of recognition in the State gazette under the circumstances appears to be in the nature of general information to the public. It has no correlation with the commencement of an exchange's operations. MCX commenced its trading operations with effect from November 10, 2003 after the notification of grant of recognition had been published in the Gazette of India dated September 26, 2003 and after making available all the Rules and Bye-laws of the Exchange on its website www.mcxindia.com.
The Memorandum of Association was not published before the exchange started functioning. It was published almost nine years later on March 25, 2012. Further, the rules, byelaws of the exchange were not printed in the gazette at all for 28 months. Even when they were printed these gazette copies were all acquired by MCX making wider circulation and publication of the byelaws impossible.
MCX is a demutualised Exchange ab initio. The Memorandum of Association and Articles of Association (MOA & AOA) were lodged with Registrar of Companies at the time of Incorporation of the Company. The updated MOA & AOA are always available at MCA portal and our website www.mcxindia.com. The said MOA & AOA were also notified in the Gazette of India dated February 25, 2012 - March 2, 2012 (Phalguna 6, 1933).
As seen from the provisions of the Act, there is no mention of publication of pre-recognised Exchange Bye laws/Rules in any Official Gazette of India/ State Gazette. What is specifically mentioned under section 6(4) of FCRA is that the recognition granted to the said association shall be published in the Official Gazette of India, which was duly published by the Ministry of Consumer Affairs (Dept of Consumer Affairs) by Notification No. S.O. 1116(E), dated 26.9.2003.
The bye-laws and Rules of MCX were published on our website www.mcxindia.com prior to commencement of our trading operations and notified in the Gazette of India dated 11th March 2006 - 17th March, 2006.
We submit that the Bye-laws and Rules made by the Exchange prior to its recognition did not require publication in the official gazette as contemplated under Section 9A and/or Section 11 of the FCRA. Since the Byelaws, Rules & MOA of the Exchange were submitted to the Government at the time of application made for recognition under section 5 of FCRA such Byelaws, Rules & MOA are "Pre-Recognised" and need not be published in the gazette. These were nevertheless uploaded on our website for public awareness. All members and clients using the Exchange undertake to comply with all requirements of Rules and Bye Laws as applicable from time to time.
MCX published the notification of recognition in the state gazette in the form of an advertisement. But, this has been subsequently cancelled as it was not by competent authority.
The said State Gazette Notification was cancelled based on a complaint by Mr. Ashok Jain (He and his wife are defaulters of MCX's member. Please refer to the attached High Court ruling). On coming to know of the cancellation, FMC, the Department of Consumer Affairs, and the Government of Maharashtra were seized of the matter. Action was initiated to restore with immediate effect Notification dated 01-07 March 2012 under Serial No. 551, 551A in part II of Maharashtra State Gazette, or alternatively, have the Notification republished in the State Gazette. The Notification was restored on July 31, 2013.
With respect to your observation that the notification has been republished by an official under the order of governor of Maharashtra; whereas the chief secretary was originally supposed to notify it, we would like to submit that it is entirely up to the Maharashtra Government to decide as to who should notify the State Gazette Notification.
In your mail you have stated that the forward markets commission and key government departments are looking into alleged irregularities in compliance of certain mandatory requirements under Forward Contracts (Regulation) Act with regard to gazette notifications by MCX. We are not aware of any such inquiry.
The aforesaid allegation is false. It is based on a concocted and wrong interpretation of statutory provisions; and is without any merit or substantiation.
The crucial requirement under Forward Contract (Regulation) Act, 1952, ("FCRA"), is the grant of Recognition to an association and the publication of the Recognition in the Gazette of India, to legitimise its activities.
MCX was granted recognition vide notification for recognition, published in the Central Gazette in Part II Section 3 Sub-Section (ii) of the Gazette of India Extraordinary dated 26th September, 2003. It was also forwarded by the Under Secretary to the Government of India, Ministry of Consumer Affairs, New Delhi to the Chief Secretary, Government of Maharashtra with a request "that the Notification may be published in the State Government Gazette". The said letter dated 26th September 2003 along with Notification (attached herewith) was also marked to the Chairman of Forward Markets Commission (FMC) and the Managing Director of MCX.
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MCX had been under a bonafide belief that the Maharashtra State Government would have acted upon the request of the Central Government to publish the same as per practice followed by the State Government for various requests pertaining to the publication of such notifications in the State Gazette that it receives from the Central Government.
During the due diligence conducted prior to MCX's Initial Public Offer (IPO) in February 2012, it was found that the aforesaid Maharashtra State Government Gazette publication was not available.
On enquiring with the Government Press of Maharashtra, MCX found that the Gazette Notification was not published as requested by the Central Government vide its letter dated 26th September 2003.
Moreover, as there is no time period laid down for the publication of the said Notification in the State Gazette, MCX forwarded the said letter dated 26th September, 2003, to the Director Printing Press and Publication, Government of Maharashtra, with a covering letter dated 25th February, 2012 requesting it to comply with the request of the Central Government along with the necessary charges for the Publication. Accordingly, the Government Press, Maharashtra, after examination of the issue, published the Notification on 01-07 March 2012 under Serial No. 551, 551A.
As per section 6(4) of FCRA, stated herein below, our Recognition is effective from the date of publication in the Gazette of India which is New Delhi, Friday, September 26, 2003 (F.No.12/3/IT/2003).
"Every grant of recognition under this section shall be published in the Gazette of India and also in the Gazette of the State in which the principal office of the recognised association is situated, and such recognition shall have effect as from the date of its publication in the Gazette of India, (Emphasis applied)."
Thus, under Section 6(4) of the FCRA, it is clear that the commencement and conduct of business of the Exchange (from the date of publication in the Gazette of India) is legal if the aforesaid recognition is published in the Gazette of India, which was done on 26th September 2003. And accordingly MCX commenced its operations and is currently operating in due compliance with the requirements of the FCRA.
The publication of the notification of recognition in the State gazette under the circumstances appears to be in the nature of general information to the public. It has no correlation with the commencement of an exchange's operations. MCX commenced its trading operations with effect from November 10, 2003 after the notification of grant of recognition had been published in the Gazette of India dated September 26, 2003 and after making available all the Rules and Bye-laws of the Exchange on its website www.mcxindia.com.
The Memorandum of Association was not published before the exchange started functioning. It was published almost nine years later on March 25, 2012. Further, the rules, byelaws of the exchange were not printed in the gazette at all for 28 months. Even when they were printed these gazette copies were all acquired by MCX making wider circulation and publication of the byelaws impossible.
MCX is a demutualised Exchange ab initio. The Memorandum of Association and Articles of Association (MOA & AOA) were lodged with Registrar of Companies at the time of Incorporation of the Company. The updated MOA & AOA are always available at MCA portal and our website www.mcxindia.com. The said MOA & AOA were also notified in the Gazette of India dated February 25, 2012 - March 2, 2012 (Phalguna 6, 1933).
As seen from the provisions of the Act, there is no mention of publication of pre-recognised Exchange Bye laws/Rules in any Official Gazette of India/ State Gazette. What is specifically mentioned under section 6(4) of FCRA is that the recognition granted to the said association shall be published in the Official Gazette of India, which was duly published by the Ministry of Consumer Affairs (Dept of Consumer Affairs) by Notification No. S.O. 1116(E), dated 26.9.2003.
The bye-laws and Rules of MCX were published on our website www.mcxindia.com prior to commencement of our trading operations and notified in the Gazette of India dated 11th March 2006 - 17th March, 2006.
We submit that the Bye-laws and Rules made by the Exchange prior to its recognition did not require publication in the official gazette as contemplated under Section 9A and/or Section 11 of the FCRA. Since the Byelaws, Rules & MOA of the Exchange were submitted to the Government at the time of application made for recognition under section 5 of FCRA such Byelaws, Rules & MOA are "Pre-Recognised" and need not be published in the gazette. These were nevertheless uploaded on our website for public awareness. All members and clients using the Exchange undertake to comply with all requirements of Rules and Bye Laws as applicable from time to time.
MCX published the notification of recognition in the state gazette in the form of an advertisement. But, this has been subsequently cancelled as it was not by competent authority.
The said State Gazette Notification was cancelled based on a complaint by Mr. Ashok Jain (He and his wife are defaulters of MCX's member. Please refer to the attached High Court ruling). On coming to know of the cancellation, FMC, the Department of Consumer Affairs, and the Government of Maharashtra were seized of the matter. Action was initiated to restore with immediate effect Notification dated 01-07 March 2012 under Serial No. 551, 551A in part II of Maharashtra State Gazette, or alternatively, have the Notification republished in the State Gazette. The Notification was restored on July 31, 2013.
With respect to your observation that the notification has been republished by an official under the order of governor of Maharashtra; whereas the chief secretary was originally supposed to notify it, we would like to submit that it is entirely up to the Maharashtra Government to decide as to who should notify the State Gazette Notification.
In your mail you have stated that the forward markets commission and key government departments are looking into alleged irregularities in compliance of certain mandatory requirements under Forward Contracts (Regulation) Act with regard to gazette notifications by MCX. We are not aware of any such inquiry.