The Rajasthan High Court has stayed the March 31 order of the Forward Markets Commission (FMC) suspending the primary membership at all commodity exchanges of a Jaipur-based guar gum trading company named Hindustan Technosol Pvt Ltd (HTPL).
“Our legal team is studying the order,” said an official at FMC, the commodity derivatives market regulator.
FMC had simultaneously suspended two other traders in the same product, on like charges — Vinod Commodities Ltd and Shresth Commodities & Financial Services Pvt Ltd — for a year and six months, respectively. Only HTPL went to court. Now, on the face of it, the other two could be entitled to the same relief.
FMC had acted on complaints alleging excessive and illegal speculation in guar gum and seed prices by a few traders, resulting in a four-fold rise in prices of both commodities within a year. Before the suspension, HTPL was a member of the National Commodity and Derivatives Exchanges (NCDEX), the Multi Commodity Exchange (MCX), the Ace Derivatives and Commodities Exchange (Ace) and the National Multi Commodity Exchange (NMCE).
FMC asked HTPL for an explanation. The court order said the presentation by HTPL’s director, Ravikant Kanoongo, failed to provide a satisfactory explanation regarding margin funding and other charges levied on the company. It detailed a number of items on which it was not satisfied with the legality HTPL’s actions.
It decided HTPL’s actions had not been in public interest and issued an order suspending it for six months from the primary membership of the exchanges. The latter were also directed to initiate disciplinary proceedings against HTPL for violations of bylaws, rules and regulations.
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HTPL counsel Sameer Jain defended the company before HC judge Ajay Rastogi and pleaded that half the period of suspension given in the FMC order had already passed. HTPL’s running business had been halted and if the further operation of the regulator’s directive was not stayed, it would be ruinous for his client.
Additional solicitor general S S Raghav appeared for FMC and contested Jain’s pleas.
“We have already written on Friday morning to FMC for granting us permission to commence trading on behalf of clients,” said Kanoongo.