SC rejects FTIL's plea to stay FMC order

The FMC's order had come in the wake of a Rs 5,574.34 crore payment scandal last year at NSEL

The Supreme Court on Friday rejected the plea of Financial Technologies Ltd (FTIL) to stay the order of the Forward Markets Commission (FMC) declaring it as  "non-fit and improper"  to run exchanges.

It has also directed FTIL to divest its shares over 2 per cent in MCX, which is owned by FTIL, and other commodities exchanges.

The bench consisting of Justices Vikramjit Sen and C Nagappan noted that the company’s petition against the order is posted for hearing before the Bombay high court in May and that may be expedited.

The company’s other petition challenging the order of the Securities Appellate Tribunal that endorsed Sebi’s directive to divest its shares  in bourses was admitted for hearing in the Supreme Court.

Senior counsel A M Singhvi for FTIL argued that the order to divest shares had a cascading effect and other regulators had also passed copycat directions to divest its shares. This forced the company to sell shares at distress rates, causing a loss of Rs 284 crore immediately and continuing to lose Rs 100 crore every day. 

Counsel contended that FMC had no power to pass the order. It did it through an executive order without any statutory backing. It could even cancel licence of the company, which manufactures software to run exchanges and does several other business activities.

Sebi counsel Shyam Divan pointed out that FTIL had already complied with the order of FMC and therefore there was no need for an interim stay on the divestment order. The high court had already rejected the prayer and the main petition will be decided there. The judges then allowed FTIL to withdraw its petition.

The FMC’s order had come in the wake of a Rs 5,574.34 crore payment scandal last year at National Spot Exchange Ltd.

The regulator had also barred Jignesh Shah, the then chairman of FTIL, from holding any management position in exchanges.