The National Commodity & Derivatives Exchange (NCDEX) has decided to move the Supreme Court against the Bombay High Court order on the Forward Market Commission’s (FMC’s) jurisdiction over the exchange’s transaction charges. The decision was taken at its board meeting on Tuesday.
A source close to the development said that the exchange, India’s second largest commodity derivatives platform, would challenge the Bombay High Court’s order shortly in the Supreme Court, but the ground on which it is planning to move the apex court was not ascertained.
The commodity market regulator, the Forward Markets Commission (FMC), had not approved the exchange’s decision to drastically cut charges for trading in the evening session. NCDEX challenged the powers of the regulator saying that transaction charges fell in the jurisdiction of the exchange.
NCDEX officials, including MD & CEO Ramalinga Ramaseshan and Chief Business Officer Unupom Kausik, were tight-lipped and denied to comment on the development.
“What is discussed in the exchange’s internal board meet need not be disclosed to the media,” Ramaseshan said.
“We cannot say anything,” was the response of Kausik.
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The High Court had on February 5 rejected the NCDEX plea on the lack of merit in the writ petition and refused to admit it. The Court had also directed FMC to decide the matter within two weeks from the day of pronouncement of this judgement.
The HC had observed that the decision of such expert bodies should be left to the authorities empowered to take such decisions. The questions with regard to the jurisdiction of the regulator over transaction charges is seen to have a direct bearing on the agrarian economy and on the business of agricultural as well as non-agricultural commodities, especially those traded on the NCDEX.
The court had further said that these are important and larger issues relatable to the economy and commercial principles, which should be examined properly by an expert body and judicial interference preventing such a process would neither be just nor fair, the HC said.
The dispute between the NCDEX and FMC started on January 28, after the exchange re-issued its circular on revision of transaction charges, which was stayed by the regulator.
On December 29, 2008, the exchange had rationalised transaction charges up to Rs 3 per lakh of value of all trades in all commodities between 10 am and 3.30 pm. Also, the transaction charges for the period between 3.30 pm and 11.30 pm were brought down to 5 paise per lakh of value of all trades in all commodities. This revision was stayed from implementation by the FMC.
Later, on January 28, the exchange re-issued the circular with a slight modification in the time to 5 pm. This decision was also disallowed by the FMC and it was challenged in the HC by the NCDEX.
Meanwhile, the NCDEX withdrew its circular on February 7, following the HC order.