FTIL, Jignesh Shah challenge FMC order in Bombay HC

Crisis-hit NSEL's promoter entities FTIL and Jignesh Shah today moved the Bombay High Court challenging the commodity market regulator FMC's order that held both were not "fit and proper" to run any exchange.

The petition, filed today, would be mentioned tomorrow before the high court bench, praying that the matter may be fixed for an early hearing as there is an urgency, sources in Financial Technologies India Ltd (FTIL) said.

The petition has requested for quashing the FMC order that held FTIL is not a 'fit and proper person' to hold anything more than 2 per cent shareholding in the Multi-Commodity Exchange (MCX). FTIL has 26 per cent shareholding in MCX.

In its 80-page order, the Forward Markets Commission (FMC), which went into the running of NSEL following payment defaults of Rs 5,500 crore to investors, said that Shah was "practically the highest beneficiary of the fraud perpetrated at the NSEL Exchange".

FMC ordered that "Shri Jignesh P Shah is not a 'fit and proper' person to hold any position in the management and the Board of any Exchange recognised or registered by the government of India/Forward Markets Commission under FCRA, 1952".

Other petitioners are Joseph Massey and Shreekant Javalgekar, former directors of MCX, against whom also FMC held that they were not fit to hold any position in the management and the Board of any Exchange.

Shah founded MCX in November 2003 and then went on to set up a stock exchange this year. He is currently the Chairman FTIL, which owns and runs National Spot Exchange Ltd (NSEL).

Shah, on October 9, quit as Vice-Chairman and Shareholder Director of MCX-SX, the third major stock exchange in the country. Few weeks later, he also resigned as Vice Chairman of MCX.

FMC had further directed that neither Shah individually,nor though any company/entity controlled by him, either directly or indirectly, should hold any shares in any association/ exchange in excess of the threshold limit of the total paid-up equity capital as prescribed under FMC guidelines.