Modern India and three other investors have filed a class action lawsuit in the Bombay High Court (HC) against Financial Technologies (India) Ltd and 37 other entities, including defunct National Spot Exchange Ltd (NSEL), which is facing a payment settlement crisis, for recovery of its dues as an investor for the trades executed on the NSEL, as per a stock market disclosure by public listed Modern India.
Justice SJ Kathawala, in the first hearing on the matter on Wednesday, directed Modern India to ask other investors, who have been affected by the NSEL payment crisis and have not approached the court yet, to join the class action suit, the paper said. Modern India, controlled by Vijay Jatia, has invested around Rs 30 crore in NSEL.
The court has also directed FTIL, the promoter of NSEL, to file an affidavit in the court stating its shareholding in its arm National Bulk Handling Corp Ltd and also disclose about the recent share sale in the Singapore Mercantile Exchange.
Last November, FTIL said it is divesting its stake in Singapore Mercantile Exchange to Intercontinental Exchange Group Inc for $150 million.
The court has also directed La-Fin Financial Services Pvt. Ltd, a unit of FTIL, to disclose its assets.
All the disclosures are to be filed by January 27, 2014, the court ruled. The matter is slated for next hearing on February 14.
FTIL-promoted spot exchange NSEL is shut since July 30 after trading in unlicensed forward instruments came to light. This was followed by a payment crisis.
Currently, FTIL holds 26 per cent stake in MCX and a cumulative 70.9 per cent in MCX-SX. It also owns 99.9 per cent stake in NSEL.
The commodities regulator Forward Markets Commission (FMC) issued notices against FTIL and others in December 2013, saying that its promoter Shah as well as senior executive Joseph Massey were not "fit and proper" to operate any exchange. FMC also asked FTIL to reduce its shareholding in MCX to 2 per cent.
Promoters will have to bring down their stake holding in the company, if the capital market watchdog SEBI too declares them unfit to run an exchange. SEBI, in a notice, has asked the promoters to reply why they should not be asked to offload their shareholding.
This will be the first high profile case of class action suit in India after the new Companies Bill incorporated such a provision for future cases. The Bill is being notified in phases. Leave Your Comment