Home / Companies / SC stays transfer of FTIL stake in IEX

The Supreme Court on Thursday stayed an order of the Central Electricity Regulatory Commission (CERC) that asked Financial Technologies India Ltd(FTIL) to transfer all its shares in India Energy Exchange (IEX) to a trust demat account.

FTIL had approached the apex court seeking to stay the 26 June CERC order.

CERC had given FTIL time till 2 July to transfer its entire stake in IEX to an IEX-owned trust demat account by 20 July.

A bench of justices Ranjan Gogoi and M.Y. Eqbal also asked CERC to file its response to FTIL’s plea.

The court also noted that it had earlier refused to stay the order, expecting that the notice issued at the 8 May hearing would suffice to not take further action in the case while it was being considered by the court. However, given that the CERC moved to impose the divestment, the apex court has stayed the order.

“The CERC order on the expropriation of FTIL shares in IEX by directing IEX to transfer FTIL’s entire shareholding into trust account has been stayed with the Supreme Court granting status quo on the CERC order," said a statement issued by FTIL on Thursday.

FTIL has claimed that CERC did not give it a hearing before passing the order.

FTIL, which owns a 26% stake in IEX, is required to divest the same as per a 13 May 2014 direction from the CERC after a 5,600 crore fraud surfaced at the National Spot Exchange Ltd(NSEL). FTIL holds 99.99% of NSEL.

FTIL had entered into a share purchase agreement on 19 June with a clutch of entities, including DCB Power Ventures Ltd and Aditya Birla Private Equity, to sell a 16.6% stake in IEX for 357.06 crore.

This is the second time that FTIL has entered into such an agreement. In November, FTIL had said it sold its 25.64% stake in IEX to a consortium led by Chennai-based private equity firm TVS Capital Funds Ltd for around 577 crore.

The new agreement was signed between FTIL and DCB Power Ventures, Kiran Vyapar Ltd, Agri Power and Engineering Solutions Pvt. Ltd and Aditya Birla Capital Advisors Pvt. Ltd (for and on behalf of Aditya Birla Trustee Co. Pvt. Ltd, trustees to Aditya Birla Private Equity Fund I and Aditya Birla Private Equity Sunrise Fund).

IEX, with more than 95% of the market share, is the country’s leading power exchange.

FTIL, according to the statement issued on Thursday, is of the view that there is a fundamental issue of jurisdiction in respect of the order passed by the CERC and a forced transfer would affect the interests of over 63,000 shareholders of FTIL, a public listed company.

The 13 May 2014 order followed a March order by capital markets regulator Securities and Exchange Board of India (Sebi), which declared FTIL and its promoter Jignesh Shahunfit to hold a stake in any stock exchange or clearing corporation.

Sebi’s order came after commodity market regulator Forward Markets Commission declared FTIL and Shah unfit to run a commodity futures exchange in the country in a December order.

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