A bench headed by Justice Abhay Oka refused to grant interim relief to FTIL after FMC objected, saying this would not be in public interest.
The bench was hearing a petition filed by FTIL and its promoter challenging the recent FMC order which ruled that both were not fit to run any stock exchange in the country and asked for reducing its shareholding in MCX to 2 per cent.
The court had earlier clubbed all the PILs filed by the investors in the Rs 5500 crore scam involving National Spot Exchange Ltd, also founded by Shah.
FTIL Counsel Janak Dwarkadas made a statement before the court assuring that Shah and FTIL would not exercise control over MCX either through the shareholding or through the Board.
However, FMC, replying to such assurance, said that its order of reducing FTIL's shareholding in MCX should not be stayed as this would not be in public interest.
Dwarkadas also said that the 26 per cent shareholding of FTIL in MCX would not cause any prejudice to shareholders. Criminal cases filed against NSEL were pending and probe was in progress. In the midst of these developments, such an order passed by FMC was not proper, he said.
FTIL argued that it was being targeted by FMC, though investigating agencies has not held them guilty so far.
FTIL counsel said the FMC had merely held that Shah and his company were not fit enough to run any stock exchange but the market regulator had not directly ordered them to reduce the shareholding in MCX.
FMC counsel Iqbal Chhagla said, "We are not holding them guilty, we are just saying that they are not fit to run any stock exchange. It cannot be argued by them (FTIL) that Shah was not aware of what was going on (in the scam-tainted organisation)."
"To say that FTIL knows nothing of what was happening in its subsidiary company would not be correct," he said.
However, FTIL Counsel said that it cannot be argued that if one director (Shah) had the knowledge (of the scam), others also had the same knowledge.
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The petition sought quashing of the FMC order that held FTIL is not 'fit and proper' to hold anything more than 2 per cent shareholding in MCX.
The petition also sought interim relief to the extent of granting a stay on the FMC order until the matter is finally decided by the HC.
In its 80-page order, the FMC, which went into the running of NSEL following payment defaults of Rs 5,500 crore to investors, said Shah was "practically the highest beneficiary of the fraud perpetrated at the NSEL Exchange."
FMC said, "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."
FMC had 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.
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 the chairman of FTIL, which owns and runs National Spot Exchange Ltd (NSEL), currently hit by a scam.
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.