Allowing Financial Technologies India Ltd (FTIL) to transfer all its shares in India Energy Exchange (IEX), the Supreme Court on Friday clarified that the transferee will enjoy full corporate benefits like voting rights, power to nominate members etc, which were suspended after the Central Electricity Regulatory Commission’s (CERC) found it unfit to run the exchange. Besides, it said that FTIL can buy shares in IEX, the country’s leading power exchange, from the market, if it succeeded in its appeal pending before the apex court.
The court had on July 2 stayed the CERC order that asked FTIL to transfer its entire shareholding in IEX, which has more than 95% of the market share, to a separate trust demat account created by the electricity bourse and exit the exchange by July 20.
A bench headed by justice Ranjan Gogoi said that after the sale of shares by FTIL, it can retain a right to buy them back from the market.
FTIL had moved the apex court against the CERC order, which was based on an earlier order by the Forward Markets Commission (FMC) that held that FTIL was not a fit and proper entity to run exchanges. FTIL, which owns 26% stake in IEX, is required to divest the same under a May 2014 direction from the CERC after a R5,600-crore fraud surfaced at the National Spot Exchange Ltd. FTIL holds 99.99% of NSEL. The 2013 fraud is being investigated by the economic offences wing (EOW) of the Mumbai Police.
FTIL had stated that CERC has no jurisdiction to pass such an order and the forced transfer would not only affect the interests of its 60,000 shareholders but also affect the share valuation.
The tariff regulator on June 26 had directed HDFC Bank, the custodian for the depository service, to transfer the shares into the IEX trust account by July 3 if FTIL failed to comply with the order.