Jignesh Shah Granted Bail In MCX-SX Licence Case
Jignesh Shah, founder of 63 Moons Technologies Ltd. (formerly called Financial Technologies), was on Wednesday granted bail nearly a month after he was first arrested in connection with the renewal of license to MCX-SX by market regulator Securities Exchange Board of India in 2010.
Shah was asked to furnish Rs 1 lakh surety by a special Central Bureau of Investigation (CBI) court which is hearing the case.
The CBI arrested Shah on September 20 after calling him in for questioning on the matter. The homes of four SEBI officials , including former chairman CB Bhave and full-time director KM Alexander were also raided on the same day as the CBI suspected that they may have received bribes from Shah in relation to the licence renewal. However, none of them were arrested.
Allegations Against Shah
The CBI has alleged that Shah was guilty of criminal conspiracy, along with certain SEBI officials, for getting MCX-SX licences renewed fraudulently in 2010, under Section 120B of the Indian Penal Code.
A charge was also made out under Section 420 of the IPC in relation to a 2008 buyback agreement between the two promoters of MCX-SX, namely MCX which held a 51 percent stake and Financial Technologies Ltd., now known as 63 Moons Technologies Ltd., which held 49 percent stake. This agreement was part of a stake sale undertaken by the promoters to comply with new SEBI guidelines restricting the maximum stake an individual company could hold in an exchange to five percent.
After his arrest by the CBI on September 20, Shah was called in for questioning and thereafter sent to 5-day policy custody. The CBI court subsequently remanded him to judicial custody till October 10 on grounds that the nature of the alleged offences was serious and that there was a prima facie case against Shah. His judicial custody was further extended to October 15.
SEBI Officials Cleared Of Charges
Bhave and Alexander have since been cleared of wrongdoing by the CBI. Shah's lawyer Amit Desai had argued on Tuesday that the fact that these officials had been cleared, especially Bhave who signed off on the renewal on Alexander's advice, proved there was no conspiracy under Section 120B of the IPC.
He further argued that since the alleged criminal conspiracy was in connection with fraudulently securing a licence renewal, a clean chit for the “principal conspirator” Bhave meant Shah was innocent of wrongdoing.
On the allegation that Shah had suppressed information regarding the buyback agreement entered into by MCX and FTIL and that this constituted cheating, Desai said that the Bombay High Court had heard this matter in 2012 and held that this wasn't sufficient ground for cancelling the exchange's licence.
He added that MCX and FTIL had given undertakings to the high court that they wouldn't increase their stake in MCX-SX , and hence allegations of suppression of information and cheating, under Section 420 of the IPC, did not stand.
Public Prosecutor Kavitha Patil argued that Shah had not been forthcoming about the sources of funds used to set up MCX-SX to which Deasi responded that SEBI had already conducted due diligence in 2008 before granting MCX-SX "fit and proper" status in 2008, and that there were no allegation of any wrongdoing in relation to the grant of the original licence.
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