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The dispute between commodity bourse MCX and its warehouse service provider Sohan Lal Commodity Management (SLCM) appears headed to the court. This can disrupt physical delivery of mentha oil.
To ensure smooth delivery of mentha oil, MCX has filed a case against SLCM in the Bombay High Court. The court hearing, set for Tuesday, has been postponed, sources said.
In October, MCX de-accredited SLCM’s services after issuing a show-cause notice based on objections raised by SEBI on the warehouse service provider trading on MCX, in violation of norms.
To protect the economic value of investors’ goods in the warehouse, MCX invoked the security deposit of about ₹6 crore given by SLCM. It also appointed Yamada Logistics as the warehouse service provider for mentha oil in UP.
Following this, Sohan Lal unilaterally terminated its services to MCX and raised a bill of about ₹2 croreto handle the mentha oil marked for delivery on the exchange’s platform.
The December contract of mentha oil on MCX expired on Monday and the exchange successfully completed the settlement by assigning the title of goods on the buyers. The problem may arise once buyers go to take physical delivery of goods stored in Sohan Lal’s warehouse in UP that hold 782,041 kg of mentha oil for delivery on MCX till March 2019.
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