The Bombay High Court has restrained Metropolitan Stock Exchange from extinguishing the 42 crore warrants held by MCX and transferring the amount to its networth.
MCX held 58.26 crore warrants of Metropolitan Stock Exchange. Of this, it had put 20 crore on auction and received bids for 14.83 crore warrants. The warrants were supposed to be converted into equity by June 19 in line with the three-year validity period provided at the time of allotment. Through its letter on June 19, MCX surrendered its warrants and asked Metropolitan Stock Exchange to refund ₹42 crore.
Since the remaining warrants were not converted into equity it was cancelled by the board of Metropolitan Stock Exchange on June 27 and the amount was added into its networth.
MCX had moved the High Court against Metropolitan Stock Exchange against the cancellation of warrants.
In an order passed on Friday, Justice GS Patel said it was admitted that the so-called resolution (to cancel the warrants) was never communicated to MCX till recently. “One would imagine that the very least that the Board of Directors of a recognised Exchange, and especially a board that is said to be comprised of eminent persons nominated by Sebi, should have done was to communicate its so-called decision immediately and without delay to the holder of the warrants,” the order said. The next hearing in the case has been posted for July 21.
Incidentally, Metropolitan Stock Exchange had come with a rights issue for ₹118 crore but got a response for only ₹75 crore and is in the market to sell the unsubscribed rights issue which was priced at ₹1 a share.