The Multi Commodity Exchange (MCX) has made further payments to the little known London-based software developer PESB to wriggle out of the arbitration proceedings in Singapore that were initiated against it by the company in January. In a vague communication issued to the stock exchanges on Tuesday, MCX said the dispute was settled “on the payment of an amount equivalent to outstanding invoices.” Payments made by MCX to PESB between 2018 and 2020 for developing a spot exchange software became controversial as 80-90 per cent of the amount was given in advance.

While MCX has termed the outside court settlement as ‘amicable’, sources told BusinessLine that the exchange had succumbed to pressure from PESB to bring a closure to the dispute despite the fact that the spot exchange software could not be delivered by the UK firm as per the contractual agreement signed nearly three years ago.

In 2019, BusinessLine had first reported the story of MCX having made advancement payments to PESB for a spot exchange software, which could not be delivered. Following the story, MCX constituted a committee to conduct inquiries with regard to the selection of the vendor, signing of contract and payments made in London. MCX had paid nearly ₹19 crore to PESB. But its latest communication is silent on the exact figure of the additional amount paid.

MCX just said that payment of an amount ‘equivalent to outstanding invoices’ was made. Sources say that MCX cannot raise invoices since it was ‘giving the order’ for software development and hence additional payment was made to PESB.

Earlier this year, MCX had disclosed that it had “requested the vendor, for amicable resolution of dispute, to complete the project without any cost escalation and provide knowledge transfer to MCX team for the amount paid thus far.” Instead PESB dragged MCX to Singapore for arbitration proceedings. MCX was under pressure to resolve its software dispute and fix the responsibility for choosing an obscure vendor, since market regulator SEBI had started asking questions, the sources said.

An e-mail query and messages sent to MCX, its board members and also to the members of the exchange audit committee remained unanswered.

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