Bombay HC refuses to stay merger of Lakshmi Vilas Bank, DBS

The Bombay High Court on Thursday heard a writ petition filed by a group of promoter entities of Lakshmi Vilas Bank challenging the scheme of amalgamation between the ailing south based lender with DBS Bank India.

The promoter entities which moved Bombay High Court include KR Pradeep, Kare Electronics, Pranava Electronics holding a total of 6.8 percent stake in Lakshmi Vilas Bank. The Reserve Bank of India (RBI), The Union of India and DBS Bank India have been made respondents in the case.

The Bombay High Court in its order refused to grant any interim relief to the promoter entities.

As far as the verdict goes, the Bombay High Court while refusing to grant an interim stay on the scheme of amalgamation between Lakshmi Vilas Bank and DBS Bank India observed that the relief sought by the petitioners in monetary in nature and can be granted at the time of disposal of the case as well and hence an immediate stay is not required.

This oral order by Bombay High Court was followed by the arguments from Senior Counsel, Darius Khambata, appearing for the shareholders who said that the steps taken by the RBI are in utter haste and with non-application of mind. He also argued that Section 45 (5) (f) of the Banking Regulation Act requires RBI to take consideration of all stakeholders, including the members. However, the shareholders of LVB in the scheme of amalgamation are being wiped out completely.

Ravi Kadam, Counsel for the RBI also argued that continuity of the financial system, economy and depositor interest is important. He further argued, shareholders are risk-takers who run the risk of investment becoming zero.

The matter will now be heard on December 14.