SC allows minority shareholders of Lakshmi Vilas Bank to transfer case to Madras High Court
Minority shareholders of the former Lakshmi Vilas Bank (LVB) have had a break with the Supreme Court of India accepting their request to transfer all cases relating to the bank’s merger with DBS Bank of India – a subsidiary of DBS Bank, Singapore – at Madras High Look.
“There were a lot of arguments and counter-arguments in which we argued that since most of the shareholders (of LVB) are located in Tamil Nadu, most of the branches are there in Tamil Nadu, 9 out of 15 motions in total are pending in the High Court with Judicature. in Chennai, the transfer of all cases should be before the Chennai High Court. Our arguments were accepted by the Honorable Judge and she was happy to transfer all the petitions, as well as the petitions from Bombay, to Chennai,” said lawyer Ankur Kashyap, who represented AUM Capital, one of the shareholders LVB minority shareholders contesting the bank’s merger with DBS Bank India.
“The Honorable Supreme Court has also set the next hearing date in Madras High Court for April 25. Now all LVB cases are transferred to Chennai,” the lawyer added.
By accepting the means of transfer put forward by the minority shareholders of LVB, the Supreme Court among others rejected the counterparties’ requests to transfer all cases to the Bombay High Court.
On November 25, 2020, the government sanctioned LVB’s proposed merger with DBS Bank India based on recommendations made by the Reserve Bank of India. As per the program, from November 27, 2020, all branches of Lakshmi Vilas Bank were to operate as branches of DBS Bank India.
Following this, minority shareholders of LVB – including AUM Capital – applied to the Madras High Court, seeking an interim stay of the merger, alleging that the scheme ignored their interests by reducing the value of their stake in LVB to virtually zero since the scheme canceled their existing shares in the bank. They also alleged that their suggestions on the draft merger plan had been ignored by the apex bank.
The high court ruled prima facie on the merits of the LVB shareholders’ argument and granted an interim order directing DBS India to set up a reserve to meet their claims. He further ordered DBS India not to do anything that may harm the interests of Lakshmi Vilas Bank shareholders.
March 26, 2022