Today, Bombay High Court released a statement in which they refused to put stay on Lakshmi Vilas Bank’s (LVB) merger with DBS Bank India which will be effective from November 27.
A division bench of Justices Nitin Jamdar and Milind Jadhav was hearing petitions filed by a group of promoters of the ailing Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd, challenging the merger.
To which the court replied, “We are refusing the interim relief sought by the petitioners to stay the amalgamation. The petitions shall be placed for hearing on December 14 when the respondents (Reserve Bank of India, LVB and DBS Bank India) shall file their affidavits in reply.”
Senior Advocates Darius Khambata and Dinyar Madon apprised the Court that the Reserve Bank of India (RBI) had imposed a moratorium on LVB for a period of 30 days to protect the depositors’ interest and in the interest of financial stability.
They pointed out that Indiabulls was a shareholder in LVB and that the scheme has written off paid-up share capital which would lead to Indiabulls shareholders losing their money.
They added that the approval of the scheme of amalgamation was given without hearing the suggestions and objections from the public and the stakeholders
Senior Advocate Ravi Kadam, appearing for RBI, objected to the prayer for stay and assured the Court that the powers exercised by the RBI were in compliance with the procedure of law.
He added that keeping LVB under a moratorium for too long would have affected its depositors which were 20 lakhs in number.
Senior Advocate Janak Dwarkadas for DBIL objected to the prayer for a stay on the ground that the amalgamation was approved keeping in mind the interest of the shareholders who would benefit after the amalgamation is brought into effect from tomorrow.
After hearing the counsel beyond ordinary court hours, till 5.30 pm, the Bench gave their verdict that they were not inclined to grant an ad-interim stay on the scheme.
The Court added that since the plea filed before them sought monetary compensation, the same would be considered at the stage of the final hearing.