The Hindu Business Line : HC declines plea against merger of Ganesh Bank with Federal

The moratorium on Ganesh Bank of Kurundwad will continue for another four weeks as the Bombay High Court has rejected an appeal against the merger of the bank with Federal Bank. The court has given four weeks time for the petitioners to make further appeal.

The Bombay High Court dismissed on Wednesday the petition field by some shareholders and employees of Ganesh Bank challenging the merger as approved by the Reserve Bank of India.

Mr Girish Godbole, advocate for the petitioners, said they would go ahead with their appeal, once the details of the judgment are known.

On January 7, the RBI put a moratorium on Ganesh Bank of Kurundwad thereby freezing the bank's operations, as its net worth had turned negative. Soon after that, on January 9, Kerala-based Federal Bank made an offer to take over Ganesh Bank. On January 24, the Government sanctioned the scheme for the amalgamation of Ganesh Bank , with Federal Bank.

The amalgamation was to come into force on January 25. But, on January 27, a group of persons, including the Ganesh Bank Chairman, a shareholder, a depositor, and an employee, filed a petition in the Bombay High Court challenging the Government orders of moratorium and subsequent merger.

`Opportunity to expand'

The merger with Ganesh Bank would give Federal Bank an opportunity to expand its presence in Maharashtra and its retail and agriculture lending, said Mr M Venugopalan, Chairman and Managing Director, Federal Bank.

About the dismissal of the petition he said, "It is too early to comment as details of the judgment are not known yet. But hopefully the merger would be upheld, as it has been approved by RBI."

Ganesh Bank branches will remain with the original management during the four weeks and no customer will be permitted to withdraw more than Rs 5,000 from his account during the period.

The judgment dismissing the petition was in the best interests of the customer and the banking principles of the country," Mr K.S. Harshan, Executive Director of Federal Bank, said.

He said the decision was a positive move and was on expected lines, since hardly any of the RBI's earlier decisions have been contested and reversed.

Even if an appeal is filed in the Supreme Court, Federal Bank remained quite optimistic, since no similar RBI decision has been reversed during the last 25 years.

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