The Hindu Business Line : Centurion, LKB merger challenged

A shareholder of Lord Krishna Bank on Wednesday approached the Kerala High Court challenging the decision taken at the AGM of the bank to merge it with Centurion Bank of Punjab.

The petition was filed by Mr Umesha Kumar Pai of Ernakulam, who holds 200 equity shares in the bank.

The petitioner sough a direction to the Central Government to appoint inspectors to investigate the affairs of the bank after making a declaration under Section 237 of the Companies Act that the affairs of the bank should be investigated.

He said that the most of the shareholders were prevented from participating in the AGM held on September 30.

The meeting had hastily transacted all the eight items on the agenda, including the merger resolution, violating all the company laws.According to the petitioner, no discussion was allowed on the merger proposal and no independent Chairman was appointed as per the norms in the case of an amalgamation scheme approved by the High Court.

He alleged that the shareholders were not given an opportunity to discuss the affairs and review the working of the bank.

Elections to the vacancies of directors, appointment of statutory auditors and amalgamation of the bank were all transacted in a "very oppressive manner."The petitioner pointed out that the audited balance sheet was passed without any discussion.

The merger resolution was passed in violation of the provisions of Section 44A of the Banking Regulation Act, 1949.

This section prescribes the presence of two-thirds of shareholders either in person or by proxy for passing amalgamation resolution.

The petitioner also alleged that the voting was not conducted in a free and fair manner.

He said that the exchange value for the swap ratio was not discussed, nor was any methodology for this deliberated.

The petitioner also said that guidelines issued by the RBI on February 3, 2004 impose a restriction on the acquisition or transaction of more than five per cent shares to a single entity. Therefore, shares in the name of the late Ashwin Kumar Puri were transferred to Mr Mohan Puri in violation of the guidelines.

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