The Hindu Business Line : HC rejects plea for probe into Lord Krishna Bank affairs

Kochi, Aug. 22 The Kerala High Court on Wednesday declined to give a direction to the Union Government to appoint inspectors under the provisions of the Companies Act to investigate the affairs of Lord Krishna Bank Limited (LKBL) including its scheme of amalgamation with Centurion Bank of Punjab (CBOP). Mr Justice M. N. Krishnan passed the judgment to the effect while dismissing a company petition filed by Mr Umesh Kumar Pai of Ernakulum who holds 200 equity shares in the bank. The petitioner sought a declaration under Section 237 of the Companies Act that the affairs of the bank should be investigated. The decision to merge the LKBL with Centurion Bank of Punjab was taken at the general body meeting held in Kochi on September 30, 2006.

No acceptable evidence

Dismissing the petition, the Judge said that except wild allegations and technical aspects of Mr Bhargava’s re-appointment as Director and the age criteria (Mr. Bhargava is above 70), no acceptable evidence was forthcoming.

The court observed that in the case of this nature, there must be “intrinsic evidence of fraud to order an investigation because the fraud could not be inferred by mere conjectures and surmises.” It was true that the bank had not been doing well and there were allegations of indiscriminate advancement of loan, spending of huge amounts for T.A. and hotel bills etc. But they were not sufficient to order an investigation under Section 237 of the Act.

The court also observed that many criticisms and accusations were being made against the directors of the LKBL, but none of them had been made parties in the petition.

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