Financial Daily from THE HINDU group of publications
Saturday, Jan 28, 2006
Financial Daily from THE HINDU group of publications Saturday, Jan 28, 2006 |
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Private Banks Money & Banking - Mergers & Acquisitions Bombay HC stays Ganesh Bank-Federal Bank merger Our Bureau
Mumbai , Jan 27 THE Bombay High Court on Friday stayed the merger of Ganesh Bank of Kurundwad in Maharashtra with the Kerala-based Federal Bank Ltd by issuing an interim order. However, the moratorium on the Ganesh Bank continues. The court order follows a petition filed by a group of persons including the Ganesh Bank Chairman, a shareholder, a depositor, and an employee challenging the Government orders of moratorium and subsequent merger. The court has stayed the Government order dated January 25, 2006 allowing amalgamation of Ganesh Bank with Federal Bank but restored the order of moratorium on Ganesh Bank dated January 7, 2006. This means that depositors of Ganesh Bank will not be able to withdraw more than Rs 5,000 now. The court has also directed Federal Bank to hand over the branches it had taken over to Ganesh Bank. The case has been adjourned for hearing on February 14. The petitioners had said: "The action by the RBI and the Central Government was taken in haste and without following the principles of natural justice and without giving adequate opportunity to Ganesh Bank." In its order, the court observed: "It is not known as to how any such scheme (scheme of amalgamation) was drawn within such a short time and how it was accepted on January 9, 2006 and a proposal was given." The court also said: "It is also seen that the representation made by Ganesh Bank, prima facie, has not been considered... the RBI could have certainly waited and continued the moratorium for some time to give adequate time... For that matter, even before a decision of merger is taken, the possibility of reconstruction has to be examined." According to the order, "if at all that is not possible, Ganesh Bank has suggested exploring the name of another bank which is offering better terms to shareholders. Prima facie, we are not satisfied that the RBI has taken appropriate steps." The interim order was issued by Mr Justice H.L. Gokhale and Mr Justice Abhay Oka. The Federal Bank scrip on Friday moved up by 4.34 per cent to Rs 185.15 on the BSE from its previous close of Rs 177.45.
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