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Minority shareholders of the erstwhile Lakshmi Vilas Bank (LVB) have got a breather with the Supreme Court of India accepting their plea to transfer all cases pertaining to the bank’s merger with DBS Bank of India — a subsidiary of DBS Bank, Singapore — to Madras High Court.
“There was a lot of argument and counter-argument wherein we submitted that since most shareholders (of LVB) are situated in Tamil Nadu, most branches are there in Tamil Nadu, 9 out of the total 15 petitions are pending at High Court with Judicature at Chennai, the transfer of all matters should be before Chennai High Court. Our arguments found acceptance with the honourable judge and she was pleased to transfer all petitions, along with the petitions in Bombay, to Chennai,” said Advocate Ankur Kashyap, who represented AUM Capital, one of the minority shareholders of LVB challenging the merger of the bank with DBS Bank India.
“The Honourable Supreme Court has also fixed the next date for hearing before the Madras High Court as April 25. Now all LVB matters stand transferred to Chennai”, the counsel added.
By accepting the transfer plea advanced by the minority shareholders of LVB, the Supreme Court has inter alia turned down pleas made by counterparties to transfer all the cases to Bombay High Court.
Diluted shares
On November 25, 2020, the government sanctioned the scheme of amalgamation of LVB with DBS Bank India on the lines of recommendations made by the Reserve Bank of India. As per the scheme, from November 27, 2020, all branches of Lakshmi Vilas Bank were to function as branches of DBS Bank India.
Following this, minority shareholders of LVB — including AUM Capital — approached the Madras High Court, seeking an interim stay against the merger, alleging that the scheme ignored their interests by reducing the value of their shareholding in LVB to virtually nil since the scheme cancelled their existing shares in the bank. They also alleged that their suggestions on the draft scheme of amalgamation were ignored by the apex bank.
The high court prima facie found merit in the argument of the LVB shareholders and granted an interim order directing DBS India to set apart a reserve to meet their claims. It further directed DBS India to not do anything which would harm the interest of Lakshmi Vilas Bank shareholders.
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