NEW DELHI: A plea in the Delhi High Court has challenged the scheme of amalgamation of Lakshmi Vilas Bank with Development Bank of Singapore (DBS), contending that its shareholders have been "left in the lurch" and the Centre and the Reserve Bank have failed to protect their interests.
The petition was listed before a bench of Chief Justice DN Patel and Justice Jyoti Singh on January 13, but was adjourned to February 19 after the bench was told that the Reserve Bank of India (RBI) has moved a plea in the Supreme Court to transfer all pleas against the amalgamation scheme to the Bombay High Court.
The petition in the Delhi High Court has been filed by lawyer Sudhir Kathpalia, who was also a shareholder in Lakshmi Vilas Bank (LVB) and lost his 20,000 shares in the company due to the amalgamation scheme.
Kathpalia has sought quashing of the clause in the scheme which states that from the date of merger, "the entire amount of the paid-up share capital and reserves and surplus, including the balances in the share/securities premium account of the transferor bank, shall stand written off".
The petition has said that under the scheme, DBS was not required to give any shares to the LVB investors in return and they were "left in the lurch". The amalgamation scheme was approved by the RBI on November 25, 2020 and the merger took place on November 27, 2020.
The petition has contended that the Centre and RBI have failed to protect the interests of the shareholders. It has also claimed that DBS was chosen for the merger without inviting bids from other banks and financial institutions.
It has alleged that the "scheme of amalgamation was irregular, arbitrary, irrational, unreasonable, illegal and thus, void".