The Bombay High Court on Thursday refused to stay Lakshmi Vilas Bank's (LVB) merger with DBS Bank India Ltd, which will be effective from November 27. A division bench of Justices Nitin Jamdar and Milind Jadhav was hearing petitions filed by a group of promoters of the ailing Lakshmi Vilas Bank and Indiabulls Housing Finance Ltd, one of its shareholders, challenging the merger.
"We are refusing the interim relief sought by the petitioners to stay the amalgamation. The petitions shall be placed for hearing on December 14 when the respondents (Reserve Bank of India, LVB and DBS Bank India) shall file their affidavits in reply," the court said.
On Wednesday, the Union Cabinet gave approval to the Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Ltd to protect the interests of LVB's depositors and employees.
As per the Scheme of Amalgamation, the entire paid-up share capital of LVB will be written off, resulting in shareholders losing their investment.
The petitioners challenged this part of the scheme and sought an interim stay to the amalgamation.
The court, however, said the petitions pertain to a monetary claim, and it needs to be heard and decided finally.
"Indiabulls is a shareholder of the Lakshmi Vilas Bank and stands to lose Rs 188 crore due to this amalgamation," the company's counsel Dinyar Madon said.
Senior counsel Ravi Kadam, appearing for the RBI, opposed the pleas and said the amalgamation decision was taken in larger public interest and in the interest of the depositors and employees of the Lakshmi Vilas Bank.
"There are 20 lakh accounts in LVB. An emergent situation arose which prompted the RBI to step in and take action. The entire liability of LVB is now the liability of a more solid bank (DBS)," Kadam said.
DBS India Ltd's lawyer, senior counsel Janak Dwarkadas argued that LVB's condition was deteriorating since March 2019 and the RBI had to take prompt corrective action.