The Hindu Business Line : HC orders TMB not to transfer shares

In an order, the Bench said, "we direct the first respondent bank not to consider any application for transfer of 95,485 shares (the subject matter of dispute) if any filed before the bank till the disposal of the appeal." It has posted the case for hearing on September 27.

The Bench comprising Mr Justice N.V. Balasubramanian and Mr Justice S. Sardar Zackria Hussain passed this order on a petition by Mr S. Ashok and 29 others.

The petitioners wanted the court to direct the third respondent (Reserve Bank of India) to produce before it the letter refusing acknowledgement for transfer of shares in the bank and to restrain Mr B. Ramachandra Adityan and nine others (all directors on the board of the bank) from taking any major policy decisions in the bank.

The court said that the counsel for appellants had stated that the Reserve Bank of India rejected the applications for transfer of 95,485 shares in favour of seven persons. Though the copy of the RBI order had not been produced, after hearing the arguments, the Bench was of the view that some direction should be issued.

According to reliable sources associated with the Tamilnad Mercantile Bank (TMB) issue, the RBI has said that it is unable to recognise the sale of shares (95,418 shares sold by the Sterling group of Mr C. Sivasankaran to a group belonging to the Nadar community led by Mr B. Ramachandra Adityan).

It may be recalled that eight individuals of the Nadar community led by Mr B. Ramachandra Adityan signed an agreement in February 2004 with the Sterling group to buy the 95,418 shares held by the group for a consideration of Rs 130 crore. The agreement was signed in the presence of the then Deputy Prime Minister, Mr L.K. Advani, in Delhi. The money was to be paid before December end.

From then, others belonging to the Nadar community have questioned the deal and had taken the issue before the Company Law Board and now to the High Court.

The TMB inducted 10 directors, including Mr Adityan, to its board in March, which was also approved by shareholders at the annual general meeting held in Tuticorin. The TMB was started by the Nadar community.

In a representation, two Nadar community associations - Nadar Mahajana Sangam and Dakshina Mara Nadar Sangam - have appealed to the Finance Minister, Mr P. Chidambaram, and RBI Governor, Dr Y.V. Reddy, to investigate the deal between the Sterling group and the acquirers led by Mr B. Ramachandra Adityan, and also impound the shares and freeze the voting rights of these shares till the investigation was completed.

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