LVS-DBS Merger: Supreme Court Issues Notice On RBI's Plea Seeking Transfer & Stay On Petitions Across High Courts

The Supreme Court on Friday issued notice on the RBI's plea, seeking transfer of five writ petitions pending before the High Courts of Madras, Delhi, Karnataka and Bombay challenging the Lakshmi Vilas Bank Limited (Amalgamation with DBS Bank India Limited) Scheme, 2020.

A bench of Justice Mohan M. Shantangoudar also issued notice on the stay applications, directing it to be returnable within 10 days.

The Amalgamation Scheme was issued by the Central Government under Section 45 of the Banking Regulation Act 1949 and was challenged before various High Courts as stipulated above. The present plea seeks transfer of the petitions before the Supreme Court for consolidation of the issues involved. 

The petitioner has stated that the great prejudice may be caused to the Petitioner and all stake holders involved because of parallel proceedings and that it is may result in inconsistent and contradictory decisions or directions, which may hard the interest of depositors. "This will be in consonance with the public policy of India," the petitioner has contended.

"It is submitted that to prevent multiplicity of proceedings, inconsistency in decision making and to save precious judicial time, this Transfer Petition ought to be allowed."

Plea in SC

The questions of law involved, the petitioner has averred also earmark whether in the exercise of its extraordinary jurisdiction, the High Court can alter an Amalgamation scheme issued by the Central Government, under Section 45 of the Banking Regulations Act.

Inter alia, the issue involved also includes whether an Amalgamation Scheme under Section 45 of the BR Act which is required to be laid down before both the Houses of Parliament, can be challenged for having been passed in haste.

Other questions of law include:

• Whether the High Court in exercise of its extraordinary writ jurisdiction sit in appeal over the decision of a financial regulator namely RBI which has recommended the Amalgamation Scheme in the interest of the depositor?
• Whether the Basel III Tier 2 bond holders and the equity shareholders of LVB are required to be paid any compensation under the Amalgamation Scheme?
• Whether Section 45 of the BR Act is a complete code in itself when it comes to an Amalgamation Scheme issued by the Central Government on the recommendation of the RBI?
• Whether a High Court ought to have exercised judicial restraint and not entered into the policy decision which had been taken by the financial regulator under Section 45 of the BR Act?
• Whether the scheme formulated under Section 45(5) of the BR Act is required to mandatorily contain all provision prescribed under clauses (f) and (h) of the aforesaid section?
• Whether the mechanism of Section 45 of the BR Act commands judicial deference to the role of the financial regulator?

• Solicitor General Tushar Mehta And Advocate Liz Mathew appeared for RBI.

  Senior Advocate Mukul Rohatgi and Anuj Berry for Respondents

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