INDIA BUSINESS WORLD - DECEMBER 1st - DECEMBER 15th
- 2007
MADRAS HIGH COURT CONFIRMS INJUNCTION AGAINST INVESTORS IN TAMILNAD MERCANTILE BANK
Madras High Court has confirmed an interim injunction restraining six new investors in Tamilnad Mercantile Bank from exercising their rights as shareholders and selling their shares. Justice R Banumathi, in an order, made absolute an interim injunction passed on June 7, 2007. A copy of the order is not yet available.
In May this year, six foreign investors and two Indian investors bought 24.93% stake in Tamilnad Mercantile Bank from Sterling Group. Nadar Mahajana Sangam, which represents the community that promoted the bank in 1920s, filed a suit in the High Court demanding the transaction be made null and void. Lawyer P Madan represented the plaintiff.
The court had passed an interim injunction restraining these investors from exercising their rights and selling. The order reinforces the earlier ruling. While a copy of the order could not be obtained, the lawyers representing these parties confirmed the development.
The foreign investors include Ramesh Vangal (Katra Holdings) (10364 shares or 3.64% stake), Rajat Gupta (14080, 4.95%), Ravi S Trehan (2845,1%), Kamehameha Mauritius (2025,0.71%), Cuna Group Mauritius (2025, 0.71%), FI Investments Mauritius, (5399, 1.90%), Swiss Re Investors (10124, 3.56%). Non-Nadar Indian investors include Gokul Patnaik (10589, 3.72%) and Vector Program (13455, 4.73%). The issue over shareholding in the bank started when the Ruias of Essar Group bought 67.29% stake from some of the original shareholders. The deal did not get the RBI approval and the shares were subsequently bought by C Sivasankaran. The deal again failed to get the RBI nod.
Finally, in 2003, Nadar Mahajana Bank Retrieval Forum, spearheaded by Ramachandra Adityan struck a deal with Sivasankaran, bought 33.74% stake (96,000 shares) for Rs 80.75 crore, and allowed the NRI businessman to retain 33.5% stake till the Forum raises funds to buy them back. In May this year, these eight investors agreed to buy close to 25% stake, while the rest was bought by Mr Adityan, MGM Maran, presently the chairman of the bank, and other investors from the community.
However, this has done nothing to pacify Nadar Mahajana Sangam, which is opposing the transaction as well as a section of Nadar Mahajana Bank Share Investors Forum as they believe they can still raise money to keep the ownership within the caste group.
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