LVS - DBS merger: SC issues notice on RBI's plea seeking transfer and stay on petitions across high courts

OVERVIEW 

•   On Friday, the Supreme Court of India issues a notice to the plea of the Reserve Bank of India of seeking transfer of five writ petitions that had been pending before the High Court of Madras, Delhi, Karnataka and Bombay. This was with regards to 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.

• Solicitor General Tushar Mehta And Advocate Liz Mathew appeared for RBI.Senior Advocate Mukul Rohatgi and Anuj Berry for Respondents.

BRIEF OUTLINE OF THE SCHEME AND THE CONTENTIONS OF THE PETITIONER

• The Amalgamation Scheme had been issued by the Central Government under Section 45 of the Banking Regulation Act 1949. It was challenged before various High Courts – those have been mentioned above. 

•  The present plea seeks transfer of the petition before the Supreme Court of India for consolidation of the issues that are 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.

• There was a question of law also involved; the petitioner had averred an earmark about 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.

WHAT WERE THE OTHER QUESTIONS OF LAW THAT WERE INCLUDED?

• Whether the mechanism of Section 45 of the BR Act commands judicial deference to the role of the financial regulator?

• 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 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 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 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 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?

DO YOU REALLY THINK THAT THERE WAS A MATTER OF QUESTION OF LAW?
MENTION YOUR VIEWS IN THE COMMENTS SECTION BELOW!