The Hindu : Centre seeks to end TMB imbroglio

Online edition of India's National Newspaper
Friday, May 02, 2003

Business

Business

Centre seeks to end TMB imbroglio

By K. T. Jagannathan

CHENNAI MAY 1 . The Tuticorin-based Tamilnad Mercantile Bank (TMB) appears to head for an unprecedented path.

If a split among the original promoters had seen a majority of the bank shares — around 67 per cent — land at the hands of Ruias of the Essar group initially and at the hands of C. Sivasankaran of the Sterling group eventually, the continuing fissures among the members of the Nadar community have ensured that the bank has been run sans any AGM (annual general meeting of the shareholders) for several years now.

The Reserve Bank of India, it may be recalled, had refused to acknowledge share transfer in the name of the original buyers - the seven Essar Group companies. When these companies were sold to Sterling group by the Ruias, in lieu of payment due for purchase of cellular licence from the former, the TMB shares acquired by these firms had also come under the hands of the former. Still, the apex bank stuck to its stance and had declined to acknowledge share transfer in the name of these firms, which had come under a new owner in the Sterling group.

The community members, in the meantime, had organised themselves and struck an agreement with Mr. Sivasankaran for taking re-possession of the TMB shares. They have reportedly collected over Rs. 80crores and even handed over the money to Mr. Sivasankaran. The Sterling group, it was reported, had even agreed to part transfer the shares. Sources said close to 7,500 share transfer deeds had been executed and lodged with the bank for transfer.

However, they alleged that the original promoters who had sold their shares but managed to occupy directorial posts somehow were stonewalling the share transfer process.

Against this backdrop, the Department of Company Affairs has moved the Company Law Board (CLB) seeking it to authorise the Central Government to appoint majority directors on the TMB board.

It has also appealed to the CLB to pass appropriate orders ``that if things fit for the smooth running of the affairs of the bank.''

Even as the issue has been taken to the CLB, the Secretary of the Tamil Nadu Mercantile Bank Share Holders' Welfare Association, M. Soundarapandian, has moved the Madras High Court on the TMB share transfer imbroglio.

The High Court, according to a statement from the association, has "ordered the RBI to investigate into the matter and submit its report within three months.''

The association has also petitioned to the RBI Governor seeking to disband the TMB board. It has also urged the apex bank to take over the management of TMB.

Further, the RBI itself had asked the Central Government to intervene and resolve share transfer imbroglio.

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