NEW DELHI: Margadarsi Financiers, a unit of Ramoji Rao-Hindu Undivided Family and two others, on Friday challenged in the Supreme Court the Andhra Pradesh High Court's refusal to stay the Andhra Pradesh Protection of Depositors of Financial Establishments (APPDFE) Act.

The Government issued two orders under this Act appointing N. Rangachary to find out whether Margadarsi Financiers had violated Section 45 S of the Reserve Bank of India Act and authorising Krishna Raju, IPS, to file applications in the competent courts to take further action contemplated under the Act.

Besides Margadarsi Financiers, Mr. Ramoji Rao and Ushodaya Enterprises Limited filed a writ petition in the High Court challenging the validity of the Act and prayed for suspending the operation of the two government orders.

They made serious allegations of mala fide against Chief Minister, Y.S. Rajasekhara Reddy.

But the High Court dismissed the stay applications and also refused to issue notice to him.

"Destabilisation bid"

In their special leave petition in the apex court, the petitioners alleged that the December 19, 2006 orders were passed ostensibly in connection with the APPDFE Act but the real motive, considering all circumstances of the case, was to financially destabilise the media enterprise (of Mr. Ramoji Rao) from running the daily Eenadu and 12 television channels.

During the last 34 years, there was not a single instance of default; nor was any complaint from any depositor, the petitioners said. Thus there would be no occasion for any State authority to look into the matter, as the RBI was completely conscious of it.

"Self-contradictory"

The impugned orders were an indirect attack on the freedom of the press, infringing Articles 19 (1) (a) and 19 (1) (g) of the Constitution. The High Court order admitting the writ petition but rejecting the plea to issue notice to the Chief Minister was self-contradictory, the SLP said.

The effect of not making the Chief Minister a party was that the court shut out on the threshold all allegations of mala fide in spite of a well-settled law on this aspect.

After the High Court refused to grant interim relief, Mr. Rangachary wrote calling upon the petitioners to furnish the relevant papers.

They prayed for quashing the impugned orders and an interim stay of the operation of the APPDFE Act.

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