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Arpan Mukherjee
Calcutta, July 6: RST Holdings Private, a shareholder of the beleaguered Sikkim Bank, has slapped a Rs 100-crore suit against the Reserve Bank of India (RBI) and its officers before the Calcutta high court. This the second case involving Sikkim Bank's shareholders and RBI in the last fortnight.
RST has challenged the central bank's decisions to sack Sikkim Bank's managing director Amarnath Mitra Mustafi in January 1999, nominating its own directors on the board, imposing a moratorium on withdrawals and proposing to merge it with the Union Bank of India.
Sikkim Bank is a private-sector entity set up under the Sikkim Companies Act and outside the ambit of the Banking Regulation Act, which covers all other Indian banks.
The bank has a network of nine branches across the country and with a deposit base of around Rs 63 crore.
Last month, another shareholder, Northeastern Financial Corp, had filed a writ petition against RBI in the Sikkim high court. This petition also cites decisions like the sacking ofMustafi and the proposed merger with Union Bank.
Sikkim Bank had a total deposit base of Rs 63.72 crore as on February 5, 1999, according to a report by RBI-nominated managing SN Kundu on the bank's financial status. Of this, Rs 57.16 crore was in term deposits, Rs 2.93 crore in savings and Rs 3.63 crore in current deposits.
Advocate-on-record for RST Holdings CK Jain confirmed that the case is slated to come up for hearing before the interlocutory judge on July 12.
He clarified that the two cases against RBI are different in nature. He pointed out that the case before the Sikkim high court is based on a writ application, while the one before the Calcutta high court was a suit where damages have been sought.
Reckless sanctioning of loans almost wiped out the bank's deposit base. The non-performing assets are estimated at Rs 60.43 crore, or 95 per cent of its advances.
The RBI, with the the finance ministry's approval, issued two notices, declaring a moratorium on March 8 and June 5,1999.
RBI-nominated officials concluded that the bank on its own will be unable to meet the future deposit liabilities. They noted that a bail-out exercise was needed by way of capital infusion, renewing of maturing deposits and fresh bulk deposits are mobilised.
Claiming Rs 100 crore in damages, RST holdings has listed RBI and its five nominees on the Sikkim Bank board -- AN Sahu, RN Bhattacharya, TB Ghoshal, Khizer Ahmed and managing director SN Kundu.
Though the suit has been filed by a shareholder of the Sikkim Bank, it has taken up the cudgels on behalf of other directors like RS Chowdhury -- the promoter of Northeastern Financial Corp who has filed the case before the Sikkim high court -- KL Roy, Karma Topden, KK Jhunjhunwala and RK Chawla.
In its suit, among other issues, RST Holdings has prayed for restraining RBI and its nominees from giving any effect to the notifications.
Copyright © 1999 Indian Express Newspapers (Bombay) Ltd.
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