The Madras High Court today permitted 10 persons, who contested for the post of Directors of Tamil Nadu Mercantile Bank and got highest votes, to assume charge, subject to outcome of pending proceedings before it.
A division bench, comprising Justice V. Ramasubrasmanian and Justice N.Kirubakaran, then posted the matter for further hearing to March 7.
Litigations on the bank were posted for hearing before the bench as per the directions of the Supreme Court.
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Justice R Balasubramanian (retd judge of Madras High Court), who was appointed Chairman to conduct the annual general meetings that were pending for a long time, submitted two sealed covers to the Registrar-Judicial of the Court, containing his own report and the report of the Scrutinizer relating to the results of the annual general meetings.
After perusing the contents, the bench said last time elections were held in 2009 following an earlier court order. After that, the AGMs could not take place, since the parties dragged the bank to various courts in a series of litigations, "some of which were proxy litigation fought by different groups to gain control over the bank."
As a consequence, the Board elected in 2009 continued for about 7 years till January 29 this year. Upon the AGM being held on that date, the directors elected in 2009 vacated their office, the bench said.
"Therefore, as on date, there is only one Managing Director and two Directors nominated by RBI. The Managing Director has virtually fallen ill, as could be seen from one of the resolutions passed in the AGM, sanctioning his medical bill."
The functioning of the Bank has actually been paralyzed by the litigation. If normalcy has to be restored, then a full- fledged Board should assume office, it said.
"This is possible either by declaring the results subject to the outcome of the cases or by nominating someone to the Board. The second option is ruled out since RBI is not agreeable to nominate anyone. They fear conflict of interest."
"Therefore, there is only one option, namely to declare the results and allow the elected directors to assume charge, subject to the outcome of the litigation pending in all these proceedings."
"....For the present, without pronouncing a final verdict on the question of validity of the votes polled by certain shareholders and without also recording a finding whether these votes have been calculated or not, we pass an order declaring the aforesaid 10 persons as having been elected. They are permitted to take charge subject to the ultimate outcome of these proceedings," the bench said.
