How are PMC Bank depositors differently circumstanced in comparison to Yes Bank: Delhi HC directs RBI, Centre to explain

The Court was hearing a petition concerning the fate of the deposits made with the PMC Bank.

Taking note of their crucial role in the Reconstruction Scheme to revive Yes Bank, the Delhi High Court has directed Reserve Bank of India and Central Government to explain how the depositors of Punjab & Maharashtra Co-operative Bank Ltd are differently circumstanced in comparison to the depositors of Yes Bank. (Sandeep Bhalla vs RBI)

The order was passed by a Single Judge Bench of Justice Rajiv Shakdher in a plea by one of the depositors, Sandeep Bhalla, seeking a direction to Reserve Bank of India (RBI) to issue a statement on timeliness and safety of deposits held by the depositors with the Punjab & Maharashtra Co-operative Bank Ltd (PMC Bank).

The plea forms part of a petition concerning the fate of the deposits made with the PMC Bank.

On the last occasion, the Court had directed the Ministry of Finance, Central Government to disclose if it intended to infuse funds, as it allgedly did in Yes Bank, to render financial support to PMC Bank.

In response, the Central Government filed an affidavit stating that it had not invested any funds in Yes Bank.

It was stated that investment in the share capital of Yes Bank was done by several investors, including the State Bank of India (SBI), pursuant to the Yes Bank Limited Reconstruction Scheme, 2020.

After perusing the affidavit, the Court observed,

“..what has emerged upon perusal of the notification is that, both, the Reserve Bank of India [in short “RBI”] as well as the UOI had a crucial role to play in the decision taken to: permit, firstly, the Reconstruction Scheme being brought into play and, secondly, to have it funded.”

The Court thus directed RBI to file an affidavit explaining as to what propelled it to take action in the “public interest” to secure the interest of the depositors of Yes Bank and the reason why sanction was accorded to the Reconstruction Scheme by the Central Government.Therefore, both the RBI as well as the UOI will file additional affidavits bringing on record the documents, which will establish the reasons which propelled the said decision to be taken i.e. the forging of the Reconstruction Scheme. The affidavits will delve into the aspect as to how the depositors of PMC Bank are differently circumstanced in comparison to the depositors of Yes Bank.Delhi High Court

It further directed the Central Government to file an affidavit indicating the shares it holds in SBI and the representation it has on the SBI’s Board of Directors.

The PMC Bank Administrator also informed the Court that as on June 25, none of the seized assets of PMC Bank had been liquidated and an application qua this aspect had been filed before the court concerned.

Directing the Administrator to file an affidavit on the above aspect, the Court stated,Given the dire state in which the depositors of PMC Bank are placed today, the Administrator, to my mind, should approach the concerned Court and make an endeavour to hasten the process. The circumstances created by the Coronavirus pandemic affects even the depositors of the PMC Bank.Delhi High Court

The matter would be heard next on August 6.

RBI was represented by Advocates HS Parihar, Kuldeep Parihar, Ikshita Parihar.

Centre was represented by Standing Counsel Jasmeet Singh.

Administrator was represented Advocate by Purusharth Bisht

Published by Sneha Vishwakarma

Advocate, Bombay High court.

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