HC issues notices in ICICI Bank-BoR merger case

The Rajasthan High Court on Wednesday issued notices to the Reserve Bank of India, Bank of Rajasthan (BoR), ICICI Bank and others on a petition filed by an employees union of the Udaipur-based BoR against its proposed merger with ICICI Bank, the country's largest private sector lender.

"The High Court issued notices to all respondents - the Union of India, Reserve Bank, Sebi, BoR, ICICI Bank, P K Tayal and S K Tayal (BoR promoters)," said lawyer Varun Sinha, who filed the petition on behalf of the Akhil Bharatiya BoR Karamchari Sangh.

The respondents have been asked to file their replies within four weeks, after which the matter will be posted for hearing. The BoR Karamchari Sangh is seeking to stay the proposed merger of the bank with the ICICI Bank, Sinha added.

The petition claims that the BoR board decision on 18 May 2010 to merge with ICICI Bank was illegal as the Securities and Exchange Board of India had found out that the Tayals had acquired 55.1 per cent equity in the bank in violation of its regulations (See: SEBI report points to malpractices in Tayal group company JTREL). 

SEBI in its order on 8 March 2010 had restrained the Tayals and their group entities from dealing in BoR shares. "Then the merger on the basis of the share swap ratio method is in contrary to the SEBI order," Sinha said.

ICICI Bank on 23 May had agreed to take over BoR in a share-swap deal that valued the BoR at over Rs3,000 crore. The merger would be based on ICICI giving one share for every 4.72 shares of BoR.

Post-merger, the balance sheet of ICICI Bank would cross Rs4,00,000 crore. BoR has a total business of over Rs23,000 crore, as against nearly Rs3,84,000 crore of ICICI Bank.