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Tamilnad Mercantile Bank sizzles: three directors exhume Nadar-Essar deal details, stir row

Three directors of Tamilnad Mercantile Bank have raised an issue over a legal technicality in a share sale deed, jeopardising the Nadar community's relentless fight to regain control of the cash-rich bank. The major setback comes just a few days after the widely reported accord between them and C Sivasankaran of the Sterling group.

A "majority" of the directors of the bank have expressed opposition to C Sivasankaran of the Sterling group directly selling the shares to the Nadar Mahajan Bank Share Investors' Forum formed by the Nadar community.

Addressing a joint press conference in Madras today, three directors of the bank -- N Vikraman, C Amarnath and Ganesan K Chezhian -- said that as per the original agreement entered into with the Essar Group to which the promoter family sold the shares in 1994, the latter, if and when it decides to sell the shares, should first offer them to the promoter family. Only if the family does not evince interest, the Essar Group can sell the shares to others, the three directors contended.

It may be recalled that the Essar Group had purchased 67 per cent of the stake in the bank. Later, Sivasankaran acquired the shares from the Essar Group.

In all, there were eight directors, six belonging to the Nadar community and two appointed by the Reserve Bank of India. The three directors claimed that all the eight were united on this issue.

Vikraman said the original share-holders sold the shares to the Essar Group at the rate of Rs 3,500 per share and would buy them back only at the same rate.

Vikraman claimed that the shares were available in the market at Rs 3,500 and even last week some people bought it at that price. He has no knowledge of the forum buying the shares at Rs 8,000 per share.

Even as Sivasankaran handed over the 67 per cent of the share certificates to Ramachandra Adityan, chairman of the forum and the latter presented a cheque for Rs 200 million as advance payment for the purchase of shares at a total cost of Rs 1.55 billion, G Kathiresan who represented the promoter family, had invoked the arbitration clause and appointed an arbitrator to resolve the issue.

Ravi N Ruia of the Essar group had also appointed an arbitrator but the third arbitrator could not be mutually agreed upon by the two, following which Kathiresan moved the Madras high court to appoint the third arbitrator. The arbitration proceedings could commence after the appointment of the third arbitrator by the court, he said.

Vikraman said the transfer of shares between Sivasankaran and the forum would not be possible when the arbitration process was on.

He said the annual general body which last met on July 1, 1997 would be convened only after the directors get some clarifications from the high court with regard to the voting rights of the share-holders.

The directors' contention was that only the original share- holders were vested with the rights and neither the Essar Group nor Sivasankaran had voting rights.

Asked why they (the three directors) kept quiet all these months when leaders of almost all the political parties prevailed upon Sivasankaran to sell the shares to the forum, Vikraman said members of the forum and retrieval committee were aware of the agreement that existed between the promoter family and the Essar Group.

Vikraman said they had decided to come out in public only after two directors -- C G Rangabashyam and S Kanagasabapathy of Pondicherry -- were assaulted and threatend that they will be forced to quit their posts.

The two directors, however, were not present at the press conference.

UNI

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