The Karnataka High Court on Wednesday ordered issue of notices to the Ministry of Finance and the Reserve Bank of India (RBI) on a petition seeking cancellation of banking licence of Axis Bank Ltd.
Justice A.S. Bopanna passed the order on a petition filed by Lotus Shopping Centre Pvt. Ltd., a developer of malls. The court also ordered issue of notice to the bank.
Alleging that fraudulent means adopted by the bank had caused huge loss to one of its projects, the petitioner-company has also sought a probe by the RBI or an agency such as the Central Bureau of Investigation into the affairs of the bank.
It has been claimed in the petition that a ₹300-crore mall project of the petitioner in Mangaluru city suffered a huge loss owing to “illegal and unilateral suspension of disbursement of loan by the bank to the mall project”.
The bank had sanctioned a ₹150-crore loan to the project but suspended disbursement, after releasing only ₹100 crore, without any valid reason, and had violated several norms governing sanctioning of loans laid down by the RBI, the petitioner said.
Also, it has been alleged in the petition that the bank indulged in “fraudulent” activities with an ulterior motive to sell valuable property of the petitioner as a distress sale, which is laced with vested interest.
Pointing out that petitioner itself had arranged ₹141 crore from its investors for the projects, it has been claimed in the petition that officials of Axis Bank created a situation to sell the project as a “distress sale” through fraudulent means even though the petitioner had provided sufficient security, which was nearly two times the project value. It has been alleged in the petition that the bank had forced the petitioner to borrow money from private lenders at an exorbitant rate of interest of 36%.
The petitioner has also sought a direction from the court to the Union government to acquire Axis Bank and initiate criminal prosecution against the officials concerned who are responsible for the alleged fraud. The RBI has not initiated any action against Axis Bank even though the alleged violations were brought to the RBI’s notice, the petitioner claimed.
