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ITEM NO.211       COURT NO.12     SECTION XII       SUPREME COURT OF INDIA             RECORD OF PROCEEDINGS

Petition(s) for Special Leave to Appeal (Civil) No(s).2816/2006 (From the judgement and order dated 16/12/2005 in WA No. 899/2002 & WP No. 26467/2001 & WP No. 26468/2001 of The HIGH COURT OF MADRAS)

SURACHAN CHANSRICHAWALA                                       Petitioner(s)

                VERSUS

U.O.I. & ORS.                              Respondent(s) (With appln(s) for directions and prayer for interim relief )) (for final disposal)

Date: 02/05/2008 This Petition was called on for hearing today.

CORAM :    HON’BLE MR. JUSTICE ALTAMAS KABIR    HON’BLE MR. JUSTICE HARJIT SINGH BEDI

For Petitioner(s)           Mr.Mukul Rohtsagi,Sr.Adv.            Mr. Gopal Jain,Adv.            Mr. R.N. Karanjawala,Adv.              Mrs Manik Karanjawala,Adv.            Ms. Pragya Singh Baghel,Adv.            Ms. Diya Kapoor,Adv.

For Respondent(s)         Mr. K.N. Bhat,Sr.Adv.          Mrs. Kuldeep S. Parihar,Adv.            Mr. H.S. Parihar ,Adv

          Mr. Mohan Parasaran,ASG            Mr. P.S. Patwalia,Sr.Adv.            Mr. P. Parmeswaran,Adv.              Mr. V.K. Verma,Adv.            Ms. Alka Sharma,Adv.              Mr. B. Krishna Prasad ,Adv

            Mr. Sridhar Potaraju ,Adv            Mr. Julius Riamei,Adv.

       UPON hearing counsel the Court made the following                   ORDER

                  Leave granted. The appeal is disposed of in terms of the signed order.

       (Ganga Thakur)                  (Radha R. Bhatia)         P.S. to Registrar            Court Master

                      (Signed order is placed on the file)

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   IN THE SUPREME COURT OF INDIA     CIVIL APPELLATE JURISDICTION

       CIVIL APPEAL NO. 3469 OF 2008               (Arising out of SLP(C) No. 2816/06)

SURACHAN CHANSRICHAWALA                                               ...APPELLANT(S)

                    Versus

U.O.I & ORS.                                                         ..RESPONDENT (S)

                               ORDER

            Leave granted.

            The appellant is the Chairman of a Non-Resident Indian Family

  Group known as Siam Vidhya Group, purportedly engaged in the business of

  banking, insurance, finance and allied activities outside India.

            In 1994, on invitation from the Management of the Catholic Syrian

  Bank, the respondent No.5 herein the appellant Group wanted to bring in

  foreign exchange in the form of capital investment into the Bank.

            The above-mentioned NRI Group had applied to the Foreign

  Investment Promotion Board for permission to acquire some shares of the

  Bank. On 18th February,1997, requisite permission was granted by the Foreign

  Investment Promotion Board to acquire shares of the Catholic Syrian Bank

  on terms and conditions set out

  in the order granting permission. The said permission

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                               -2-

was granted for two years and required the appellant to obtain necessary

permission both from SEBI as well as the Reserve Bank of India having

particular    regard   to the provisions of the Foreign Exchange Regulation

Act,1973.      Admittedly, after permission was granted by the             Foreign

Investment Promotion Board, the appellant started purchasing shares of the

Bank and also applied to the Reserve Bank of India for necessary permission

under Section 29 of the Foreign Exchange Regulation Act, which permission

was refused by the Reserve Bank of India. The appellant was, thereafter,

prosecuted for violation of the aforesaid Act.    The said prosecution is the

subject matter of challenge in the appeal.

            During the pendency of the proceedings, upon considering the

submissions made by the learned counsel appearing for the respective parties,

this Court directed the Reserve Bank of India to consider the application of the

appellant and to pass appropriate orders under Section 29 of the Foreign

Exchange Regulation Act,1973, after considering all relevant

aspects of the matter. The appellant was given leave to make a comprehensive

representation before the Reserve Bank of India in support of his claim.

            The matter was thereafter considered by the Reserve Bank of India

which has submitted its Report

                               -3-

dated 27th November,2007, which has been annexed to the application, being

I.A. No.4, which is being heard by us.

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          From the said Report, it appears that the Reserve Bank of India has

considered the application made by the appellant and has agreed to the transfer

of 21,42,736 shares of the Catholic Syrian Bank Ltd. in favour of 11 persons

forming the Siam Vidhya Group, subject to the following conditions:

              "a) The Siam Vidhya Group may hold up to 10% of the total       paid up capital of the Catholic Syrian Bank Limited on a long term       basis.

                b) The shares in excess of 10% of the paid up capital shall be       divested by the Siam Vidhya Group within a period of six months from       the date of transfer.

                c) Each sale of shares made by Siam Vidhya Group and       registration of the transfer in the books of Catholic Syrian Bank Limited       resulting in acquisition of 1% or more of the paid-up capital of the       bank by a person or persons acting in concert directly or indirectly shall       be with the prior approval of Reserve Bank of India from the ‘fit &       proper’ angle.

               d) The Siam Vidhya Group shall not have any representation       on the Board of the Catholic Syrian Bank Limited."

          During the hearing of the application, it has been brought to our

notice that pursuant to the

conditions suggested by the Reserve Bank of India and agreed to by the

appellant and the NRI Group represented by him, the aforesaid shares have

been transferred to

                               -4-

the said persons representing the Siam Vidhya Group. In that view of the

matter all that remains is to dispose of the application and the prayers made

therein.

          As far as prayer ‘A’ is concerned, the same is allowed and the order

of the Reserve Bank of India dated 28th November,2007, is taken on record.

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Prayer ‘B’ is not pressed. As far as prayer ‘C’ is concerned, having regard to

the settlement arrived at on the recommendation made by the Reserve Bank of

India, the same has to be allowed. It is also submitted on behalf of the

Reserve Bank of India that it does not wish to proceed any further with the

various proceedings which were pending before it.

         In view of the approval granted by the Reserve Bank of India and the

Report submitted by it, the Reserve Bank of India is no longer interested in

the pending proceedings and the same may be dropped along

with the show cause notice. Such prayer is accordingly allowed.

         Prayers ‘D & F’ are also not pressed, but it will be open to the

appellant to make such further requests as may be permissible in law, having

regard to the fact that steps have already been taken pursuant to the

recommendations of the Reserve Bank of India.

                              -5-

         As far as prayer ‘E’ is concerned, we are told that a representation

has been made in this behalf and the same is under consideration.

          I.A. No.4 is accordingly disposed of.

         Having regard to the Order passed by this Court and the Report

submitted by the Reserve Bank of India, time for divesting shares in excess of

10% is extended by a further period of three months from today.

         In view of this Order which is passed on I.A. No.4, the judgment of

the Madras High Court in connection with writ petitions Nos. 26467 & 26468

of 2001 and writ appeal No. 899 of 2002 are hereby set aside.

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             The Appeal is disposed of accordingly.

                      .....................J.                            ( ALTAMAS KABIR )

                                              ......................j.                                              ( HARJIT SINGH BEDI )

New Delhi, May 2,2008.