Delhi HC permits Swamy to withdraw PIL seeking probe on Yes Bank’s transfer of stress assets portfolio to JC Flowers

The Delhi High Court has allowed former Rajya Sabha member Subramanian Swamy to withdraw his public interest litigation seeking constitution of an expert committee to look into the transfer of a stress asset portfolio of Rs 48,000 crore from Yes Bank to JC Flowers Asset Reconstruction Company.

A bench headed by Acting Chief Justice Manmohan observed that there was no objection by the parties to the withdrawal of the petition and thus cancelled further hearing in the matter.

“The present writ petition is dismissed as withdrawn,” ordered the bench, also comprising Justice Mini Pushkarna, on November 22.

The court noted that RBI has issued guidelines for licensing and operation of assets reconstructions companies, which according to the petitioner, cover the issues of capital adequacy, governance, risk management and disclosure requirements.

In some cases, partnerships between Assets Reconstructions Companies (ARCs) and banks may require approval from both RBI and SEBI, added the court.

Swamy had moved the high court earlier this year seeking to direct the Union Ministry of Finance, Reserve Bank of India and Securities and Exchange Board of India (SEBI) to regulate the arrangements entered into between Banks/ NBFS or other financial institutions and ARCs.

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Swamy had said he wished to highlight the growing rot prevalent in private banking sector, which has been further accelerated by perpetual decay of corporate governance and ethical standards prevailing in private banking industry and asset reconstruction industry.

“This is growing case of concern as there is apparent conflict of interest between functioning of banks and ARCs. The situation is further complicated, when motivated and mala fide transactions between the two are allowed to stand as the regulator (RBI), fails to act and enforce its own guidelines causing significant loss of public monies,” the plea had said.

With regards the transfer of a stress asset portfolio worth Rs. 48,000 crore from Yes Bank to J C Flowers ARC, the petition said, “This transfer is linked to another deal in which Respondent No.4 (Yes Bank) has obtained a stake of up to 19.9 per cent in the company of Respondent No.5. (J C Flowers Asset Reconstruction Company)”, which circumvented laws and regulations.