The Maharashtra government-owned State Industrial Corporation (Sicom) has protested to C R Mehta, who represents the Company Law Board, that forged proxy shares were used in the voting in the election for the re-appointment of United Western Bank directors at the bank's annual general meeting at Satara on Thursday.
Sources close to Sicom allege that at least 15 lakh to 20 lakh proxy shares were fabricated with several bunches of proxy forms having the same handwriting.
The top management of United Western Bank had been campaigning quietly against the re-appointment of the 2 directors on the bank's board representing Sicom: A K D Jadhav, managing director of Sicom and Sharad Upasani.
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Besides, Sicom had proposed a resolution for the appointment of 4 new additional directors on the bank's board: S Jambunathan, Ramesh Venkat, P B Kulkarni and P C Shejwalkar.
However at the last minute, Kulkarni, former chairman and managing director of Bank of Maharashtra, and Shejwalkar, Pune-based management educationist, dropped out of the race.
Sicom and UWB have been at loggerheads ever since the two signed a memorandum of understanding for integration of the banking and financial institutional activities of both. Sicom had picked up 9.9 per cent equity of the bank's equity in two tranches in 1995 and another in 1999 at a premium of Rs 30 per share (face value per share: Rs 10 per share) involving a total investment of close to Rs 12 crore.
The first time Sicom bought the bank's equity was for integrated working. The second time it was for joint financing. Integration and merger was one of the options the two considered.
Sicom had also proposed that Shrikant Garde of the bank join on its board. In its joint petition to the Reserve Bank of India, both Sicom and the bank had proposed merger and therefore had sought permission to allow Garde on Sicom's board.
This request is still pending with the RBI. The first MoU was signed between the bank and Sicom in 1998 for joint financing and joint training of their respective staff. However, none of the terms of the MoU materialised as the bank's management did not show any interest in implementing it, Sicom officials complain.
Sicom, however, realised that the bank had placed 9.9 per cent of its equity with it to ward off any predators trying to take over the bank.
The 1998 MoU expired in October 2000 when Sicom insisted that four of its representatives should be on the bank's board. However, a compromise was struck whereby it was agreed that three Sicom men would be on the bank's board.
Meanwhile, P N Joshi, chairman and managing director of the bank who negotiated the two equity deals with Sicom, retired sometime in August 2000. After Joshi's retirement, the relationship between Sicom and the bank became strained as the Satara-based bank suspected Sicom of aligning with the Mumbai-based Makharias.
Earlier, the Makharias had a close relationship with the top management of the bank and had even received liberal funding for their group companies to the tune of Rs 48 crore. The Makharia group and their associates are said to be currently holding close to 16 per cent of the bank's equity. However, the Makharias have declined to confirm this figure.
Meanwhile, the Makharias filed a petition with the CLB for freezing the 8 per cent equity mopped up from the market by the Employees Share Trust of the bank.
The bank has also filed a petition with the CLB to freeze the 9.9 per cent shares held by Sicom on the ground that the financial institution was conspiring with the Makharias. The bank has also sought the freezing of the shares held by the Makharias fearing a takeover of the bank.
With several petitions creating controversies and the newest being alleged forged voting, the CLB may not declare the results of the voting for the re-appointment and new appointment of directors immediately until the petitions are cleared.