New Delhi: The Supreme Court on Friday issued notice to the Andhra Pradesh Government on a special leave petition filed by Margadarsi Financiers, a unit of Ramoji Rao-Hindu Undivided Family, and two others against the interim order of the Andhra Pradesh High Court refusing to stay the operation of the Andhra Pradesh Protection of Depositors of Financial Establishments (APPDFE) Act.

A Bench of Chief Justice K.G. Balakrishnan and Justice R.V. Raveendran issued the notice after hearing senior counsel Harish Salve, Arun Jaitley, Raju Ramachandran and Mukul Rohatgi for the petitioners and the interveners, and senior counsel Ram Jethmalani, Rohinton Nariman and Advocate-General Mohan Reddy for the State Government.

The Bench also issued notice on the petitions seeking transfer of the plea pending in the High Court to the apex court but did not stay the further proceedings in the High Court.

On the applications filed by the Editor-in-Chief of The Hindu , N. Ram, and senior journalist Kuldip Nayar seeking intervention in the case, the Bench said these applications would be heard along with the main SLP.

The State Government issued orders under the APPDFE Act appointing N. Rangachary committee to find out whether Margadarsi Financiers had violated Section 45 S of the Reserve Bank of India Act and authorising Krishna Raju, IPS, to file applications in the courts of the competent jurisdiction to take other action contemplated under the APPDFE Act.

Margadarsi Financiers, Mr. Ramoji Rao and Ushodaya Enterprises Limited had filed a writ petition in the High Court challenging the validity of the APPDFE Act and prayed for suspending the operation of the Act and the two Government Orders.

Mr. Salve submitted that the petitioners had made serious allegations of mala fides against the Andhra Pradesh Chief Minister, Y.S. Rajasekhar Reddy. But the High Court dismissed the stay applications and also refused to issue notice to the Chief Minister. Tracing the sequence of events, he said the question of mala fides was a relevant factor as the passing of the two GOs was the culmination of the mala fide exercise of power.

The Bench intervened and said "even without making the Chief Minister as a respondent you can prove your allegation." He said the mala fide was further exhibited by the Committee concluding its enquiry and submitting its report on February 15 even before the apex court could take up the matter.

The Bench told Mr. Salve "you [Mr. Ramoji Rao] have two hats, one as a media owner and other as a financier." When the counsel said that it all started because of Eenadu highlighting the "misdeeds" of the Chief Minister, the Bench said "you exposed their misdeeds and they want to expose your misdeeds."

Mr. Salve said that so far not a single complaint had been preferred by the depositors. "We furnished all the details to the Reserve Bank of India and the RBI has asked us not to collect fresh deposits and we accepted it. The RBI said it would monitor the repayment of deposits. While so where is the need for a further enquiry by the State."

The Bench observed: "Financial institutions always get into trouble while repaying deposits. The State Government has a duty to protect the interest of the depositors."Mr. Jethmalani said "they [Margadarsi Financiers] have taken Rs. 2,300 crore as deposits and of which they had diverted Rs. 1,300 crore for their private business. Can't the Government make any enquiry? Don't bring freedom of press here as it is totally irrelevant."

The Bench told Mr. Jethmalani that "the petitioners' apprehension was that raiding the media house would be the next step."

Printer friendly page  
Send this article to Friends by E-Mail