The Madras High Court on Friday passed an interim order restraining Axis Bank from enforcing the forex derivatives contract sold to its client Rajshree Sugars and Chemicals. An injunction was passed today to maintain the status quo on the dispute by withholding its enforcement.
The Coimbatore-based sugar manufacturer had taken Axis Bank (formerly UTI Bank) to court for selling exotic forex derivative products.
Axis bank, however, filed a counter saying it was not within the Madras High Court's jurisdiction to entertain the case.
The bank took the plea that the contract document signed between the bank and the company clearly states that disputes, if any, will be resolved only in the Mumbai High Court. The court will hear the arguments of both the parties on April 27.
The case first came up for hearing at the Madras High Court on March 25, but was adjourned for hearing today since the bank was then not ready with its counter. The bank later filed its counter stating that the disputed contract was well within the RBI guidelines.
Though several companies in the country have taken a handful of private sector and multi-national banks to court on similar grounds, this case is being watched by corporate India with keenness as the final judgment on this case might set the precedence for similar cases.
The final hearing on the Rajshree Sugars case is expected to come up in the next two weeks. Sources close to the company also said that what is widely discussed as loss, running into a few million dollars, is only a notional loss and cannot take effect until the contract is enforced. A similar dispute is also brewing in the case of Sundaram Brake Lining, part of the TVS Group.
