The status quo order was passed by a division bench comprising Justice Sujata V Manohar and Justice R P Sethi pending hearing on the special leave petition filed by State Bank of India against a Calcutta High Court order. The court also issued notices to the banks - UTI Ltd, South Indian Bank Ltd, Global Trust Bank Ltd, Federal Bank Ltd and Centurion Bank Ltd - and 57 others including the Madhumita group of companies.

State Bank of India, through advocate Sanjay Kapur, had filed the special leave petition challenging an order of the division bench of Calcutta High Court which had stayed the status quo ordered by a single judge of the same High Court with regard to demand raised by these banks on account of discounting of bills.

State Bank of India has alleged thatfraudulent LCs had been opened by some of its employees at the bank's Baghbazar branch in Calcutta in collusion with several companies and their employees in favour of persons and concerns who had agreed to supply prawn/fish to the SBI's constituents.

The five banks claimed to have discounted 80 lcs purported to have been issued by the Baghbazar branch of State Bank of India.

StateBank of India had also alleged that such LCs had been issued by its employees, who were not authorised, on behalf of Madhumita Construction Pvt Ltd, Madhumita Tea Pvt Ltd, MMC Exports Ltd, and in favour of frontal companies/associates set up by the Madhumita group of companies. As a result of such collusion and conspiracy and also due to negligence on part of the five banks, SBI said it has been defrauded to the tune of Rs 113 crore.

These five banks, who claimed to have discounted bills, were aware that these LCs were full of discrepancies and did not conform to international standards, it said.

The nationalised bank saidthese LCs were meant for local transaction in Calcutta itself, while the LCs were normally issued for international trade transaction or for inter-city transaction.

SBI lodged an FIR on September 14 last year against the promoters/directors of Madhumita group of companies and eight SBI officials. CBI is at present conducting probe into the matter. SBI claimed before the court that the LCs were fictitious in nature and did not relate to any genuine transactions.