Kochhar seeks time to make RBI party in case

Business Standard - - FRONT PAGE - SUBRATA PANDA

Chanda Kochhar, former man­ag­ing di­rec­tor and chief ex­ec­u­tive of­fi­cer of ICICI Bank, has sought time from the Bom­bay High Court to make the Re­serve Bank of In­dia (RBI) party in a case against the pri­vate lender. The court gave her time till December 9 to amend the plea and serve no­tice on the RBI.

Chanda Kochhar ( pic­tured), the former man­ag­ing di­rec­tor (MD) and chief ex­ec­u­tive of­fi­cer (CEO) of ICICI Bank, has sought time from the Bom­bay High Court to make the Re­serve Bank of In­dia (RBI) a party in a case against the pri­vate lender.

The court gave her time till December 9 to amend the plea and serve no­tice on the RBI. The mat­ter will be next heard on December 9. Kochhar has chal­lenged the pri­vate lender’s de­ci­sion to ter­mi­nate her ser­vices and claw back bonuses and stock op­tions she re­ceived be­tween April 2009 and March 2018.

In its re­ply to the pe­ti­tion, ICICI Bank said the RBI gave the go-ahead to Kochhar’s ter­mi­na­tion in March 2019 while she was served the ter­mi­na­tion let­ter in Jan­uary. Kochhar’s coun­sel ar­gued that ac­cord­ing to Sec­tion 35B (b) of the Bank­ing Reg­u­la­tion Act, prior ap­proval of the RBI is re­quired to ter­mi­nate the con­tract of a bank’s chair­man or man­ag­ing di­rec­tor. But in this case, the RBI ap­proval came af­ter the ter­mi­na­tion let­ter was served.

The sec­tion says, “No ap­point­ment or re-ap­point­ment or ter­mi­na­tion of ap­point­ment of a chair­man, a man­ag­ing or whole-time di­rec­tor, man­ager or chief ex­ec­u­tive of­fi­cer by what­ever name called, shall have ef­fect un­less such ap­point­ment, re-ap­point­ment or ter­mi­na­tion of ap­point­ment is made with the pre­vi­ous ap­proval of the Re­serve Bank.”

In all cases of ap­point­ments and ter­mi­na­tion of bank CEOS and MDS, the RBI per­mis­sion comes af­ter the board clears the ap­point­ment/ter­mi­na­tion and seeks the reg­u­la­tor’s per­mis­sion, said a lawyer.

The bank retroac­tively sought the RBI’S per­mis­sion to ter­mi­nate Kochhar’s ser­vices ef­fec­tive Oc­to­ber 4, 2018 — the day Kochhar sent in her res­ig­na­tion which was ac­cepted by the board. The RBI’S per­mis­sion was sought in Jan­uary this year af­ter the board re­ceived the report of a com­mit­tee, headed by re­tired Supreme Court jus­tice B N Srikr­ishna, which in­dicted Kochhar.

On the other hand, the lender also chal­lenged the main­tain­abil­ity of Kochhar’s pe­ti­tion, say­ing her ter­mi­na­tion was a con­trac­tual is­sue and since ICICI Bank is a pri­vate bank a writ pe­ti­tion is not main­tain­able. Last year, af­ter re­ports raised ques­tions over Kochhar’s deal­ings with the Video­con group, the bank’s board had ini­tially de­fended her and re­jected any ex­ter­nal in­quiry, but later changed its stance af­ter the CBI started prob­ing the mat­ter. On June 6, 2018, the bank ap­pointed Jus­tice Srikr­ishna to in­quire into all the al­le­ga­tions.

Kochhar had opted for early re­tire­ment in Oc­to­ber 2018, which was ap­proved by the bank’s board.

Kochhar’s coun­sel ar­gued that ac­cord­ing to Sec­tion 35B (b) of the Bank­ing Reg­u­la­tion Act, prior ap­proval of the RBI is re­quired to ter­mi­nate the con­tract of a bank’s chair­man or MD

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.