HC allows Kochhar to challenge RBI with the dismissal gesture

Swati Deshpande | TNN

Mumbai: Bombay's high court allowed Chanda on Monday Kochhar , former managing director and CEO of ICICI Bank , to amend her petition against its termination on January 30, 2019 and also challenge the RBI's approval to dismiss her post facto in March 2019. She has tried to add the RBI as part of your request and defies your assent as illegal and void.

A bank of judges Ranjit More and M S Karnik However, he said he kept the bank's preliminary objections open to the maintainability of his request.

Darius Khambata, counsel for the bank, said it was a contractual dispute and since the lender is a private firm and not a public limited company, a writ petition is not maintainable. Vikram Nankani , counsel for Chanda Kochhar - who was not in court but her husband Deepak Kochhar was - argued that under banking regulations, the termination required RBI’s approval. He said that the bank’s affidavit disclosed that the RBI had given its approval for her removal in March 2019, after the January 30 termination.

Nankani, who along with Sujay Kantawala appeared for Kochhar , sought to amend the petition to add the RBI as a party and challenge its nod, as “illegal’’ and “void’’. Khambata, however, said such an amendment cannot be permitted. “He can’t argue that by amending and adding the RBI , what was not maintainable suddenly becomes maintainable,” said Khambata.

The bank’s case is that the approval by the RBI was in compliance with the law under Section 35B(1)(b) of the Banking Regulations Act, hence her petition must be dismissed. The bank, in its reply, has said that she has “attempted to invoke the HC’s writ jurisdiction under the garb of an alleged violation of section 35B of Banking Regulations Act” and denied that there was in fact, any such violation or non-compliance.

The bank said it has on February 3 sought approval from the RBI for the termination and it was granted on March 13.

The bank allowed the amendment, but said it would also listen to the bank about maintainability.

Last October, the ICICI Bank had accepted her October 3 plea for early retirement and having accepted her resignation had appointed Sandeep Bakshi as MD and CEO for five years.

However, on January 30, the bank rescinded it for just cause, in view of a pending investigation.

The bank also then cancelled all her benefits, including those from 2008 to 2019. The benefit amount is estimated to be significantly high. In a letter dated February 1, 2019, the bank informed Kochhar that she was paid over Rs 7 crore as bonus during the period she was CEO since May 2009 and the amount had to be immediately revoked. She challenged her termination as “illegal’’.

Kochhar last week approached the Bombay high court to challenge the validity of the bank’s letter of termination. She has sought a declaration to hold as valid its letter of last October by which the bank had already accepted her request for early retirement.

Her case now is that once her early retirement was accepted the bank, it cannot terminate and withhold her benefits. Section 35B of the Act stipulates that ‘no appointment or reappointment or termination of the appointment of a chairman, an MD or whole-time director or CEO shall have effect unless …made with the previous approval of the RBI .’’

The approval has to be a ‘previous approval’, not after the bank’s decision to terminate, her amended plea says adding that Bakshi’s appointment as with “previous approval from the RBI.”

The HC published the matter for its hearing on December 9.