Private lender ICICI Bank has filed a civil suit against its erstwhile managing director (MD) and chief executive officer (CEO) Chanda Kochhar in the Bombay High Court, seeking recovery of amounts towards the clawback of bonuses given to her from April 2006 to March 2018 after her termination of services by the bank.
On the other hand, Kochhar is contesting that ICICI Bank should have secured the Reserve Bank of India (RBI) permission first before terminating her services. Kochhar has also challenged the RBI’s approval in terminating her services. She has said the move was illegal and had no legal base. The central bank on March 13 gave its consent to the bank management on Kochhar’s termination, after the bank fired her on January 31, 2019.
The bank has given a composite reply to the court on all the objections that Kochhar has raised. The bank has said that Section 35B of the Banking Regulation Act of 1949, under which Kochhar is seeking nullification of her termination of her services, is a “regulatory provision”.
The bank further said that Kochhar was aware that Section 35B is a part of the RBI’s regulatory and supervisory powers and the Section does not confer any right or protection on her part. Also, the Section does not cast a duty on the bank, but is just a form of regulatory oversight by the RBI for the protection of the banking company and its depositors.
The bank also said, “The said Section does not govern or regulate the petitioner’s (Kochhar’s) contract of services with the respondent (ICICI Bank)”. Therefore, the petitioner has no locus to make a claim in respect of the alleged violation of the said Section.
The bank has raised the objection that Kochhar’s writ petition is not maintainable, that “it is a private banking company and the writ petition seeks to contest what are purely private contractual terms”. Hence, the bank argued that Kochhar’s writ petition did not have legal basis.
Moreover, it has said that none of the reliefs sought by Kochhar — declare termination illegal, refrain from recovering and cancelling early retirement benefits and remuneration, permit exercising stock options — seeks compliance with any statutory provisions whatsoever. Also, the reliefs sought by Kochhar, the bank alleged, are of a purely private character and seek to secure performance of contractual obligations allegedly owed by an employer to an employee.
The bank has also said that the appointment of Kochhar happened in 1984 and the appointment letter specifically says that Kochhar would be bound by the rules and regulations of the bank. After which, Kochhar’s elevation to various positions from 1985-1998 was communicated to her through promotion letters. Further, no fresh appointment letter was issued to her when she was elevated to the post of executive director in 2001 and MD & CEO in 2009.
“Therefore, the petitioner’s (Kochhar) employment with the respondent (ICICI Bank) continued on such terms and conditions as were decided by the board subject to provisions, which were signed by the petitioner from time to time”.
Senior counsels Vikram Nankani and Sujay Kantawala are representing Kochhar in the case, while ICICI Bank is being represented by senior counsel Darius Khambata and law firm Veritas Legal.
The bank has also said, “It is only upon the board approving appointment/reappointment/termination that an approval from the RBI is sought”.
When Kochhar was appointed the executive director of the bank with effect from April 1, 2001, to March 31, 2006, the RBI did not grant prior approval to the appointment before April 1, 2001, but granted its approval subsequently by a letter dated May 29, 2001.
“If the petitioner’s contention is accepted that the prior approval under Section 35B does not include a post-facto approval, the appointment of the petitioner as an executive director of the said respondent is itself invalid. The same principle must necessarily apply to the appointment, as the said Section deals evenly with both appointment and termination,” the bank has said in its reply.
Meanwhile, the Enforcement Directorate has attached assets and cash belonging to Kochhar and her husband Deepak in connection with the Videocon loan case.
The matter will be next heard on January 20.