Bombay High Court Directs RBI To Respond To Chanda Kochhar’s Plea By Dec. 16
A man talking on a mobile phone walks past signage for ICICI Bank Ltd. at the Bandra Kurla Complex in Mumbai. Photographer: Dhiraj Singh/Bloomberg

Bombay High Court Directs RBI To Respond To Chanda Kochhar’s Plea By Dec. 16

The Bombay High Court has directed the Reserve Bank of India to respond to a plea by Chanda Kochhar, former Managing Director and Chief Executive Officer of ICICI Bank Ltd., by Dec. 16 to her case challenging the clawback of bonuses paid to her over nine years.

That comes after the high court allowed the addition of the central bank as a party to an application filed by Kochhar in which she had sought quashing of the private lender’s move to clawback Rs 7.4 crore granted to her between April 2009 and March 2018.

The private lender had named a panel headed by Justice BN Srikrishna to probe the alleged quid pro quo in ICICI Bank’s loans to Videocon Group when Kochhar’s husband had business dealings with the conglomerate’s founder Venugopal Dhoot. The panel found that Kochhar violated the bank’s code of conduct and she failed to discharge her fiduciary duty to recuse herself to avoid any conflict of interest. This prompted the bank to treat her resignation as termination.

Kochhar had also asked for copies of the investigation report against her along with the material considered by the enquiry committee. The lender, according to her petition, only shared excerpts from the report and declined to share the minutes and supporting material relied upon by the committee.

Kochhar’s writ petition against the bank was filed under Article 226 of the Indian Constitution. ICICI Bank challenged the maintainability of the writ petition on the ground that being a private lender, it didn’t discharge any public duty. As a writ petition can be filed only against the state, the petition against it was not maintainable, it contended.

Here are the key arguments of the parties:

ICICI Bank’s Arguments

Darius Khambata, counsel appearing for ICICI Bank, challenged the maintainability of Kochhar’s application as:

  • ICICI Bank is a private banking entity organised under the laws of India. It doesn’t discharge any public duty or isn’t owned by the government, hence it does not fall within the definition of “State”. Kochhar’s plea to invoke high court’s writ jurisdiction is therefore not maintainable.
  • The dispute regarding clawback of bonuses and termination between Kochhar and the bank were contractual in nature. It pertains to the exercise of private contractual terms and rights between parties. Alternate remedies for resolution of such disputes are available under law.
  • Actions taken against Kochhar were pursuant to the findings of an enquiry conducted by Justice BN Srikrishna, in which it was concluded that Kochhar failed to make key disclosures regarding dealings with Videocon Group, violating the bank’s code of conduct.
  • It was also found out that Kochhar didn’t disclose the fact that she paid no rent for her residential apartment between 2009-16, as it was owned by an entity belonging to the Videocon Group.
  • Kochhar’s application failed to establish that the bank didn’t discharge its statutory duty.

Kochhar’s Rebuttal

Vikram Nankani and Sujay Kantawala, counsels for Chanda Kochhar, rebutted ICICI Bank’s case on the following grounds:

  • The Banking Regulation Act clearly required ICICI Bank to seek the central bank’s approval before terminating her but no such approval was obtained.
  • Kochhar’s request for early retirement was approved by the bank even if it was fully aware of the pending enquiry against her. Hence, the bank cannot treat retirement as a termination for cause.
  • ICICI Bank’s arguments don’t stand if the lender cannot show a prior approval for Kochhar’s removal.

The court will next hear the matter on Dec. 18.

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