HC asks RBI to reply to Kochhar’s plea

Court hearing arguments on termination of services of ex-ICICI Bank MD & CEO

The Bombay High Court on Monday directed the Reserve Bank of India (RBI) to file its reply in the plea filed by Chanda Kochhar, former MD & CEO of ICICI Bank, challenging the lender’s decision to terminate her from services last year.

A division bench was hearing a petition filed by Ms. Kochhar, challenging her termination by the bank and denying her the agreed upon remuneration without prior approval of the RBI.

She alleged this constituted a breach of statutory obligation under the Banking Regulation Act, 1949 as the bank’s board had already accepted her request for early retirement. In its affidavit, the bank said, “this writ petition is merely part of a concerted stratagem adopted by Ms. Kochhar to avoid making any payments to the ICICI under such clawback provisions.”

The affidavit stated “Ms. Kochhar is attempting to seek restoration of contractual benefits such as vested/unvested stock options, which stood forfeited on the account of treatment of Ms. Kochhar’s separation as termination for cause.”

It said, “As per a report received on January 27, 2019, the audit committee contended, Ms. Kochhar had committed serious violations of inter alia the code of conduct of ICICI, the provisions of Companies Act, RBI Master Circulars on Loans and Advances and SEBI (listing obligations and disclosure requirements) Regulations.

The affidavit, which lists some violations, says “the apartment in which Ms. Kochhar resides was owned by Quality Techno Advisors Private Limited (then part of the Videocon Group) and no rent was paid by her or her husband. It was virtually gifted to a family trust of Ms. Kochhar’s at a nominal consideration.”

Ms. Kochhar’s lawyers informed the court that as per the Act, prior sanction of the RBI was required to terminate her services. They said despite receiving the bank’s letter, seeking approval to terminate her services, the RBI failed to observe additional time was being sought post facto and issued the approval. The court then directed the RBI to file its reply and slated the matter for hearing on December 18.