HC rejects Chanda Kochhar’s plea for interim reliefs against ICICI Bank

After hearing both sides the single judge termed the action of the bank as valid and refused to grant the interim reliefs sought by Kochhar. She then challenged the order which was decided by the division bench of justice K R Shriram and justice Rajesh Patil on Wednesday

MUMBAI: In a setback to Chanda Kochhar, former MD and CEO of ICICI Bank, a division bench of the Bombay high court (HC) upheld the decision of a single judge to refuse to grant reliefs to her against the bank. Kochhar had filed an interim application in the suit she filed against the bank for post-retirement benefits. Kochhar had sought honouring of the commitments and contractual obligations made by the bank to her when she retired on October 4, 2018.

Mumbai: ICICI Bank MD & CEO Chanda Kochhar during the India Economic Summit 2018 at Bombay Stock Exchange in Mumbai on Friday. PTI Photo by Mitesh Bhuvad (PTI4_27_2018_000166A) (PTI)

The bank had however sought a restraint on her from dealing in the 6.9 lakh vested and unvested Employee Stock Options (ESOPs) as her services were treated as “termination for cause.”

After hearing both sides the single judge termed the action of the bank as valid and refused to grant the interim reliefs sought by Kochhar. She then challenged the order which was decided by the division bench of justice K R Shriram and justice Rajesh Patil on Wednesday.

The division bench noted in its order, “Any grant of the interim reliefs as sought by the appellant would cause irreparable injury and prejudice to the respondent (ICICI Bank), in as much as if respondent were to succeed in its suit and appellant was to lose in her suit, respondent would then be required to seek recovery of the shares acquired by appellant and/or the monetary equivalent of the same.”

The bench justified the order of the single judge and said, “There is nothing to indicate that the discretion exercised by the learned single judge is arbitrary or capricious or perverse or unjustified in law. The trial court has exercised its discretion reasonably and in a judicial manner. The observations made by the learned single judge on the conduct of the appellant, though not conclusive, are very serious in nature.”

The bench further held that in the event of Kochhar succeeding in her suit the bank could be directed to purchase shares from the stock market or to pay an amount equal to their value to the appellant. However, if Kochhar lost the suit the bank would be required to seek recovery of the shares acquired by the appellant and/or monetary equivalent of the same. The appellant is an individual, whereas the respondent is a publicly listed company.

The court stated that findings made in its judgement or by the single judge were only prima facie findings and not conclusive and posted a hearing of the suit to August 4 before the Single Judge.

The allegation against Kochhar by the bank was that she and her husband had been the beneficiaries of illegal considerations from a firm that had been given a loan of ₹3,250 crore by ICICI Bank in 2012. Based on a specific complaint, in 2017 the Central Bureau of Investigation initiated a preliminary inquiry into the sanctioning of the loan. In June 2018, the bank instituted an inquiry by Justice (Retd) B N Srikrishna. While the enquiry report was pending, Kochhar applied for early retirement. The report submitted in December 2018 stated that Kochhar had committed “gross/serious violations” of the Code of Conduct for extended periods of time.

In January 2019, the bank passed an order of termination of Kochhar’s services and decided to claw back all bonuses given to her since 2009 when she took charge of the top post.

Kochhar, through senior advocate Aspi Chinoy, had argued that once her early retirement had been accepted by the bank on October 4, the employer-employee relationship ceased, and hence the bank could not initiate the inquiry after that.

However, senior advocate Darius Khambata, on behalf of ICICI Bank, submitted that the bank came to know of the misconduct by Kochhar later and hence was justified in its action of issuing termination for cause. He further referred to the Early Retirement Scheme (ERS) stipulations which provide that “in the event of non-compliance of good conduct, the Bank reserves the right to review vesting and exercise of options over the Exercise Period” and “The Bank reserves its right to withdraw any features/benefits given under the ERS at its sole discretion in the event of non-compliance with good conduct.”