The Kapurs got an initial lead over the Rana Kapoor in the sordid Yes Bank management saga with the Bombay High Court Monday allowing Madhu to file an amended petition that seeks to revoke the appointment of three new whole-time directors and questions the modalities by which Yes bank appointed three other directors recently. The court of justice SJ Kathawala posted the matter for final hearing to July 29.
On Madhu's request for direction from the court to the bank to share the minutes of the June 8annual general meeting as well as the video recordings of the same, the High Court, without giving any direction on the plea, asked the petitioner to write to the bank Monday itself and also asked the bank to reply by Tuesday. "You write a letter. If they refuse inspection and the court later during arguments finds that the refusal was wrong then we will pass adverse order," Kathawala said.
The petition alleged that the business at the bank's annual general meeting held on June 8was not conducted properly, saying the minutes did not have important details like the number of shareholders and the proxies present or why SL Kapur, who is neither a shareholder nor a director, was allowed to speak at the AGM. Therefore, the petitioner sought to access the video recording of the AGM to ascertain facts.
Senior counsel Darius Khambata, appearing for Madhu and her daughter Shagun Kapur Gogia, said the bank should be directed to maintain status quo pending hearing of Madhu's petition. Yes Bank counsel Iqbal Chagla objected to this and said the pendency of the petition is already creating serious problems for the bank. However, Kathawala did not pass any direction on this and posted the matter for final hearing on July 29.
The HC also allowed the chamber summons removed by Madhu seeking amendments to be made in her petition and posted the matter for final hearing on July 29. Madhu, the wife of the bank's co-founder Ashok Kapur, who got killed in the November 2008 terror attacks on the city, had approached the High Court on June 6 seeking a stay on the appointment of Srinivasan, Nanda and Chopra as the directors appointed by the promoters.
According to the revised petition, the Kapurs alleged lack of corporate governance at the bank, and also sought a slew of directions to protect their interests, including revoking appointments of three new whole-time directors.
While Madhu and her two children (Shagun Gogia and son Gaurav Kapur) together hold 12 per cent interest in the bank, the current managing director and chief executive Rana Kapoor, who along with the late Ashok Kapur, co-founded the bank in 2003, holds 13.7 per cent. Madhu's sister Bina is married to Rana.
Even as the case was subjudice, the bank appointed three of its senior executives–Sanjay Palve, Rajat Monga and Pralay Mondal-as whole-time directors of the bank. The petitioner wanted these appointments to be revoked along with the previous three appointments of Diwan Arun Nanda, Ravish Chopra and MR Srinivasan, saying the Kapurs were not consulted on this, despite being a promoter entity.
The amended petition also highlighted how Rana Kapoor did not recuse himself during the appointment of Ravish Chopra and Diwan Arun Nanda as additional directors in October 2012 even though he had nominated them. Also, according to minutes of the nomination and governance committee meeting, there was only one other director–Arun K Mago–in attendance.
"Rana Kapoor's participation vitiated the free and fair assessment of these nominations," said the petition, while a person close to the Kapurs also questioned the veracity of the committee if only one eligible person (Mago)
was present that made these appointments.
Additionally, the petition pointed out that two of the directors —MR Srinivasan (69 years, who also is the non-executive chairman of the bank) and Nanda (again 69 years)– are well past the RBI prescribed age limit of 35 to 65 years and hence, do not meet the RBI's fit and proper criterion for being appointed as directors. The Kapurs also alleged that Rana Kapoor arbitrarily struck out the name of Ashok Kapur in all bank documents, including its annual reports and a book on the bank's history.
Madhu wants her daughter Shagun appointed to the board as one of the promoter-nominee directors. The HC had earlier asked the bank board to consider the same, but the board declined it, saying Shagun does not meet the fit and proper criterion set by the RBI.
The board decision was "pre-determined and mala fide…the purported reasons given by the board for rejecting the nomination are malafide, perverse and unsustainable in law," the amended petition said.
