The Bombay High Court has dismissed a petition by Chanda Kochhar against ICICI Bank on her removal as managing director and chief executive officer (CEO) of the bank. A bench comprising judges N.M. Jamdar and M.S. Karnik agreed with the bank that ICICI Bank as a private body is not a part of the writ jurisdiction.
“It is not an instrumentality of the state. It receives no public funding. Service conditions of the petitioner are not governed by any statute. The dispute raised in this petition arises from a contract of personal service. The termination of the petitioner is in the realm of contractual relationship," the court said.
The bank had argued that the petition was not maintainable as writ petition because there is no public cause in this case, and that the action to remove Kochhar was part of private contractual terms. “It performs no public duty. There is no public law element in its functioning. It is only a private bank having a purely private character," senior counsel Darius Khambatta argued in favour of the bank.
Kochhar moved the court on 30 November seeking remedy against her removal when the board had already accepted her early retirement request. She pointed out that her retirement request was accepted by the bank in October 2018 and in February 2019, the bank issued her a termination letter. Kochhar, in her petition, challenged the “purported termination" and denial of the agreed remuneration.
The petition termed the termination of her services by the bank as contravention of law on the grounds that it was without the previous approval of the Reserve Bank of India (RBI), as Section 35B of the Banking Regulation Act, 1949 requires prior-approval of the RBI before terminating the services of the managing director of a bank. In the first week of December, the bank produced the RBI approval letter in the court, forcing Kochhar to file an amended plea.
India’s second largest private sector bank decided to terminate Kochhar after a committee led by Justice B.N. Srikrishna found that Videocon Industries was granted loans by ICICI Bank and, in quid pro quo, Videocon invested in Nupower Renewables, the company of Kochhar’s husband.
While the committee indicted Chanda Kochhar, the board sacked her earlier this year after taking into consideration the Srikrishna report. The board also informed Kochhar that it has decided to treat her separation from the bank as “termination for cause" under its internal policies and that it requires clawback of the entire bonus of £742,000 paid to her from April 2009 until March 2018.
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