Dhanlaxmi Bank gets legal breather in fresh twist to tussle for board seat

Kerala HC on Tuesday ruled in favour of the bank on the issue of writ petitions filed by four persons demanding board positions

In a fresh twist to the battle between shareholders and management of Dhanlaxmi Bank, the Kerala High Court on Tuesday ruled in favour of the bank on writ petitions filed by four individuals demanding board positions.

The petitioners were P K Vijayakumar, K N Madhusoodanan, P Mohanan and Prakash D L. Their candidature for board positions had been rejected  by the bank last year. The petition was filed against the Reserve Bank of India (RBI), Dhanlaxmi Bank and its board of directors. This March, the high court stopped the bank from holding an annual general meeting for the appointment of directors until the legal issues were sorted. According to sources, the court indicated that the petitions were not maintainable. A source said the petitioners have the option to appeal against this judgement at the Supreme Court or in civil courts or NCLT.

The current directors on the bank’s board are C K Gopinathan, a former director of Catholic Syrian Bank, who holds 10 per cent equity; Chief Executive Officer J K Sivan; independent director, G Rajagopalan Nair, an expert on fintech with a long experience in banking; and the two RBI nominees: D K Kashyap and Jayakumar Yarasi.

The court ruling comes amid a call by a group of nine shareholders of the Thrissur-based bank to hold an extraordinary general meeting (EGM) of the bank on November 12, in a move to curb the spending powers of its chief executive officer, J K Shivan.

The nine shareholders collectively hold about 13 per cent shares in the company. The group is led by R P Group head Ravindran Pillai, who holds a 9.99 per cent stake in the company. The shareholders are seeking a curb on the powers of the CEO on issues related to capital and revenue expenditure, except statutory payments like salaries and wages, central and state taxes. It added that the powers will remain suspended till the date on which a proper quorum and composition of the board of directors of the bank, audit committee, and other mandatory committees of the board are reinstated and RBI and Sebi guidelines are followed. Through another resolution, the shareholders were also seeking a settlement of a legal battle with some shareholders regarding board positions.

The differences between the management and shareholders had led to the exit of several top executives of the bank over the past 5-6 years. The list of recent exits include Suseela Menon (independent director) this May, Sunil Gurbaxani (ousted as CEO) in October 2020, G Subramonia Iyer (part-time chairman) in December 2021, Sajeev Krishnan (part-time chairman and independent director) in June 2020 and T Latha (MD and CEO) in October 2019.