HC reserves order on YES Bank standoff

The Bombay High Court (HC) on Wednesday reserved its order on whether it has jurisdiction to hear the suit filed by Madhu Kapur, widow of YES Bank co-founder Ashok Kapur, against appointment of directors on the bank's board.

The matter came up before a two-judge Bench. With both the parties concluding their arguments, the HC can now pronounce the judgment any day.

Earlier, Madhu had claimed her right as co-promoter of the bank was violated, as she was not consulted before appointment of these directors. YES Bank had made a preliminary objection that according to Section 10A (6) of the Banking Regulation Act, 1949, dispute over appointment of directors on a bank's board cannot be heard by a civil court.

The court had ruled it had jurisdiction to hear Madhu's plea, prompting the bank to appeal against the order. "The judgement has been reserved. The judgment can come any day," a source said requesting anonymity. The judgement assumes importance as the hearing on Madhu's plea is scheduled to start on Friday.

The possibility of an out-of-court settlement appears dim after the bank's board, in a meeting last week, maintained its stance of not considering Madhu as a co-promoter of the bank. Ashok Kapur co-founded YES Bank with his brother-in-law, Rana Kapoor. Madhu and Rana's wife, Bindu, are sisters.

But YES Bank has so far maintained a stand that banking is not a family business and 'financial family successors' do not automatically become part of the promoter group of a bank due to regulatory criteria.

" Madhu Kapur being successor of late Ashok Kapur cannot be considered as Indian partner or Indian promoter and accordingly, cannot inherit the rights under articles of association or the status of promoter of YES Bank," the bank had said in an emailed statement.