The Bombay High Court on Thursday dismissed the writ petition filed by Chanda Kochhar against her termination as managing director and chief executive officer of ICICI Bank, and the clawback of her bonuses.
A division Bench of Justices N M Jamdar and M S Karnik accepted the contention of the lender that Kochhar’s writ petition was not maintainable because the dispute concerned a private banking company and was over contractual terms.
“The termination of the petitioner is in the realm of a contractual relationship," the Bench said in its order.
It said courts could not exercise their writ jurisdiction when employment in a private entity was regulated by contracts.
“Contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance and declaration.” The bank had argued that none of the reliefs sought by Kochhar — declare termination illegal, refrain from recovering and cancelling early retirement benefits and remuneration, and permit exercising stock options — complied with statutory provisions. Also, these reliefs, the bank said, were of a purely private character and sought to secure performance of contractual obligations.
Kochhar was contesting that ICICI Bank should have secured the Reserve Bank of India (RBI) permission before terminating her services. She had also challenged the RBI’s ex post facto approval, saying the move was illegal. RBI had on March 13, 2019, given its consent to the management on Kochhar’s termination, after the lender fired her on January 31.
“The RBI issued the alleged approval without due and proper application of mind and in colorable exercise of powers, by mechanically accepting the mala fide request of the respondent bank (ICICI) without disclosing contents thereof to the petitioner (Kochhar) and contrary to the provisions of Section 35B (1)(b) of the Banking Regulations Act,” Kochhar said in her petition. The Banking Regulation Act says prior approval of RBI is required to terminate the contract of a bank’s chairman or MD.
“The requirement of prior approval is mandatory and cannot be granted post facto and the non-fulfilment thereof is incurable and an afterthought,” her petition read.
The bank in its reply said that Section 35B of the Banking Regulation Act of 1949, under which Kochhar was seeking the nullification of her termination of her services, was a “regulatory provision”.
The bank argued that Kochhar was aware that Section 35B was part of the RBI’s regulatory and supervisory powers and the Section did not confer any right or protection on her part. Also, the Section does not cast a duty on the bank, but is just a form of regulatory oversight for protection of the banking company and its depositors. Kochhar moved the high court last year, challenging the decision to terminate her employment and claw back bonuses and stock options she received.