The Reserve Bank of India (RBI) on Tuesday said its approval to the termination of former ICICI Bank Managing Director and Chief Executive Officer Chanda Kochhar was within its jurisdiction and was given after considering the request of Kochhar’s former employer.
The central bank was replying to Kochhar’s petition alleging that the RBI’s nod to her termination was illegal.
It also said, “While giving regulatory approval for termination of appointment of a managing director, the RBI does not sit in judgment over the legality of actions taken by a banking company in pursuance of its contracts with the person concerned.”
In the last hearing of the matter, Kochhar contested that ICICI Bank should have secured the RBI’s permission before terminating her services. Kocchar’s lawyers have argued there was a breach of statutory obligation.
ICICI Bank has questioned the maintainability of the writ petition arguing that it is “a private banking company and the writ petition seeks to contest what are purely private contractual terms”. The RBI has also seconded ICICI Bank’s view.
Kochhar’s lawyers, however, also brought in the merits of the matter under which the petition is maintainable. They argued that as the RBI is the banking regulator and its prior approval is required before terminating services, and as the RBI is a respondent in the matter, the writ petition falls under an exception.
The Bombay High Court has given three weeks’ time to ICICI Bank for filing a detailed affidavit on the merits of Kochhar’s termination and why a prior approval of the banking regulator was not taken. It has also asked the RBI to file a reply. The matter will be next heard on January 13.
The RBI said while approving Kochhar’s termination, it acted in accordance with the statutory provisions.
“When the RBI grants approval, it is looking at the issue from the regulatory angle. The RBI does not get involved in any employer-employee disputes and by no means does it act as an arbiter for disputes between the banking company and its employees,” it further said.
Senior counsels Vikram Nankani and Sujay Kantawala are representing Kochhar in the case, while ICICI Bank is being represented by senior counsel Darius Khambata and law firm Veritas Legal.
Kochhar has alleged that the bank had accepted her early retirement request on October 4, 2018, with immediate effect, and only certain benefits — employee stock options granted in 2018 and bonuses of the last two financial years — were made subject to the outcome of the pending enquiry. The appointment of Sandeep Bakhshi as successor to Kochhar was done after securing RBI’s approval. Hence, when she was not functioning as the CEO of the bank there was no question of her termination, Kochhar’s lawyers argued.
The bank has said that while the enquiry by former Supreme Court judge B N Srikrishna was pending, it accepted the early retirement request of Kochhar’s in “good faith”. After the completion of enquiry, the bank found out that Kochhar had committed serious violations of the code of conduct.
Kochhar moved the Bombay High Court against ICICI Bank on November 30, 2019, challenging the decision of the bank’s board earlier this year to terminate her employment and claw back the bonuses and stock options she received between April 2009 and March 2018.