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The case between YES Bank and Madhu Kapur, widow of the bank's co-founder Ashok Kapur, did not come up for hearing on Friday in the Bombay High Court. The case is now likely to be heard early next week.
"There was no hearing today. As per the Banking Act, if the board appoints directors, it cannot be challenged. Hence, the present suit (challenging appointment of three directors on the bank's board) is not maintainable. The Madhu Kapur family did not file any amended suit. This case is as good as over," sources close to YES Bank said, adding the appointments have been ratified by shareholders in the annual general meeting.
Sources close to Madhu Kapur said, an amended suit is likely to be filed early next week.The Kapur family had moved the Bombay High Court alleging their right as co-promoter was violated. They claimed Madhu Kapur, as legal heir and wife of deceased Ashok Kapur, has the right to jointly recommend appointment of directors on the board. She was not consulted when the bank's other co-founder Rana Kapoor (also MD and chief executive) recommended appointment of two directors - MR Srinivasan and Ravish Chopra - on the board.
The bank also appointed Diwan Arun Nanda as an independent director on its board. The bank claims the Kapur family's claims are based on "complete misconception and misinterpretation" of the articles of association.
Article 110(b) of the bank states if the bank's Indian partners hold, along with any of their affiliates, directly or indirectly, at least 10 per cent of the issued and paid-up capital, they will have to recommend the appointment of three directors collectively. The articles refer Rana Kapoor and Ashok Kapur as Indian partners of the bank.
"It is submitted that in the context of Article 110(b), the reference to Indian partners was to the two individuals specifically. It is submitted that in the context in which it is used it would be absurd and unworkable to interpret the right of recommendation contained in the said article to vest in an indeterminate number of people by interpreting the same to include the respective successors, legal representatives and assigns of the two individuals," the bank said in an affidavit submitted to the court on July 1.
