In what may prove to be yet another setback for Yes Bank MD & CEO Rana Kapoor, the Bombay High Court on Monday said that it will hear the matter involving Madhu Kapur and Shagun Gogia in detail. The private sector bank had earlier contended that under the Banking Regulations Act, the court does not have any jurisdiction to question board decisions regarding director appointments.
“The Bombay High Court holds that bar under Section 10A (6) of the Banking Regulation Act, 1949, is not applicable and will hear the case in detail. Yes Bank awaits full text of the said order,” the bank said in a statement to the press.
In August last year, the high court had stated that it would first decide on the jurisdiction issue before hearing on the case. The bank has refused a board seat to Shagun Gogia, daughter of Madhu Kapur, twice since 2009, citing her lack of experience. While Gogia claims she has the right due to her status as a legal heir,the bank argues that she may not pass muster with the RBI’s fit-and-proper criteria for bank directorship.
The tussle began on June 6 when Madhu moved the Bombay High Court seeking to quash the appointment of three directors (Diwan Arun Nanda,Ravish Chopra and MR Srinivasan) on its board as well as to stall the AGM slated for June 8. In her petition, Kapur argues that Nanda, Chopra and Srinivasan do not fulfill the “fit and proper” criteria set by the Reserve Bank of India, when it comes to appointment of directors.
While hearing the case,Justice S J Kathawala had advised the warring families to resolve the dispute in an amicable manner,but did not stop the AGM. It asked the board to advance its July 22 meeting to June 27 and consider Kapur’s request for making her daughter Gogia a nominee director.
Gogia was nominated by her mother as the legal heir to her deceased husband Ashok Kapur’s 12% stake in the bank. Ashok Kapur is also the co-founder of the bank. Rana Kapoor, owns 13.7% in the bank.