Supreme Court Dismisses Chanda Kochhar's Challenge Against ICICI Bank Terminating Her Services

Noting that the only controversy involved is that of the bank having earlier accepted her resignation and subsequently, terminated her, the Supreme Court on Tuesday observed that the issue being of the contractual relationship between a private bank and its employee, it did not call for invocation of the writ jurisdiction, and dismissed former ICICI bank MD Chanda Kochhar's plea.The bench of Justices S. K. Kaul and Dinesh Maheshwari was hearing the Kochhar's SLP against the March 5 decision of the Bombay High Court, dismissing as non-maintainable her writ petition challenging the termination order and the communication by the RBI of its approval to the same."The High Court dismissed my petition for maintainability. It is completely wrong", began senior advocate Mukul Rohatgi, appearing for Kochhar. He indicated that on October 4, 2018, Kochhar's request for early retirement, like resignation, was accepted. "The only thing was that the Srikrishna report (the audit committee of the bank had instituted an independent enquiry committee, headed by former Supreme Court judge BN Srikrishna, to probe various allegations against Kochhar, including the Rs 3,250-crore ICICI bank-Videocon loan case) was yet to come. But the report was also on my stock options! It did not concern my retirement and it was not open to the bank to take any actions as regards my early retirement!", he urged.The Committee subsequently indicted Kochhar of violation of bank's code of conduct. The board of directors after receiving the enquiry report decided to treat the separation of Chanda Kochhar from the bank as a 'Termination for Cause' under the bank's internal policies, schemes and the code of conduct.The board also revoked all her existing and future entitlements such as any unpaid amounts, unpaid bonuses or increments, unvested and vested and unexercised stock options, and medical benefits and require the clawback of all bonuses paid from April 2009 until March 2018."On January 30, 2019, the bank passed the order virtually recalling its acceptance of my resignation and converting it into a termination. I was not given a copy of the Srikrishna report on the grounds of privilege. The report had nothing to do with my retirement. On account of the fact that no prior approval of the RBI had been obtained towards my termination, it was illegal and void. The bank had later applied to the RBI, which granted an ex-post facto approval on March 14, 2019", pressed Mr. Rohatgi."By virtue of section 35B of the Banking Regulation Act, prior consent of the RBI is needed! I am entitled to take advantage of the statute because it provides for prior approval from the RBI, but in this case, it was granted later. The RBI had no jurisdiction to grant ex-post facto approval, which deserves to be quashed by a writ. It has been held in any number of judgements of this court that when a statute prescribes a thing to be done in a particular way, it has to be done in that very way", he continued.He indicated clause (a) of section 35B(1) which provides that no amendment of any provision relating to the maximum permissible number of directors or the appointment or re-appointment or termination of appointment or remuneration of a chairman, managing director or any other director, or of a manager or a chief executive officer shall have effect unless approved by the Reserve Bank. He pointed out that distinguishably, clause (b) stipulates no appointment or re-appointment or termination of appointment of a chairman, a director, manager or chief executive officer shall have effect unless made with the "previous approval of the Reserve Bank"."(1)(a) does not speak of any prior approval. It pertains to amendment and it does not concern me. I am only showing the intention of the legislature. The law used two different phrases! (1)(b) is a mandate of the statute and imposes an obligation on the RBI. Even if this was a case of termination first-off, unlike a subsequent conversion of retirement into termination as in my case, a prior approval was required!', argued Mr. Rohatgi."The RBI itself can raise the issue with the bank. This is between the bank and the RBI. Your engagement is with the private bank. Can you say that since no prior approval was granted by the RBI, you can maintain a writ petition?", asked Justice Kaul."ICICI bank is also in-charge of public funds. The line between the public and the private banks is very blurred today because of the nature of the funds they control. The funds are of the same electorate. How can a private bank be entitled to adopt a policy of hire-and-fire when the RBI is the regulator and the heads of the banks have to be governed in the same way?", pressed Mr. Rohatgi."So all banks would then be amenable to writ to jurisdiction?", wondered Justice Kaul."I am not at all suggesting that. I am only saying this for a certain class of employees, not as regards the class III and class IV employees", said Mr. Rohatgi."The RBI could itself...

Supreme Court Dismisses Chanda Kochhar's Challenge Against ICICI Bank Terminating Her Services

Mehal Jain And Sanya Talwar

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