ICICI Bank told the Bombay High Court on Monday that former MD and CEO Chanda Kochhar’s separation from the bank’s services has been treated as ‘termination for cause’ by the board of directors ‘on account of flagrant violation of ICICI Group Code of Business Conduct and Ethics.’
A division bench was hearing a petition filed by Ms. Kochhar on November 20, 2019, challenging the termination of her services by the bank and denial of the agreed remuneration as the MD and CEO without previous approval of the Reserve Bank of India (RBI).
She alleged this constituted a breach of statutory obligation under the Banking Regulation Act, 1949 and said her services were terminated after the board accepted her request for early retirement.
The bank’s affidavit read, “The section of the Act does not confer any right or protection upon Ms. Kochhar much less does it cast any duty upon the bank but instead is a form of regulatory oversight by the RBI for the protection of the banking company and its depositors. It does not govern or regulate Ms. Kochhar’s contract of service, therefore has no locus to make a claim.”
The affidavit said the dispute was purely contractual and “the petition pertains to termination of various contractual benefits concerning Ms. Kochhar (including stock options) and clawbacks of bonuses (which, too, were contractual in nature).”
The affidavit also relied on retired Justice B.N. Srikrishna’s report that noted, “Ms. Kochhar had not made mandatory and appropriate disclosures and failed to discharge her fiduciary duty to rescue and avoid conflict as required by the Code of Conduct as well as applicable laws and rules.”
Meanwhile, on January 10, 2020, the bank also filed a monetary suit against Ms. Kochhar for recovery of amounts towards the clawback of bonuses given to her from April 2006 to March 2018 pursuant to the termination of services. The suit says, “the question regarding the validity of Ms. Kochhar’s service being terminated for cause is an issue that will arise in the commercial suit. Therefore, she ought not to be permitted to raise the same issue in the petition.” The matter will be heard on January 20.
