HC allows Federal Bank to hold board meet

The ICICI- Federal Bank spat yesterday took a new turn with a division bench of the Kerala High Court issuing an interim order permitting Federal Bank to conduct a board meeting with its newly elected members.

The next hearing of the case would be held on October 19. Federal Bank sources said the bank would soon decide the date of the board meeting. Sources in ICICI Bank said the court has restricted the board from taking any major policy decisions. Any policy decisions taken would need to be cleared by the court.

Earlier, the Company Law Board had restrained Federal Bank from appointing new directors to its board. In addition to this all the special resolutions moved in the annual general meeting held on September 27 were rejected, including that of splitting the chairman's post into a part time chairman and full time managing director.

These along with the decision to increase the authorised share capital of the bank to Rs 200 crore were stayed by the CLB. The court order passed yesterday has modified the Company Law Board (CLB) order to ensure that company affairs run smoothly, said an ICICI bank official.

However, the court has restricted the board from taking any major policy decisions this the official said should have no major impact on the CLB order, he added.

The controversy began on September 27 when Federal Bank chairman denied full voting rights to ICICI Bank which holds 20.44 per cent, at the AGM. Other shareholders who were also denied voting rights include HDFC Mutual Fund, UTI, Kotak Mutual Fund and a big broker.

Upset by the move ICICI Bank had approached the CLB, which stayed the appointment of new directors and rejected all the special resolutions .

These along with the decision to increase the authorised share capital of the bank to Rs 200 crore were stayed by the CLB. Dealing a body blow to ICICI Bank's alleged move to take control of Federal Bank, its nominee to the board P H Ravikumar was voted out at the AGM.

K P Fabian, former Indian ambassador, P C Cyriac, former rubber board chairman and CG George, managing director of Geojit Financial Services, were elected to the board. ICICI Bank proposed Ravikumar in place of MS Parthasarthy who retired last month.