 "YES Bank's stance on Madhu Kapur dims hope for out-of-court settlement")
YES Bank’s decision to not recognise Madhu Kapur as co-promoter of the bank has almost ruled out the possibility of settling the dispute outside the court. Madhu, widow of the bank’s co-founder Ashok Kapur, will continue the legal battle, seeking her right to nominate directors on the private sector lender’s board, people familiar with the development said.
“There is no scope for an out-of-court settlement now. Madhu is the legal heir of Ashok Kapur and according to the bank’s articles of association, inherits the rights of a co-promoter. She should be allowed to nominate directors on YES Bank’s board. Unfor-tunately, the bank is not willing to recognise her rights and settle the dispute. So, she will wait for the court’s verdict,” said a source, requesting anonymity.
The next hearing on the case is scheduled on Tuesday. The Bombay High Court will hear if the parties have reached any amicable settlement over the dispute. The court had earlier said Rana Kapoor, managing director and chief executive of YES Bank, and Madhu should try and settle the dispute outside the court. Rana had co-founded YES Bank with his brother-in-law, Ashok Kapur. Madhu and Rana’s wife, Bindu, are sisters.
The hearing on the case was postponed, as YES Bank’s board was scheduled to meet last week. In the meeting, the board decided not to consider Madhu as a co-promoter of the bank. “Mrs Madhu Kapur being successor of late Mr Ashok Kapur cannot be considered as Indian partner or Indian promoter and accordingly, cannot inherit the rights under articles of association or the status of promoter of YES Bank,” the bank said, in an emailed statement.
“Since the advocates of Mrs Madhu Kapur as start up to any amicable resolution requires the bank to recognise her rights as Indian partner, the board is not in a position to accede to any such request for the reason mentioned above,” it added.
The bank has been arguing that banking is not a family business and “financial family successors” do not automatically become part of the promoter group of a bank due to regulatory criteria.
Meanwhile, YES Bank has announced appointment of two new independent directors – Saurabh Srivastava and Vasant V Gujarathi – on its board. Sources close to the Kapur family said they were once again not consulted on the induction of Srivastava and Gujarathi on the YES Bank board and are likely to contest these new appointments.
“There is no scope for an out-of-court settlement now. Madhu is the legal heir of Ashok Kapur and according to the bank’s articles of association, inherits the rights of a co-promoter. She should be allowed to nominate directors on YES Bank’s board. Unfor-tunately, the bank is not willing to recognise her rights and settle the dispute. So, she will wait for the court’s verdict,” said a source, requesting anonymity.
The next hearing on the case is scheduled on Tuesday. The Bombay High Court will hear if the parties have reached any amicable settlement over the dispute. The court had earlier said Rana Kapoor, managing director and chief executive of YES Bank, and Madhu should try and settle the dispute outside the court. Rana had co-founded YES Bank with his brother-in-law, Ashok Kapur. Madhu and Rana’s wife, Bindu, are sisters.
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“As things stand now, it appears that the court case will continue,” said another person not willing to be identified. The high court had dismissed YES Bank’s preliminary objection that under Section 10A (6) of the Banking Regulation Act, 1949, dispute over appointment of directors on a bank’s board cannot be heard by a civil court. Sources said the court will hear Madhu’s petition – claiming violation of her rights as co-promoter of the bank – on May 2.
The hearing on the case was postponed, as YES Bank’s board was scheduled to meet last week. In the meeting, the board decided not to consider Madhu as a co-promoter of the bank. “Mrs Madhu Kapur being successor of late Mr Ashok Kapur cannot be considered as Indian partner or Indian promoter and accordingly, cannot inherit the rights under articles of association or the status of promoter of YES Bank,” the bank said, in an emailed statement.
“Since the advocates of Mrs Madhu Kapur as start up to any amicable resolution requires the bank to recognise her rights as Indian partner, the board is not in a position to accede to any such request for the reason mentioned above,” it added.
The bank has been arguing that banking is not a family business and “financial family successors” do not automatically become part of the promoter group of a bank due to regulatory criteria.
Meanwhile, YES Bank has announced appointment of two new independent directors – Saurabh Srivastava and Vasant V Gujarathi – on its board. Sources close to the Kapur family said they were once again not consulted on the induction of Srivastava and Gujarathi on the YES Bank board and are likely to contest these new appointments.