)
YES Bank on Monday filed an affidavit to the Bombay High Court claiming the suit filed by Madhu Kapur (widow of the bank co-founder Ashok Kapur) and her children against the lender was based upon “complete misconception and misinterpretation” of the articles of association.
The affidavit added the right to recommend director appointments continued only with Rana Kapoor, co-founder, managing director and chief executive of YES Bank, as he was the sole surviving Indian partner.
The article 110(b) of the bank states if its Indian partners hold, along with any of their affiliates, directly or indirectly, at least 10 per cent of the issued and paid-up capital, they will have to recommend the appointment of three directors collectively. The articles refer to Rana Kapoor and Ashok Kapur as Indian partners of the bank.
After Ashok Kapur died in the November 2008 Mumbai terrorist attack, it was claimed his wife and legal heir, Madhu Kapur, must be considered an Indian partner, along with Rana Kapoor. The Kapur family had moved the high court, alleging their right as co-promoter was violated.
The case came for hearing on Monday. The court will again hear the case next Friday.
“It is submitted that in the context of article 110(b), the reference to Indian partners was to the two individuals specifically. It is submitted that in the context in which it is used, it would be absurd and unworkable to interpret the right of recommendation contained in the said article to vest in an indeterminate number of people by interpreting the same to include the respective successors, legal representatives and assigns of the two individuals,” the affidavit said.
Sources, however, said the bank’s articles of association define Ashok Kapur as an Indian national and unless repugnant to the context, it will mean and include his successors, legal representatives and assigns.
“If article 110(b) is interpreted in the manner sought by the plaintiffs, it would amount to imposing a fetter on the board of directors, the bank and the shareholders to decide on the manner in which the board should be appointed and the people who shall be appointed on the board...Such an interpretation would effectively create a pooling agreement,” the affidavit added.
The strongly worded affidavit accused the Kapur family of suppressing several relevant facts from the court and approaching it with “unclean hands”.
The affidavit further stated the process adopted while appointing M R Srinivasan as chairman of the bank was the same as that adopted during the appointment of S L Kapur as chairman in 2009.
