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Please read the clarification at the end
The Supreme Court on Tuesday declined to stay the ongoing legal battle in the Bombay High Court between YES Bank Ltd and Madhu Kapur, widow of the late co-founder of the private sector bank, Ashok Kapur, over nomination of directors. The court posted the appeal for the final hearing in January next year.
The bench, presided over by Justice Anil Dave, agreed with the contention of senior lawyer Kapil Sibal, representing the bank, that the jurisdiction of the high court to hear Madhu Kapur is a substantial question of law, which the Supreme Court will decide finally. However, after Tuesday's order, the high court can continue to deal with the case without impediment.
The bank argued that the nomination of three directors, challenged by Madhu Kapur in the high court, was with the approval of the shareholders.
In any case, the Banking Regulation Act did not allow challenge to the decision of the board of directors in a court of law. Therefore, the petition of Madhu Kapur was not maintainable and should not be heard by the high court, it was argued.
Earlier this year, a single judge and later a division bench of the high court had repeatedly tried to persuade Madhu Kapur and Rana Kapoor, the co-promoter of the bank, to settle the disputes amicably. However, their efforts were not successful. Thus, the high court had continued with the hearing and also allowed Madhu Kapur to challenge the resolutions of the annual general meeting this year.
Madhu Kapur, who holds around 12 per cent shares in the company, wanted her daughter Shagun Kapur Gogia to be nominated a director, citing the articles of association. She also argued that as a legal heir, Gogia has a right to be nominated to the board.
But Rana Kapoor and other shareholders not only deny such right but also argue that that she might not pass the Reserve Bank of India's 'fit and proper' criterion. This tussle led to the messy litigation since June last year.
SC SAYS NO TO YES BANK'S APPEAL
- Supreme Court declines to stay ongoing legal battle in the Bombay High Court between YES Bank Ltd and Madhu Kapur
- After Tuesday's order, the high court can continue to deal with the case without impediment
- The bank argued that the nomination of three directors, challenged by Madhu Kapur in the high court, was with the approval of the shareholders
- YES Bank says the Banking Regulation Act did not allow challenge to the decision of the board of directors in a court of law
- Madhu Kapur wanted her daughter Shagun Kapur Gogia to be nominated a director
| A clarification |
| YES Bank has clarified that it had filed a petition before the Supreme Court, challenging the order of the Bombay High Court wherein its plea of jurisdiction in a suit filed by Madhu Ashok Kapur was dismissed. Madhu Ashok Kapur and her family had filed a suit challenging the appointment of certain directors to the Board of YES Bank. YES Bank had contended before the Supreme Court that under Section 10A of the Banking Regulation Act, 1949, a civil court cannot entertain a suit challenging the appointment of directors of a banking company. YES Bank also pleaded before the Supreme Court that all the appointments of the directors were in compliance of Section 10A and 10A (2) of the Banking Regulation Act and the appointments of the directors were covered by the bar of jurisdiction of Section 10A (6) of the Act. YES Bank had pleaded in its petition that it was the fourth largest bank in the country and had shown better performance compared to many other banks. It had filed a statement before the Court to demonstrate that the valuation of the shares held by Late Ashok Kapur’s family had increased manifold and the original investment of Rs 52 crore had increased to Rs 2,450 crore. The Supreme Court, according to the YES Bank clarification, has found merit in the contention of YES Bank and has listed the matter in January, 2015 to examine it in further detail. |
