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Yes Bank today took a stand before the Bombay High Court that the suit filed by Madhu Kapur, the widow of Bank's co-founder Ashok Kapur, challenging the appointment of directors nominated by the current Managing Director Rana Kapoor, was not maintainable.
The High court, in its jurisdiction as a civil court, cannot entertain such a suit which challenged election of directors of a banking company, its counsel Ravi Kadam submitted before Justice S J Kathawala.
He said under section 10(A)(6) of Banking Regulation Act, a civil court cannot entertain suits which challenge the appointment of directors.
Therefore, the Bombay High Court, in a civil jurisdiction, cannot entertain this matter.
Kadam also argued that the decision (to appoint the directors of a company) taken at the Annual General Meeting by a majority shareholders cannot be challenged in a civil court.
Madhu Kapur has challenged appointment of part time directors Diwan Arun Nanda and Ravish Chopra and part time chairman M R Srinivasan who were appointed in an Annual General Meeting of the Bank held on June 8 this year.
She has also challenged the decision of the Bank's Board to appoint three wholetime directors Rajat Monga, Sanjay Palve and Pralay Mondal. Their appointment, made in a meeting on June 24, is, however, subject to the approval of Reserve Bank of India and the Annual General Meeting.
Yes Bank argued that as a banking company it was governed by Banking Regulation Act which provides that an election of a director cannot be challenged before a civil court. Such matters concern internal management and a civil court does not have the jurisdiction if majority of the shareholders have already decided them, its counsel argued.
The arguments would continue tomorrow when Madhu Kapur's lawyers would put up her version on maintainability of the suit.
