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Madhu Kapoor can challenge Yes Bank AGM resolutions in court: HC

LiveMint logoLiveMint 12-06-2014 Khushboo Narayan

Mumbai: The Bombay high court on Thursday allowed Madhu Kapur, widow of Yes Bank Ltd’s co-founder Ashok Kapur, to challenge in court all the resolutions that are likely to be passed in the annual general meeting (AGM) of the bank on 14 June.

The court was hearing a chamber summons filed by Kapur, seeking a stay on several board resolutions that have been proposed to be passed in the AGM.

A single bench of the Bombay high court also directed Yes Bank to furnish documents related to the bank’s communication with the Reserve Bank of India (RBI) and the capital markets regulator Securities and Exchange Board of India on the “declassification” of Kapur’s status as a promoter of the bank.

“The plaintiff (Madhu Kapur), however, shall not circulate that material or put it in public domain,” said justice G.S. Patel in his order.

On 29 May, an interim order of the high court ruled that the board appointments at Yes Bank, including that of managing director and chief executive officer Rana Kapoor, will be subject to a final order by the court.

RBI has approved Kapoor’s appointment till August 2015.

Ahead of the bank’s AGM on Saturday, Dinyar Madan, senior counsel representing Kapur, said on Thursday, “the board resolutions that have been sought to be passed in the AGM are clearly an overreach of the court’s earlier order”.

For instance, Madan said the bank’s board is seeking the shareholders’ nod for deciding on the remuneration of nominee directors Ravish Chopra and M.R. Srinivasan despite the fact that their appointment has been challenged in court.

“None of the resolutions can be put to vote,” said Madan.

Kapur and her family are fighting a court case against Yes Bank and Rana Kapoor, demanding the right to nominate a director on the bank’s board.

Madhu Kapur’s late husband Ashok Kapur was killed in the November 2008 Mumbai terror attack. She and Rana Kapoor’s wife are sisters.

Yes Bank has contended that since the directors of the bank were elected by shareholders and under Section 10 A (6) of the Banking Regulation Act, the court has no jurisdiction to hear the plea.

Madhu Kapur’s daughter Shagun Kapur Gogia had also applied to be a part of the bank’s board, as directed by the court in June 2013, but the board rejected her nomination in a meeting held the same month, ostensibly due to the lack of sufficient experience to be a director.

In a letter to RBI, Madhu Kapur, Shagun Kapur Gogia and son Gaurav Kapur, requested the central bank to “give no approval to any person as chairman or managing director of the bank, unless it is jointly recommended by Rana Kapoor and us as per the articles of association”.

Madhu Kapur is also opposing the new directors who were appointed by the bank in June 2013, because she, as co-promoter, had not been consulted before they were appointed.

The three nominee directors—M.R. Srinivasan, Ravish Chopra and Diwan Arun Nanda—were not “fit and proper” to serve on the bank’s board, the petition had said. It has also challenged the appointment of three other Yes Bank directors—Rajat Monga, Sanjay Palve and Pralay Mondal—naming them as respondents in the case.

On 30 May, in a letter, Madhu Kapur asked shareholders to “vote against, or at least abstain from voting in his favour”, when Kapoor’s appointment comes up for approval at the bank’s AGM on 14 June.

Accusing Kapoor of running the bank “as his own fiefdom without any checks and balances”, Madhu Kapur also asked shareholders to oppose the appointments of Mukesh Sabharwal, Radha Singh, Ravish Chopra, Brahm Dutt, Saurabh Srivastava, Vasant Gujarathi, Ajay Vohra and Diwan Arun Nanda as independent directors.

In her letter, Madhu Kapur asked shareholders to vote against the appointment of Srinivasan as non-independent director and non-executive chairman of the bank.

Yes Bank, later in a rebuttal, said Madhu Kapur has made baseless allegations. The bank said Kapur has not challenged the finalization of the books of accounts and payment of dividend recommended by the board and its management, which is at an all-time high of 80%.

The high court will now hear the case on 23 July.

Currently, Madhu Kapur’s group holds 10.37% stake in Yes Bank while Rana Kapoor’s group holds 11.87%.​

At 2.50pm, Yes Bank was trading at `547.45 on BSE, down 1.41% from its previous close, while India’s benchmark Sensex rose 0.42% to 25,581.61 points.

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