Was Chanda Kochhar's sack legal? HC asks RBI

Mumbai: The Bombay High Court on Monday sought to know the stand of the Reserve Bank of India (RBI) on the termination of the services of the former managing director of the ICICI bank Chanda Kochhar.

The court has asked the RBI to respond whether Kochhar's termination of services was in accordance with the due procedure of law or not.

A bench of Justices Ranjit More and Surendra Tavade has accordingly ordered the RBI to file a detailed reply in response to the claims of Kochhar, who has challenged termination of her services under the Banking Regulation Act, 1949.

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According to Kochhar, her services were terminated in January 2019 under section 35 (b) of the Act, which she claims was without obtaining sanction that is mandatory as per the law. She has argued that the ICICI Bank sacked her in January 2019 while the RBI sanctioned it only in March 2019.

Raising preliminary objections to Kochhar's plea, ICICI Bank submitted that there was no violation of any statutory rule. It claimed that it was awaiting the report of Justice (retd.) Srikrishna, who was investigating the allegations against Kochhar, and thus, the sanction was obtained belatedly.

Referring to Justice Srikrishna's report, ICICI Bank claimed that Kochhar did not fulfil her contractual duties and had failed to disclose her 'personal interests' through her husband, who was heading a firm, which was being probed for unlawful transactions, along with the Videocon Group. The bank maintained that her conduct was against the applicable laws and regulations.

The contentions of the RBI were vehemently opposed by advocate Sujay Kantawala, who pointed out that as per the law, a sanction is mandatory before sacking a CEO.

He argued that the RBI granted the mandatory sanction only in March, while ICICI Bank had terminated Kochhar's services at least a month prior to this.

Having heard the contentions, the bench ordered the RBI to file its detailed reply and posted the matter for further hearing on December 18.

Top banker Kochhar was first named in a news report published in March 2018, which detailed her role in the alleged Rs 3,250-crore scam pertaining to a loan granted to Videocon Group by the ICICI Bank.

It is alleged that Kochhar was instrumental in sanctioning the loan out-of-turn in 2012 and soon after, at least 10 per cent of the loan amount was invested in Nupower, a company owned by her husband Deepak.