By Adv. R. S. Agrawal 

 

A SUPREME Court division bench consisting of Justices Sanjiv Khanna and S V N Bhatti has affirmed the Bombay High Court’s November 10, 2023 order which was impugned in appeal filed by former ICICI Bank M D and CEO, Chanda Kochhar seeking direction to the Bank to release her retirement benefits. The said impugned order was passed by a Single Judge Bench headed by Justice R I Chagla, at the Bombay High Court on the Original Side, rejecting the two interim applications in the suit filed by Chanda Kochhar against the Bank. The SC has declined to entertain the appeal on December 8 last, with the comment that it has seen the facts involved and the case does not warrant its interference. The Court has asked Kochhar to contest the suit filed by her, pending before the HC, when her counsel, Harish Salve pressed for interim relief, saying that a suit filed in Mumbai will take at least 25 years for decision, the SC declined to grant any interim order. By declining interim order, the SC has also impliedly affirmed the HC’s observation in the paragraph 95 of the HC’s order that “Mrs Kochhar has not come with clean hands” in that she has feigned ignorance of the ERS-Employee Retirement Scheme (amended in 2016) by placing reliance on letter dated September 24, 2018 issued by the Board of ICICI Bank to her which provided the benefits she would be entitled to under the ERS, 2005, which contained the Clause that the ICICI Bank had reserved its right to withdraw any features/ benefits given under ERS in the event the employee did not comply with good conduct.

 

Thus, she has suppressed the ERS amended in 2016, which she herself had approved. Mrs Kochhar was initially appointed as a Trainee Officer on April 17, 1984 and promoted subsequently from time to time. She was appointed MD-cum-CEO of the Bank on May 1, 2009 and thereafter was re-appointed from time to time for a term ending on March 31, 2019. During her employment with the ICICI Bank had signed in acceptance various policies of ICICI Bank. Which included Code of Conduct, Framework for dealing with conflict of interest, Deeds for Covenants and Claw back agreements. She was also required to make various disclosures in compliance of the Companies Act, 1956 and the Act of 2013, RBI Guidelines on compensation of Whole Time Directors/CEOs. In July, 2016, there were news reports which contained allegations of nepotism against (Mrs) Kochhar with regard to grant of loans to companies affiliated to Videocon Group as a quid pro quo for investments by Mr. Venugopal Dhoot or his affiliates in NuPower Renewables Pvt. Ltd. (NRPL), a company promoted by Mr Deepak Kocchar, the husband of Mrs Kochhar.

 

The HC did not find any merit in the submission that the inquiry was a preliminary inquiry headed by the retired Judge, Justice B N Srikrishna and such inquiry could not result in disciplinary procedure or action taken against Mrs Kochhar, after cessation of employer and employee relationship by acceptance of early retirement on October 4, 2018. The disciplinary action set out in the Code of Conduct only deal with employees up to the level of Senior General Manager and in fact the highest appellate authority under such procedure is the MD-CEO of the ICICI Bank, that is, the position held by Mrs Kochhar. The Code of conduct only contains an indicative guidance for formulating disciplinary procedures. Undoubtedly ICICI Bank has the flexibility to formulate the appropriate procedure to be followed when taking action against an employee, including omitting any or all levels of action under the Code of Conduct. Further, taking into account the fact that for allegations of misconduct against the MD and CEO, the court has found that there is no specific procedure identified under the Code of Conduct.

 

The Court did not find any fault in the inquiry headed by Justice Srikrishna (Retd.), which is with the view to ensure a fair and independent process, particularly with regard to the allegations of misconduct made against MD and CEO of the ICICI Bank. It is an admitted position that Mrs Kochhar had provided both oral and written submissions during the Inquiry upon the opportunity given to her and now it is not open to her to contend that the inquiry was conducted in breach of Principles of natural justice. Further, Mrs Kochhar does not seem to have indicated the prejudice caused to her by she not being given a second hearing as contended and as to what additional material she would have placed before Justice Srikrishna, if she was given a second hearing. Having considered that the acceptance of her early retirement by ICICI was on account of it not having complete knowledge of the facts, including the non disclosure by Mrs Kochhar of various facts, which were learnt only after the receipt of the inquiry report submitted by Justice Srikrishna. In the prima facie view of the HC, it was justified in revoking acceptance of early retirement through communication of January 30, 2019. Besides the HC’s finding that Mrs Kochhar did not come to the Court with clean hands, she has also made an incorrect statement that the Sample Vesting confirmation was never issued or received by her.

 

ICICI Bank had thereafter produced the E-mails addressed to her (Mrs Kochhar) enclosing the Vesting Confirmations which contains the term that ICICI reserves the right to review vesting and exercise of Employee Stock Options (ESOPs) over the Exercise Period in the event of non-compliance with good conduct. In view of these prima facie findings, as well as Mrs Kochhar not coming to Court with “clean hands, of the two Interim applications filed by her in one each in two suits, the one (1014/2022)has been dismissed. In regard to Interim Application 307/2020 the HC has passed the order restraining Mrs Kochhar by an order of injunction from dealing with any of the 6,90,000 ESOPs already exercised by her during the period from October 4, 2018 to January 30, 2019. The HC has also directed her to disclose, if she has sold or dealt with any of such shares as well as disclose her gain from such sale which shall be by way of Affidavit of Disclosure to be filed by her within six weeks from uploading of this order. In terms of this order both Interim Applications have been disposed of.