Muhammad Yunus in Dhaka. (AP)

Dhaka, March 8: A Bangladesh high court has declared illegal the reign of Muhammad Yunus at Grameen Bank from 1999, which means the invalid period covers the year in which he shared the Nobel Peace Prize with the microfinance institution.

The Nobel laureate has the option of appealing in the Supreme Court, which he is expected to do soon.

The high court today rejected Yunus’s petition challenging the legality of a government order dismissing him as the head of the microfinance bank he founded.

The court accepted the contention of the Bangladesh Bank — the apex bank — that Yunus, 71, was holding office without any legal basis.

Yunus was relieved of his duties on March 2 through a Bangladesh Bank letter sent to Grameen Bank chairman Khondoker Muzammel Huq.

The central bank said Yunus failed to seek its approval when he was re-appointed the managing director in 1999, violating one of the statutes of the partly state-owned Grameen Bank.

Agreeing with the Bangladesh Bank, the court said the Nobel laureate’s term as managing director since 1999 was in itself illegal as he had crossed the mandatory retirement age of 60 years by then. When allegations of illegal funds diversion were levelled against Yunus, the Nobel Committee had stood by him and defended its decision to pick him for the award.

Yunus’s lawyer Sara Hossain said today: “The court has upheld a grossly illegal order and made an extraordinary declaration that (his) term of office expired when he reached 60 in 1999 and that the central bank’s clear audits of Grameen and of Yunus for 10 years amount to nothing.”

The court said the decision of the Grameen Bank board in 1999 to appoint Yunus managing director for an indefinite period had no legal basis either. “The managing director of Grameen Bank is an officer who cannot hold the office for an unlimited time,” the court said.

“We will consult lawyers before we make our next step. We hope that in the meantime, nothing will jeopardise the stability of Grameen Bank. Eight million borrowers and 26,000 members of Grameen Bank had brought the bank to this level through their hard work,” said the managing director and spokesperson for the bank, Jannat-E-Quanine, in a statement after the judgment was passed.

The official added: “(We) are deeply involved in building the future for their children — we hope nothing will disrupt that.”

Yunus wasn’t present in court and could not be immediately contacted.

Dozens of Grameen borrowers and employees stood in a human chain outside the headquarters in Dhaka’s northern Mirpur district to express support for Yunus.

The court said in its order that “according to the Bank Companies Act, the central bank reserves the right to issue such orders”, in effect legitimising the Bangladesh Bank’s order for Yunus’s removal.

Yunus has found some support from an unlikely source — Opposition leader Khaleda Zia who has seized the opportunity to criticise the government.