Mumbai, May 9: Yes Bank today suffered a setback when a division bench of the Bombay high court ruled that it had the jurisdiction to hear a plea by Madhu Kapur on her right to nominate directors on the bank’s board.
Madhu Kapur is the widow of Ashok Kapur, the co-founder of Yes Bank.
The court will now decide the case on its merits after it resumes hearing on June 19 following summer vacations.
The division bench comprising Justices S.J. Vazifdar and B. P. Colabawalla dismissed an appeal made by the bank against a ruling by a single bench of the court on March 24 that it had the jurisdiction to hear Madhu Kapur’s plea.
Yes Bank had maintained that Section 10A (6) of the Banking Regulation Act, 1949, states any dispute over the appointment of directors cannot be heard by a court
Madhu Kapur has challenged the appointment of three directors — M.R. Srinivasan, Diwan Arun Nanda and Ravish Chopra — on the grounds that she was not consulted prior to their appointment despite being a co-promoter of the private sector lender. Madhu Kapur contends that she has the right to appoint a director on the board, citing the articles of association of the lender.
Madhu Kapur has a 12 per cent stake in the bank, while managing director and CEO Rana Kapoor owns 13.7 per cent. Madhu’s sister Bindu is the wife of Rana Kapoor.
Last month, the division bench had asked both Rana Kapoor and Madhu Kapur to settle their dispute over the right to nominate directors amicably.
However, Yes Bank has maintained in a recent statement that Madhu Kapur cannot be treated as a promoter.
“Madhu Kapur being successor of late Ashok Kapur cannot be considered as an Indian partner or India promoter and accordingly, cannot inherit the rights under Articles of Association or the status of promoter of Yes Bank,” it had said.
Reportedly, Yes Bank is also seeking clarity from regulators that include Sebi on whether Madhu Kapur can be moved out of the promoter category.