Bombay High Court Says Chanda Kochhar's Retrospective Termination By ICICI Bank 'Prima Facie Valid'

A single bench of Justice Riyaz Chagla observed that Kochhar had not come to court with "clean hands." 

In the interim order, the court also restrained Kochhar from dealing with ICICI's 6,90,000 shares which she had acquired through stock options between October 4 and December 11, 2018.

It further directed her to disclose all her transactions while dealing with the stocks on an affidavit within six weeks.

"ICICI Bank did not have complete knowledge of the facts including the non-disclosures by Ms Kochhar (at the time of her resignation).. these facts were disclosed only on receipt of the inquiry report. I have held that the termination was a valid termination and Ms Kochhar didn't come to court with clean hands," the court said adding, "Ms Kochhar is restrained by an order of injunction from dealing with any of the 6.90 lakh shares...."

The orders were passed in Kochhar's suit seeking "specific performance of her entitlements" when the Bank accepted her early retirement in 2018. Through the interim application Kochhar sought to restrain the bank from acting on her termination. In a separate application, ICICI bank had sought full disclosure of the profits she had made.

In May 2018, ICICI Bank had set up a private enquiry against Kochchar under Justice Srikrishna after the bank received a whistle-blower's complaint. Kochhar had proceeded on leave thereafter. However, as the Banking Regulation Act, 1949, does not provide for more than four months' leave for Managing Director of a Bank, Kochhar applied for early retirement, which was accepted.

The bank, however, converted the early retirement into termination in January – February 2019 after the internal inquiry found that Kochhar had violated disclosure norms on conflict of interest. The bank decided to treat her October 2018 exit as a dismissal and not a normal resignation.

As certain benefits as per her contract were not passed on to her, Kochchar filed a suit against the bank. She claimed that the Bank accepted her early retirement on October 4, 2018, and had unconditionally agreed to honour certain commitments and contractual obligations towards her entitlements and benefits, from which it later "wrongfully resiled from." She further said that the Bank could not have terminated a person who had already retired.

Senior Advocate Aspi Chinoy, assisted by advocate Rohan Dakshini for Rashmikant and Partners, appeared for Kochhar. The bank was represented by Senior Advocate Darius Khambata, instructed by law firm Veritas Legal

Citation: 2022 LiveLaw (Bom) 433