“Matter Of Trial, Cannot Be Decided At Interim Stage”: Bombay High Court Refuses To Stay Chanda Kochhar’s Termination From ICICI Bank

The Bombay High Court on Wednesday upheld a single judge’s order and refused to grant interim relief to the former CEO and MD of ICICI Bank Chanda Kochhar in her suit seeking specific performance of her retirement benefits and other entitlements.

The court refused to stay the ICICI bank’s email dated January 30, 2019, terminating her employment and allowing her unexercised vested stock of 1,25,42,750 to lapse.

A division bench of Justices KR Shriram and Rajesh Patil observed “reliefs sought by appellant (Kochhar) are in the nature of final reliefs and grant of such reliefs would amount to decreeing appellant’s suit at the interim stage.”

Whether the acceptance of Kochhar’s offer of early retirement on October 4, 2018 resulted in cessation of the employer - employee relationship that precluded the bank from terminating her employment in 2019 (effective 2018) after an enquiry report showed gross misconduct are all matters of trial which cannot be decided at the interim stage, the court observed.

The bench specifically noted that Kochhar intended to sell her Employee Stock Options Shares (ESOS), ie. ICICI's 6,90,000 shares which she had acquired between October 4 and December 11, 2018 during pendency of the suit which would cause irreparable damage to the bank.

FACTS

Kochhar had joined the bank as a trainee officer in 1984 and grew up in ranks over the years and on 1st May 2009 was appointed as Managing Director and Chief Executive Officer of ICICI Bank, a position she held till October 2018. Her term of last appointment was to end on 31st March 2019.

In May 2018, ICICI Bank had set up a private enquiry against Kochhar under Justice BN Srikrishna on 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 in October 2018, which was accepted.

The bank, however, converted the early retirement into termination in January – February 2019 after the inquiry found that Kochhar had violated disclosure norms on conflict of interest. This was specifically regarding the loans granted to Videocon Group and Videocon’s connection with her husband Deepak Kochhar. 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, Kochhar filed a suit against the bank. She claimed that the Bank accepted her early retirement on October 4, 2018, and couldn’t now terminate her services. She was also entitled to all her retirement benefits, she said.

A single judge bench of Justice Riyaz Chagla, rejected Kochhar’s prayer for interim relief on November 10, 2022 and prima facie held her termination as a “valid termination.” He also disallowed her from dealing with the shares.

The division bench observed that grant of the interim reliefs as sought by Kochhar would cause irreparable injury and prejudice to bank. As if the bank would eventually succeed it would have to recover shares from an individual.

It listed the four issues to be decided at trial.

1. Whether the retirement letter ends the rights and obligations of the parties under the subsisting contracts or whether it constitutes a new contract or whether benefits listed in the letter were unconditionally granted are also matters of trial.
2. Whether reference to good conduct in the contracts is not a reference to the undertaking dated 19th July 2016 signed by appellant.
3. Whether the bank, in view of the serious findings in the enquiry report by Justice B.N. Srikrishna (retired), could clawback the benefits that appellant derived during her employment between 2009 and 2018.
4. Whether ESOPs can be revoked or whether ESOP is a separate contract are also matters for trial.

Apart from the above the court observed, “there is nothing to indicate that the discretion exercised by the learned Single Judge is arbitrary or capricious or perverse or unjustified in law. The Trial Court has exercised its discretion reasonably and in a judicial manner. The observations made by the learned Single Judge on the conduct of appellant, though not conclusive, are very serious in nature.”

Case Title: Chanda Kochhar Vs ICICI Bank Limited [Appeal (L) No.38843 Of 2022]

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