Yes Bank dispute: HC orders early AGM; amicable settlement likely
By Jagdeep Worah
11 June 2013
The Bombay High Court on Monday asked Yes Bank to advance its board meeting from 14 July to 27 June to consider the claim of Shagun Kapur Gogia, daughter of the late co-founder of the bank Ashok Kapur, to join the board.
Monday's direction from the court is a big step forward for Madhu Kapur, widow of Ashok Kapur, who had moved the application for the nomination of Gogia. By the same token, it is something of a setback for Yes Bank managing director and chief executive Rana Kapoor, who has been resisting giving her a board seat.
Justice S J Kathawalla directed Madhu Kapur to make a formal representation to the bank nominating her daughter as a nominee-director by 15 June so that the bank can place the proposal before the board. After the board holds its meeting on 27 June, it has been asked to inform the court about its decision by 1 July.
Meanwhile, the bank announced that the appointments of three directors - Diwan Arun Nanda, Ravish Chopra and M R Srinivasan - which was put to vote last Saturday was passed by the shareholders. "Overall 57 per cent of the total shareholder ownership votes were cast, and the general body of the shareholders passed all the three resolutions with an overwhelming majority of about 80 per cent and elected all three aforesaid directors," the bank said.
In 2009, a few months after Ashok Kapur's death in the 26 / 11 Mumbai terror attack, Madhu Kapur had requested the bank for a board position, but her proposal was rejected. Earlier this month, she requested the bank to appoint her daughter, Shagun Kapur Gogia, as her nominee board member.
Kapur then filed a petition in the Bombay High Court requesting a stay on the bank's annual general meeting (AGM) and alleged she had not been consulted on the appointment of three directors - Diwan Arun Nanda, Ravish Chopra and M R Srinivasan - in violation of the bank's articles of association.
While the court refused to order a stay on the AGM, it directed Yes Bank to advance its board meeting by a month to 27 June and consider Gogia's appointment as a director on the bank's board.
Yes Bank, in a media statement, said the order ''is in line with Yes Bank's proposal as per its letter dated June 6, 2013 ... (when) chairman M R Srinivasan and MD and CEO Rana Kapoor ... had offered to discuss the name of Mrs Madhu Kapur's nominee at its scheduled board meeting to be held on 24 July 2013.''
In the court, Yes Bank was initially reluctant to advance the board meeting to June citing difficulties in getting all the directors to attend it, but the court insisted on the meeting taking place before the next hearing on 1 July.
The families of the founders of Yes Bank – the late Ashok Kapur and Rana Kapoor – are locked in a dispute over the nomination of three people to the board of the bank.
Kapoor's wife Bindu and Madhu Kapur are sisters, and Gogia is his niece.
On Monday, Justice S J Kathawala, after hearing the petition, said, ''The way she (Gogia) has addressed (Rana Kapoor) in her letters, it seems that the dispute has not gone ugly. Let's sort it out before it gets ugly.''
The judge was referring to a letter written by Gogia to Kapoor in May requesting him to consult the Kapur family before appointing the three directors. In her letter, which was produced in court on Monday, Gogia refers to Kapoor as ''Dear Rana Uncle''.
Chances of an out-of-court settlement of the dispute appear bright, according to several reports. J J Bhat, senior counsel representing the Kapur family in the court, said on Monday, ''We don't want this dispute to come out in public. We will follow the path shown by the court.''
Virendra Tulzapurkar, senior counsel representing Kapoor, too, said his client was looking for a quick resolution to the matter.
On Friday, the Bombay high court had allowed Yes Bank to hold its shareholders' meeting and appoint directors, turning down a petition asking for interim relief by Madhu Kapur. She had challenged the nominations of Arun Nanda, Ravish Chopra and M R Srinivasan as whole time directors.
Kapur and her family want the right to be consulted on any appointment of directors to the board. They have based their argument on article 110(b) of Yes Bank's articles of association.
Kapur holds a 12-per cent stake in the bank, and Kapoor, directly and through other family-owned ventures, holds a 13.72 per cent stake, making him the bank's largest shareholder and co-promoter.