Yes Bank managing director and chief executive officer Rana Kapoor had appointed directors on the company board without consulting the family of deceased co-founder Ashok Kapur. Now, the Bombay High Court has ruled those appointments as invalid.
The court said in an order Wednesday that descendants of Kapur are his successors, and have the right to nominate directors to the board of India’s youngest commercial bank.
Kapoor founded Yes Bank with Ashok, who was killed in the 2008 Mumbai terror attack. The ruling is a victory for Madhu Kapur and her family, who had filed the case two years ago against Rana Kapoor and the bank.
The court also quashed appointments of bank directors Ravish Chopra, M.R. Srinivasan, Diwan Arun Nanda, Ajay Vohra, Rajat Monga, Sanjay Palve and Pralay Mondal.
Madhu Kapur had also petitioned to remove Rana Kapoor from his post, but that was not accepted. Judge GS Patel said that there was not enough evidence to prove her charges against him. "Alleging ill motives to Rana Kapoor does not carry the matter further," he said. The court also turned down Madhu Kapur's request to appoint her daughter Shagun Kapur Gogia on the board of YES Bank.
Kapoor is related to Madhu's family by marriage — his wife and Madhu are sisters. In 2012, Kapoor had written to the Reserve Bank of India to de-classify Madhu Kapur as co-promoter of the bank, following which Kapur filed the lawsuit.
However, the final order has been stayed for five weeks, so Madhu Kapur does not get to immediately appoint new directors. Yes Bank can use this time to appeal against the court decision to a bench of the High Court.
“There is no immediate impact whatsoever on the bank’s board of directors or its management. Few procedural infirmities were pointed out by the Hon’ble Court, which are curable, and the bank and its board of directors do not foresee any material impact even in the mid to long term,” the bank said in a statement.
Rana Kapoor and Madhu Kapur are the two largest shareholders of the bank with stakes of 11.77% and 10.29%, respectively, as of March 2015.