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SC refuses to stay Madhu Kapur-YES Bank case in HC

The Supreme Court on Tuesday declined to stay the ongoing legal battle in the Bombay High Court between YES Bank Ltd and Madhu Kapur, widow of the late co-founder of the private sector bank, Ashok Kapur, over nomination of directors. The court posted the appeal for the final hearing in January next year.

The bench, presided over by Justice Anil Dave, agreed with the contention of senior lawyer Kapil Sibal, representing the bank, that the jurisdiction of the high court to hear Madhu Kapur is a substantial question of law, which the Supreme Court will decide finally. However, after Tuesday’s order, the high court can continue to deal with the case without impediment.

The bank argued that the nomination of three directors, challenged by Madhu Kapur in the high court, was with the approval of the shareholders.

In any case, the Banking Regulation Act did not allow challenge to the decision of the board of directors in a court of law. Therefore, the petition of Madhu Kapur was not maintainable and should not be heard by the high court, it was argued.

Earlier this year, a single judge and later a division bench of the high court had repeatedly tried to persuade Madhu Kapur and Rana Kapoor, the co-promoter of the bank, to settle the disputes amicably. However, their efforts were not successful. Thus, the high court had continued with the hearing and also allowed Madhu Kapur to challenge the resolutions of the annual general meeting this year.

Madhu Kapur, who holds around 12 per cent shares in the company, wanted her daughter Shagun Kapur Gogia to be nominated a director, citing the articles of association. She also argued that as a legal heir, Gogia has a right to be nominated to the board.

But Rana Kapoor and other shareholders not only deny such right but also argue that that she might not pass the Reserve Bank of India’s ‘fit and proper’ criterion. This tussle led to the messy litigation since June last year.


SC SAYS NO TO YES BANK’S APPEAL

  • Supreme Court declines to stay ongoing legal battle in the Bombay High Court between YES Bank Ltd and Madhu Kapur
  • After Tuesday’s order, the high court can continue to deal with the case without impediment
  • The bank argued that the nomination of three directors, challenged by Madhu Kapur in the high court, was with the approval of the shareholders
  • YES Bank says the Banking Regulation Act did not allow challenge to the decision of the board of directors in a court of law
  • Madhu Kapur wanted her daughter Shagun Kapur Gogia to be nominated a director

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