No relief for Chanda Kochhar as Bombay HC upholds order citing her termination valid

The Bombay high court refused to grant any relief to the former chief executive officer (CEO) of ICICI Bank, Chanda Kochhar on Wednesday, in a suit filed by her against the bank for retirement benefits, observing that any relief to her would ‘cause irreparable injury and prejudice’ to the bank.

 A division bench of Justices K R Shriram and Rajesh Patil, while dismissing Kochhar’s suit, observed: “Any grant of the interim reliefs as sought by appellant (Kochhar) would cause irreparable injury and prejudice to respondent (ICICI).” It further added that in case the bank was to succeed in the suit, then it would be required to seek the recovery of the shares acquired by Kochhar and/ or the monetary equivalent of the same.

The bench upheld the order of single-judge Justice R I Chagla, dated November 10, 2022, which stated that Kochhar’s termination was valid. Justice Chagla had also restrained Kochhar from dealing with the 6.9 lakh shares of the bank which she had acquired through stock options between October 4 and December 11, 2018.

Kochhar filed plea before division bech of HC seeking benefits

Kochhar had challenged the order before the division bench of the HC, seeking specific performance of her entitlements and benefits that were unconditionally provided to her when the bank accepted her early retirement on October 4, 2018. She had sent in her retirement letter a day before, on October 3, 2018.

Kochhar had claimed in her suit that the bank was aware of the terms of reference and scope of enquiry when entering into a contract with her, which granted her certain benefits unconditionally. She alleged that the bank later reneged on its contractual commitment flowing from its acceptance letter, without justification. Also, the bank could not have terminated a person who had already retired, she claimed.

Bombay HC noted Kochhar indicated she sought interim reliefs

The HC noted that Kochhar had indicated in her suit that she was seeking interim reliefs for exercising the Employee Stock Options (ESOPs), in order to be able to sell the share during the pendency of her suit.

The bench, hence, noted that any interim relief would be equivalent to final relief, thereby causing “irreparable injury and prejudice” to the bank.

The judges held that it was a matter of trial whether Kochhar’s offer of early retirement on October 3, 2018, and the ICICI’s acceptance of it thereof by its letter on October 4, 2018, resulted in a “contract for retirement” or in “cessation of the employer-employee relationship”.

Court's observations

“Whether the respondent, in view of the serious findings in the enquiry report by Mr Justice B N Srikrishna (retired), could claw back the benefits that the appellant derived during her employment between 2009 and 2018 is also a matter of trial. Whether ESOPs can be revoked or whether ESOP is a separate contract are also matters for trial,” remarked the HC, in a detailed 28-page judgment.

 The balance of convenience was completely in favour of the bank, since it was a public-listed company, and if Kochhar succeeded in her suit, the bank could be directed to purchase shares from the stock market or to pay an amount equal to their value, the bench concluded.