Bombay High Court Reiterates: Not Appropriate for Court to Hold Mini-Trial at the Stage of Grant of Temporary Injunction

Bombay High Court Reiterates: Not Appropriate for Court to Hold Mini-Trial at the Stage of Grant of Temporary Injunction

The Bombay High Court observed that it is not appropriate for a Court to hold a mini-trial at the stage of grant of temporary injunction while refusing 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 division bench comprising of Justices Rajesg S. Pathil and K.R. Shriram while hearing the extensive submissions, at the outset remarked that the reliefs sought by the appellant were in the nature of final reliefs and grant of such reliefs would amount to decreeing appellant’s suit at the interim stage.

The brief background of the case, was that the appellant- Chanda 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.

The ICICI Bank in May 2018, 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 4 October, 2018, and could not terminate her services. She was also entitled to all her retirement benefits, she pleaded.

Previously, the single judge Justice Riyaz Chagla, had rejected Kochhar’s prayer for interim relief on 10 November, 2022 and prima facie held her termination. He had also disallowed her from dealing with the shares.

The division bench was of the view that there was nothing to indicate that the discretion exercised by the learned Single Judge was arbitrary or capricious or perverse or unjustified in law. The Trial Court had 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, were very serious in nature, the Court opined.

The Court categorically framed four issues which were to be decided at trial:

(a) 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.

(b) Whether reference to good conduct in the contracts is not a reference to the undertaking dated 19th July 2016 signed by appellant.

(c) 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.

(d) Whether ESOPs can be revoked or whether ESOP is a separate contract are also matters for trial.

The bench concluded by observing, “if the interim reliefs sought by appellant is granted, that would cause irreparable injury and prejudice to respondent. The balance of convenience is completely in favor of respondent, since it is a public listed company, and if appellant succeeds in her suit, respondent can at that stage be directed to purchase shares from the stock market or to pay an amount equal to their value to appellant. Per contra if appellant’s suit is ultimately dismissed, respondent would then be required to seek recovery of the shares acquired by appellant and/or monetary equivalent of the same. Appellant is an individual, whereas respondent is a public listed company.”

The bench reckoned that it is also well settled that it is not appropriate for a Court to hold a mini-trial at the stage of grant of temporary injunction.

Accordingly, it listed the matter for 4th August, 2023.