The Reserve Bank of India (RBI) told the Bombay High Court on Wednesday that its decision to grant approval to ICICI Bank for termination of the appointment of Chanda Kochhar as MD and CEO was fair and not arbitrary.
The central bank filed an affidavit in response to a petition filed by Kochhar last month, challenging her ouster as the chief executive and managing director of ICICI Bank months after she voluntarily left the private sector lender.
The bank, while terminating her employment, also denied her remuneration and rescinded the bonuses and stock options given to her from April 2009 to March 2018.
She was accused of playing a role in grant of out-of- turn loans of Rs 3,250 crore to Videocon Group, which allegedly benefited her husband, Deepak Kochhar.
Chanda Kochhar's lawyers Vikram Nankarni and Sujay Kantawalla argued that her termination came months after the bank had already accepted her voluntary resignation on October 5, 2018, and therefore the sacking was illegal.
The RBI in its affidavit said there was no violation of Kochchar's fundamental rights, and its decision to approve the termination of her services was devoid of any "malafides or arbitrariness".
While giving such approvals, the RBI does not sit in judgment over the legality of the action, it added.
"RBI does not get involved in employee-employee disputes," the affidavit said.
"It is not the function of RBI to micromanage the actions of the bank and substitute its commercial wisdom for that of the bank," the affidavit filed by Navin Nambiar, General Manager of RBI's Department of Regulation, said.
The central bank received a letter from ICICI Bank on February 2, 2019, informing that the bank's Board of Directors has considered the report submitted by the Justice Srikrishna Committee and concluded that Kochhar was guilty and reconsidered her early retirement, the affidavit said.
ICICI Bank then sought regulatory approval from the RBI for Kochhar's termination, as required under section 35B (1) of the RBI Act, it said.
"The letter was carefully considered...The RBI vide its letter dated March 13, 2019, accorded its approval to ICICI and advised that the termination of appointment would be as of October 4, 2018, the last working day of the petitioner (Kochhar)," the RBI said.
Both RBI counsel Venkatesh Dhond and ICICI Bank counsel Darius Khambata on Wednesday contended before a division bench of Justices R V More and S P Tavade that Kochhar's petition was not maintainable.
The bench scheduled the next hearing for January 13, 2020.