The Hindu Business Line : Court lobs Federal Bank cases to CLB

A DIVISION Bench of the Kerala High Court today declined to interfere with the order of the Additional Principal Bench of the Company Law Board, Chennai, staying the implementation of all the resolutions which were put to vote and passed in the annual general body meeting of the Federal Bank held on September 27.

The Bench comprising Chief Justice Mr N.K. Sodhi and Mr Justice Thottathil B. Radhakrishnan while disposing of the appeals filed by Mr K.P. Padmakumar, Chairman of the bank, said that the appellants could raise their contentions against the Board's order before the Board itself.

According to the appeals, the Board had not given Federal Bank an opportunity of being heard before passing the order. The Board should have taken into account the fact that the declaration of voting results and consequent assumption of office by the newly elected director.

The Chairman said that under section 12(2) of the Banking Regulation Act, ICICI Bank was entitled to exercise voting rights up to 10 per cent of " the paid up total shares" of Federal Bank. However, he had allowed the bank the full voting rights in respect of 26,67,000 shares held by it. He had not restricted the voting rights to the statutory limit of 10 per cent. Thus, the bank was allowed to exceed the statutory limit of 10 per cent mandated by the Act.

He had also challenged the interim order of the Board issued on September 25 directing the Chairman of the AGM to allow ICICI Bank its full voting rights in respect of 45,32,400 shares allotted to it on September 27.

Dismissing the writ petition filed by Mr K.P. Fabian, one of the newly elected directors, the Bench said that the petition could not be entertained. There were serious disputes regarding the election of the petitioner as a director. This could be resolved only by a competent authority on the basis of material placed before such authority. Besides, the disputes could not be settled in summery proceedings.

The Bench also added that if the writ petition was entertained, the possibility of giving contradictory rulings by the Board and the court could not be ruled out. Therefore, the petitioner could raise all the contentions before the appropriate authority, which had the jurisdiction to decide the issue.

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