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K.C. Gopakumar

Kochi , Oct. 1

THE Federal Bank Chairman, Mr K.P. Padmakumar, today filed an appeal before the Kerala High Court against the order of the Additional Principal Bench of the Company Law Board, Chennai, staying the implementation of all the resolutions passed in the annual general body meeting of the bank held on September 27.

According to the appeal, the CLB had violated the principles of natural justice. The bank was not been given an opportunity of being heard before passing the order by the CLB. The board should have taken into account the fact that the declaration of voting results and consequent assumption of office by newly elected directors. According to the petitioner, the policies of ICICI Bank Ltd were not similar to that of ICICI Ltd. The reasons and circumstances for seeking exemption in respect of shares allotted to ICICI Ltd were not available to the ICICI Bank Ltd, which was totally a different entity.

There were RBI draft guidelines limiting the percentage of shares that could be held in a banking company by another banking company to 5 per cent. Thus, the guidelines clearly indicated that ICICI Bank was not entitled to exercise voting rights in excess of 5 per cent. Besides, the consent of the Federal Bank had not been obtained by ICICI Ltd before merging with the ICCI Bank. The petitioner said that the CLB order had exceeded its jurisdiction.

As per Section 12(2) of the Banking Regulation Act, the ICICI Bank was entitled to exercise voting rights up to 10 per cent of "the paid up total shares" of the Federal Bank. He had allowed ICICI Bank full voting rights in respect of the shares currently held by it without curtailing the voting rights to the statutory limit of 10 per cent on the basis of the ex-parte interim order of the CLB. Thus, the bank was allowed to exceed the statutory limit of 10 per cent mandated by the Act. He also challenged the interim order of the board issued on September 25 directing the Chairman of the AGM to allow ICICI Bank Ltd its full voting rights in respect of shares currently held by it.

Meanwhile, the petition filed by Mr K.P. Fabian, one of the newly elected directors, challenging the CLB order would be taken up for hearing on October 4. Mr Padmakumar's petition is also likely to come up on October 4.

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