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Madhu Ashok Kapur and Others Versus Rana Kapoor and Anothers

2015 (6) TMI 707 - BOMBAY HIGH COURT

Right vested by the Articles of Association denied - Control of Yes Bank - Family dispute - Held that:- Yes Bank’s Articles do contain a set of proprietary and participative rights; particularly in Article 110(b). These are rights that are attached to shares, and flow from, and only from the shareholding of Ashok Kapur and Rana Kapoor.

Of these various rights, the right to recommend under Article 110(b) decidedly is not and never was personal to either Ashok Kapur or Rana Kapoor. It .....

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s Board. It was unnecessary to include in the Articles a mere ‘right to suggest’; brute strength in shareholding and even mere shareholding would have done as well. It is the right to nominate.

It is equally incorrect to suggest that the Plaintiffs have, only on account of Ashok Kapur’s demise, transmogrified into some sort of non-promoter capacity. The applications to the RBI to this end are motivated, self-serving and prima facie unlawful. It also follows that any recommendations m .....

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ppointment is inconsequential. Similarly, the appointments of Defendants Nos. 10, 11 and 12 as whole time directors of Yes Bank’s Board are also prima facie ultra vires its Articles and void. As regards Defendants Nos. 7 and 18, I am unable to understand how it could have been proposed to ‘treat’ them as Independent Directors. They were required to be appointed as such by validly passed resolutions at a properly called General Meeting and there is no provision in the 2013 Act to allow any person .....

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commercial expediency cannot trump acts ultra vires or illegal. If reliefs are not granted, the Articles’ meaning is forever lost. The Articles of a company are to it very like what the Constitution is to citizens. Shareholders are truly ‘invested’ in the enterprise: not merely for making profits and earning dividends, but also with a view to ensure that their rights, enshrined in the Articles, are always protected. It is of little use to say that the Plaintiffs are not a minority because they h .....

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order and injunction from acting or holding himself out as Managing Director or Chief Executive Officer of Defendant No. 6 - that the Hon'ble Court be pleased to declare that Defendant No. 9 was not validly appointed the Non-Executive Part-time Chairman of Defendant No. 6 from the date of his purported appointment - restrain Defendant Nos. 1 and 6 by themselves, their servants, agents and officers by a temporary order and injunction from appointing any person either as chairman and/or as managin .....

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s as the promoter of Defendant No. 6 in the Annual Reports of Defendant No. 6 or otherwise howsoever. - NOTICE OF MOTION NO. 944 OF 2013 IN SUIT NO. 462 OF 2013 - Dated:- 4-6-2015 - G.S. PATEL, J. For The Defendant : D.J. Khambata, Senior Advocate, D.D. Madon, Senior Advocate, Shyam Mehta, Senior Advocate, Jimmy Avasia, M.S. Doctor, Aditya Mehta, Rohan Dakshini, Ms. Pooja Kothari, Ms. Nikita Mishra and Ms. Spenta Havewala for the Plaintiff. Rohit Kapadia, Senior Advocate, Naval Agrawal, Prashant .....

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dgment). On one side of the dispute are the widow, the two adult children and a group company of one Ashok Kapur, by all accounts a person of considerable standing in financial and banking circles. He was one of the victims of the 26th November 2008 terror attacks in Mumbai. Ashok Kapur and Rana Kapoor, the 1st Defendant, promoted a new banking enterprise, the 6th Defendant, Yes Bank. This is a relatively new entrant on India's banking scene but in a very short time it has done extremely wel .....

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he battle between these two groups has been portrayed, especially in the media and in public imagination, as a fight for control of Yes Bank. It is nothing of the kind. Indeed, I would venture to suggest that the controversy in this litigation is very narrow although it has gone down a particularly convoluted path. When they founded Yes Bank, Ashok Kapur and Rana Kapoor ensured that they enjoyed certain privileges in the running of Yes Bank, its management and control of its affairs. The Article .....

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that these rights would receive recognition in the fullness of time. They waited. There was no action from either Rana Kapoor or Yes Bank. The Plaintiffs reasserted their rights and it was then they found that their rights were being completely denied. The principal right sought to be asserted and invoked is the right to 'nominate' representatives to Yes Bank's Board. 1.5 Matters soon came to a head. This suit was filed on 6th June 2013. Various interim proceedings were filed. A pre .....

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e Plaintiffs are, they say, a disruptive influence. Any rights under the Articles were limited to Ashok Kapur himself and did not survive to his family and group companies. There is, therefore, no legal basis to the plaint. 1.7 I have heard Mr. Khambata, learned Senior Counsel on behalf of the Plaintiffs, Mr. Rohit Kapadia, learned Senior counsel for Rana Kapoor, Dr. Tulzapurkar for Yes Bank and Mr. Soli Cooper for some of its directors at quite debilitating length over several weeks. The argume .....

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ts are invoked by Rana Kapoor acting on his own. The Plaintiffs say that these can only be validly invoked if the Plaintiffs do, in fact, succeed to the rights of Ashok Kapur. In Mr. Khambata's telling of the Plaintiffs' story, there is no manner of doubt that the Plaintiffs have been systematically excluded from all aspects of Yes Bank's functioning. The Bank has been entirely ring-fenced against the Plaintiffs. Their ostracism from the company is as complete as it is possible to be .....

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tion of the broad issues for determination. I have then considered the Articles and their interpretation, followed by an assessment of the rival submissions impeaching certain directorships. I have also considered the question of Ms. Shagun Kapur Gogia's nomination and its rejection by Yes Bank's board, as a relief is pressed in that regard. I have then set out my conclusions and findings, addressed the question of balance of convenience, prima facie case and prejudice, and identified th .....

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Mr. Cooper to deny the Plaintiffs all relief. 2. Dramatis Personae The Plaintiffs - Ashok Kapur's Family Ashok Kapur One of the co-founders of Yes Bank, Defendant No. 6. Was one of the victims of the 26th November 2008 terrorist attacks in Mumbai. Madhu Kapur Plaintiff No. 1 Ashok Kapur's wife; Shagun Kapur Gogia Plaintiff No. 2 Their daughter; also referred to as "Shagun" in this judgment. Gaurav Ashok Kapur Plaintiff No. 3 Ashok and Madhu Kapur's son. Mags Finvest Pvt Lt .....

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uot;Yes Capital"; An investment company of the Rana Kapoor family: Rana Kapoor holds 4.5%;Bindu Kapoor holds 4.5% and Radha Kapoor holds 91%. Morgan Credits Pvt Ltd Defendant No. 5 "Morgan Credits"; Another investment company of the Rana Kapoor family. Rana Kapoor holds 3.62%; Bindu Kapoor holds 0.45%; Raakhe Kapoor, another daughter of Rana and Bindu Kapoor, holds 95.93%. The Defendants - Yes Bank and its Directors Yes Bank Ltd Defendant No. 6 "Yes Bank"; The Bank set u .....

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inted Whole Time Director. Appointment challenged. Pralay Mondal Appointed Whole Time Director. Appointment challenged. Defendant No. 12 Lt. Gen. (Retd). Mukesh Sabharwal Independent Director. Appointment not challenged. Defendant No. 13 Brahm Dutt Independent Director. Defendant No. 14 Appointment not challenged. Saurabh Srivastava Independent Director. Defendant No. 15 Appointment not challenged. Vasant V. Gujarathi Independent Director. Defendant No. 16 Appointment not challenged. Ms Radha Si .....

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entity. Rabobank agreed to subscribe to 49% of the equity shares of the proposed banking company, while Ashok Kapur and Rana Kapoor agreed to subscribe to the remaining 51%. On the same day, a Shareholders Agreement ("SHA") was executed by Ashok Kapoor, Rana Kapoor and Rabobank. This SHA contains several definitions too, including of Ashok Kapur and Rana Kapoor. It closely follows the preceding SSA. 3.2 On 4th November 2003, Yes Bank, Defendant No. 6, obtained RBI approval to its Artic .....

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o which I will return shortly, after I complete the factual narrative. As on 25th November 2003, Ashok Kapur held 17.5% of the equity of Yes Bank. Another 8.5% was held by the 4th Plaintiff, Mags Finvest Private Limited ("Mags Finvest"), a company held by Madhu Kapur, Shagun Kapur and Gaurav Kapur. Rana Kapoor held 10% of the shares in Yes Bank. Defendant No. 4, Yes Capital (India) Private Limited ("Yes Capital"), a company held by Rana Kapoor, Bindu Kapoor and their daughter .....

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nce to Yes Bank. On 10th November 2004 Yes Bank applied to the RBI for an amendment to its Articles to include a new Article 127A. 3.4 On 24th June 2004, Yes Bank made a public offering of its equity shares. The prospectus in this regard was approved by SEBI. At this stage, it is only necessary to note that in the prospectus, the term "Promoters" was defined to mean Mr. Ashok Kapur and Mr. Rana Kapoor. 3.5 Between 2004 and 2008, Yes Bank's business grew substantially. Mr. Ashok Kap .....

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Ashok Kapur held 13.01%. Mags Finvest held 6.3%. Rana Kapoor held 7.41%. Yes Capital held 6.3%, and Morgan Credits held 5.6%. 3.7 Tragedy struck on 26th November 2008. Ashok Kapur was one of the victims of the 26th November 2008 terrorist attacks on Bombay. Following his untimely demise, Ashok Kapur's shares in Yes Bank were transmitted to his wife Madhu Kapur and their children Shagun and Gaurav. 3.8 In January 2009, Shagun Kapur met Rana Kapoor. It seems that at this meeting Shagun Kapur e .....

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nt of Yes Bank. 3.9 On 21st April 2009 and 22nd April 2009, Yes Bank's Nomination and Governance Committee ("NGC") met. At this meeting, this Committee apparently 'rejected' the 'nomination' of Madhu Kapur as a Director of Yes Bank. The terms of the minutes of this meeting are of some consequence. They have been emphasized by Mr. Khambata for different purposes, and I will return to these later in this judgment. What is, however, not in doubt is that the Plaintiffs .....

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st for the nomination of Madhu Kapur to Yes Bank's Board. 3.10 On 1st June 2009, Yes Bank applied to the RBI for approval to the appointment of Rana Kapoor as Yes Bank's Managing Director and CEO for another period of five years from 1st September 2009 to 31st August 2014. The Plaintiffs' contention is that their concurrence was not obtained for this appointment, although, according to them, this was required by Yes Bank's Articles. Although the application was for a five year te .....

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s Chairman. Mr. S.L. Kapur was duly appointed by Yes Bank's Board as Non-Executive Part Time Chairman of Yes Bank. 3.12 In 2010, Rabobank sold its shareholding in Yes Bank in the open market on a piecemeal basis. Rabobank thus completely exited the Yes Bank venture. 3.13 Yes Bank's Annual Report for 2009-2010, published on 27th April 2010, listed the major shareholders of Yes Bank as on 31st March 2010. The Plaintiffs' group held 12.68% and Rana Kapoor's group collectively held 1 .....

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s Bank's Board. These are challenged and impugned by the Plaintiffs for want of sufficient authority, principally on the ground that the recommendation of these persons are not either in accordance with law or in accordance with the terms of the Articles of Association of Yes Bank, or both. Rather than include each one of these challenges in this factual narrative, I propose to deal with them separately later in this judgment. 3.15 On 18th August 2010, Yes Bank wrote to the RBI claiming inte .....

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one of the documents that were disclosed subsequently during the course of this Notice of Motion. It came to light as recently as June 2014. 3.16 In January 2011, Madhu and Shagun Kapur met Rana Kapoor to discuss the Shagun's participation in Yes Bank's management. Once again, Rana Kapoor asked Madhu and Shagun Kapur to trust him. It seems that at this point Rana Kapoor also asked that the Plaintiffs consider selling their equity shareholding in Yes Bank. 3.17 It seems that a few months .....

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n this issue. It now claimed that the "Indian Promoter" status and definition in the Articles of Yes Bank was personal to Ashok Kapur and did not travel to his heirs and legal representatives. Evidently, the Plaintiffs were unaware of this correspondence. This was part of the correspondence and documentation disclosed in June 2014. A reminder e-mail followed from Rana Kapoor on 2nd February 2012 to the same effect. 3.18 On 25th April 2012, at a meeting of Yes Bank's Board of Direct .....

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appointment was never placed before the shareholders for their approval either at the eighth AGM (14th July 2012) or the ninth AGM (8th June 2013). It was sought for the first time only two years later at the tenth AGM held on 14th June 2014 on the basis of a AGM notice that the Plaintiffs described as 'tricky and misleading' . The continued appointment of Rana Kapoor as the Managing Director and CEO of Yes Bank from 1st September 2012 is challenged. 3.19 On 18th June 2012, Yes Bank app .....

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tirely omits the all-important Article 127(b), but only includes copies of Articles 127(a) and (c). I must note that even before me Yes Bank and Rana Kapoor went to great lengths to withhold disclosure of this document and it was only pursuant to my order of 12th June 2014 that this document was disclosed. The disclosure was also made only on 20th June 2014 well after the 10th AGM held on 10th June 2014. The approval sought from the RBI came through on 31st August 2012. This approval is also imp .....

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November 2011 was modified, so that the shareholding of Madhu Kapur's group, the heirs of Mr. Ashok Kapur, would not be counted as a promoter's stake subject to that group's shareholding being brought down to less than 5% of the Bank's paid up capital. The RBI said that this was a normal condition: shareholders other than promoters and financial institutions were not permitted to hold 5% or more of a Bank's paid up capital. Time was given till 31st March 2014 in order to ach .....

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not so much to the question of classification of the Plaintiffs' shareholding as a promoter or a non-promoter shareholding, but to the question of whether Shagun Kapur Gogia, Plaintiff No. 2, was entitled as a matter of right to be nominated to and to serve on Yes Bank's Board. I believe this to be a somewhat different issue from the question of whether or not Rana Kapoor was entitled to make nominations on his own, or whether this or any nominations to the Board required the concurrenc .....

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completely omitted. She asked for a meeting between herself and her mother on the one hand and Rana Kapoor on the other. There was no reply. On 13th May 2013, Shagun sent a second letter to Rana Kapoor. She said that the Plaintiffs had not even been consulted before Rana Kapoor appointed Directors ostensibly 'on behalf of the Indian Partners' . Once again there was no reply. A third letter followed on 15th May 2013, and in this, Shagun requested a meeting as an AGM was scheduled on 8th .....

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n Kapur Gogia as a representative director of the Plaintiffs. The next day, 5th June 2013, Madhu Kapur wrote to Rana Kapoor requesting that effect be given to Articles 110, 121 and 127 of the Articles of Yes Bank. She suggested that the nomination of three Directors by the two Indian partners, i.e., the Plaintiffs' group and Rana Kapoor's group should be by consensus. Absent such consensus, Madhu Kapur suggested, it should be agreed that one director would be nominated by each of the Ind .....

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thin the next few weeks. 3.24 On 5th June 2013, Rana Kapoor arranged a meeting between Madhu Kapur and Shagun Kapur Gogia and M.R. Srinivasan, Defendant No. 9, then the Chairman of Yes Bank. Srinivasan indicated that he was looking for a satisfactory way forward in the interest of both families and of course Yes Bank. According to the Plaintiffs, Srinivasan at this meeting indicated that Madhu Kapur could nominate Shagun as a director. After this meeting, on 5th June 2013 itself, Shagun Kapur se .....

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pur sent an email to Rana Kapoor on 6th June 2013 along with a letter. These related to the question of establishing a protocol or procedure to implement nomination rights under the Article. That very day, Shagun Kapur gave to Srinivasan a signed copy of Madhu Kapur's letter to Rana Kapoor and requested Srinivasan to pass this on to Rana Kapoor. This suit was filed on 6th June 2013. That afternoon, Srinivasan sent an email to Shagun. In this email, Srinivasan clearly attempts to put some dis .....

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e families of the Indian Promoters. He declined to get further involved in this matter. 3.26 That evening, at about 5.41 p.m. on 6th June 2013, Rana Kapoor sent an email and letter to Madhu Kapur in response of her letters of 4th and 5th June 2013. The Plaintiffs claim to have seen this letter only after the suit was filed. Mr. Khambata laid a very great deal of emphasis on this document. According to him, it demonstrates that Rana Kapoor has unequivocally accepted that the Plaintiffs have entre .....

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holders. 3.27 On 7th June 2013, on an application made for ad-interim reliefs inter alia in relation to the AGM to be held on 8th June 2013, it was clarified that the appointments of Defendants Nos. 7, 8 and 9 as Directors of Yes Bank would be subject to further orders of the Court. On 8th June 2013, Yes Bank held its AGM in Mumbai. Srinivasan was the Chairman at the AGM. At Madhu Kapur's request, Srinivasan conducted a poll to determine the outcome resolutions relating to the appointments o .....

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This was to be done within seven days and this nomination was to be considered by the Board at its scheduled meeting on 22nd June 2013. There followed between 10th June 2013 and 12th June 2013 some correspondence relating to inspection. I am not immediately concerned with this. On 15th June 2013 the Plaintiffs wrote to Rana Kapoor referring to Article 110 and this Court's order of 10th June 2013. In this letter the Plaintiffs stated that since Rana Kapoor had agreed to Shagun Kapur Gogia' .....

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sked the Plaintiffs to provide a revised declaration. It also called for an extensive amount for additional information and particulars. These details included information regarding lists of relatives, the probated will of Ashok Kapur, a copy of the Power of Attorney from Plaintiff No. 3, Rana Kapoor to Madhu Kapur, the consent of Ashok Kapur's legal heirs for the recommendation of Shagun Kapur Gogia and a confirmation whether Gaurav Kapur or any other member of the Ashok Kapur group had per .....

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a's nomination. This was on the basis that she did not meet the standards of Yes Bank and its peer banks and, secondly since RBI guidelines of ownership and governance in private sector banks made it undesirable that two or more "relatives" should be on the Board of the bank. 3.30 At that very meeting, Defendants Nos. 10 to 12 were appointed as Whole Time Directors of Yes Bank on the recommendation of Rana Kapoor ostensibly pursuant to Article 127A. 3.31 On 28th June 2013, the Plai .....

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emand. 3.32 On 12th August 2013 Madhu Kapur wrote to the RBI referring to the news article that said that Rana Kapoor had sought from the RBI a declassification of the Plaintiffs. There is no reply to this letter till date. 3.33 In the course of their replies to the Plaintiffs' Notice of Motion, the Defendants raised objections to the jurisdiction of this Court. Preliminary issues were framed under Section 9A of the Code of Civil Procedure, 1908. These were finally heard and rejected by this .....

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vember 2013 saying that its Board was the competent authority to make the appointments in question. 3.35 On 28th March 2014, the Plaintiffs wrote to Rana Kapoor and Yes Bank pointing out that the positions of Chairman and Managing Director of Yes Bank would soon fall vacant and requesting that the be taken into confidence if steps have already been taken to identify suitable candidates for these two positions. 3.36 On 23rd April 2014, the Board of Directors of Yes Bank resolved that Madhu Kapur .....

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ctor by following the due process of law. 3.38 That very day, even while this suit was pending, Yes Bank wrote to the RBI attempting to persuade RBI that the Plaintiffs should not and could not be considered as Promoters of Yes Bank. This correspondence, as indeed all correspondence between Yes Bank/Rana Kapoor and RBI was not copied to or disclosed to the Plaintiffs. As the following facts will show, this disclosure was only made pursuant to an order that I passed a little later. 3.39 In the me .....

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respondence continued in this vein between the Plaintiffs and Yes Bank/Rana Kapoor in May 2014. 3.41 On 15th May 2014 the Plaintiffs received an email notice dated 23rd April 2014 of the 10th AGM of Yes Bank scheduled to be held on 14th June 2014. This is a notice that the Plaintiff describe as tricky and misleading. The Plaintiffs challenge not only the notice but the appointments made at this annual General Meeting. There followed, on 23rd May 2014 an entirely unnecessary and avoidable controv .....

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l material in the documents or correspondence that did not relate to the Plaintiffs or to this declassification/ clarification. A further order on disclosure followed on 20th June 2014. The 10th AGM was video recorded and a copy of that video record was submitted to Court and is in safe custody. 4. THE FRAME OF THE SUIT & THE INTERIM RELIEFS SOUGHT 4.1 The Suit seeks to enforce what the Plaintiffs described as valuable proprietary and participatory rights vested in them, or so they say, by t .....

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t be considered at the stage of final hearing of the Suit. Having said that, the reliefs in the Notice of Motion also seek similar orders of restraint. The reliefs sought in regard to the Annual General Meetings held till 2014 will not, of course, survive. But there are other reliefs sought seeking inter alia to restrain Yes Bank from appointing any Directors without consulting the Plaintiffs and without obtaining their consent. There are also injunctions sought against several of the Defendants .....

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e Notice of Motion both have both been extensively amended at least twice. For clarity and convenience, the reliefs sought in the Notice of Motion are set out again in Annexure " A " to this judgment. 4.3 Mr. Khambata has restricted himself to the following prayer clauses, viz., (a)(iii), (a)(iv), (a)(v), (a)(vi), (a)(vii), (a)(viii), (a)(xiii), (a)(xiv), (a)(xv) and (a)(xx). The remaining reliefs are not pressed. 4.4 These reliefs are themselves divisible into certain classes. Prayer .....

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mselves out or acting as Directors of the Yes Bank. Prayer clause (a)(xiii) must be read with prayer clauses (a)(iii), (a)(iv) and (a)(v) but demands a reconstitution of the Board of Directors of Yes Bank to comply with Section 149 and Section 152 of the Companies Act, 2013 read with Article 121 of the Article of Associations of Yes Bank. Prayer clause (a)(xiv) is directed against Rana Kapoor and falls under same category as prayer clause (a)(viii): it seeks to restrain Rana Kapoor from acting o .....

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t prayer clause (a)(iii) is substantially covered by prayer clause (a)(vi) and that the prayer clause (a)(xiii) is substantially covered by prayer clause (a)(v). 4.6 Therefore, these prayers can be broadly classified into three categories: (a) One set that seeks recognition of the Plaintiffs rights to participate in the management of Yes Bank; (b) A second set that seeks to restrain individual Directors from acting as such or holding out themselves as Directors; and (c) Prayer clause (a)(xx) whi .....

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twice as many volumes: six in all, totalling about 1300 pages. There is also a Joint Compilation that runs into five volumes and 2000 pages. This, I was told, was for convenience although that term seems to have been used somewhat loosely. There is also an additional compilation of correspondence with the RBI. In addition, there are several files containing the authorities cited on either side. The Plaintiffs have filed comprehensive notes of arguments and a supplemental set of written submissi .....

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ecommendation or nomination of persons to Yes Bank s Board? And if they did, what is the effect on any such recommendations or nominations made without that consent or concurrence? (B) Is the right to recommend equivalent to a right to nominate or is it merely a right to suggest ? (C) Did the rights claimed by the Plaintiffs include the right to have a person of the Plaintiffs choice serve on the Board of Yes Bank? 6.2 There are consequential questions or issues that arise relating to the appoin .....

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BANK S ARTICLES 8.1 As I have noted, Ashok Kapur and Rana Kapoor between them, their family members and their respective group companies (Mags Invest, Yes Capital and Morgan Credits) held 51% of the equity shares of Yes Bank. The RBI required Yes Bank s shares to be offered to the public. The Share Subscription Agreement of 30th April 2003 contained draft Articles of Association. According to Mr. Khambata, the Articles that governed Yes Bank on its incorporation on 21st November 2003 constitute .....

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nds on an interpretation of these articles. 8.3 Article 3 contains clauses of definitions and interpretation. Both Ashok Kapur and Rana Kapoor are defined to mean two individuals and, unless it be repugnant to the context to include each of there successors, legal representatives and assignees . 8.4 The word affiliate is defined to mean any person which is a holding company or subsidiary of Rabo (i.e. Rabobank) or any person including any subsidiary or holding company which directly or indirectl .....

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rately. The definition makes it clear that the term Indian Partners refers to the two gentlemen together and that each of them is referred to separately as the Indian Partner . Further, the Articles make it clear that the reference to a person means not only an individual but also artificial entities such as a company, a trust and the like. The interpretation clause also states specifically that the phrase person in the case of a body corporate is a reference to its successors and permitted assi .....

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equity shares of the company. This clause was subject to any guidelines, instructions or directions issued, recommended or approved by the Reserve Bank in relation to the capital structure of the company. Any relaxation in this clause was required to be prorated to the respective shareholdings. 8.7 We come now to the all important Article 110. Although I have set this out in the annexure to this judgment, I believe that it is necessary to set this out again here simply because it is so critical .....

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along with any of its Affiliates directly or indirectly, at least 10% of the issued and paid up share capital of the Company, Rabo shall have the right to recommend the appointment of one director referred to as the Rabo Representative Director . (c) Apart from the IP Representative Directors and the Rabo Representative Director, the other directors shall be independent ( Independent Directors ). The Indian Partners shall propose the names of the first three Independent Directors, who upon appr .....

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affect independence of judgment of the Director. 8.8 The material part of this Article for our purposes is Article 110(b). The first sentence of this Article specifies a threshold limit for the Article to operate. It says that provided the Indian Partners (as defined in the Articles) along with any of their affiliates (also defined), directly or indirectly hold at least 10% of the issued and paid up share capital of the Company, the Indian Partners have the right to recommend the appointment of .....

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the appointment of IP Representative Directors, the Indian Partners were required (the word used is shall ) to propose the names of the first three Independent Directors. These names were to be approved by Rabo and these were then to be appointed to the Board. For the remaining Independent Directors, Rabo and Indian Partners were entitled to make recommendations to Yes Bank s nominations committee. 8.10 Article 111 is also important. This names Ashok Kapur and Rana Kapoor as the first two IP Re .....

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e state where the Board meetings were ordinarily held. The Alternate Director was to be nominated by a shareholder for whose representation the Director was appointed. The term shareholder is also defined and it means the holder of any share of the Company. This phrase seems to indicate that there is a certain class of shares, the holders of which are entitled to representation on the Board of Yes Bank. 8.11 It is normal in such cases to provide for vacancies in the offices of Directors. Article .....

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Representative Directors are not liable to retire by rotation. 8.13 Article 127 deals with the Non-executive Chairman and CEO and Managing Director of Yes Bank. Article 127(b) says in terms that the Indian Partners have, again the right to recommend the name of the Chairman. They also have the right to recommend the CEO and Managing Director of the Company. This Articles specifically provided that Ashok Kapur would be the first Chairman of the Yes Bank and Rana Kapoor its first CEO and Managing .....

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e Rabobank representative had little choice in this matter of appointment of the Chairman, CEO and Managing Director to various committees of Yes Bank. 8.14 Article 127A was introduced by an amendment in 2004, one that was approved by the Reserve Bank of India. This Article sought to introduce the concept of Whole Time Directors into these Articles. Article 127A(a) says specifically that subject to the provision of the governing statutes and to the Articles, the Board of Yes Bank shall, subject .....

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necessary approvals and the articles, the Board of Yes Bank is entitled to periodically appoint or reappoint one or more existing members to be designated as and to act as a Whole Time Director of a company. In any case, these Whole Time Directors are not to exceed more than one-third of the total number of Directors of Yes Bank. 8.16 Article 127A(e) opens with a non-obstante clause and says that Whole Time Directors are not subject to retirement by rotation under Article 122. They remain subjec .....

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ed as an Indian Partner. The definitions of them by name as also the interpretations of the word person in the Articles made it clear that their rights extended to their heirs and legal representatives. The rights that Mr. Khambata speaks of are substantial. Under Article 110, the Indian Partners had a right to recommend the appointment of three Directors to Yes Bank s Board. That Article also provides for a threshold shareholding of 10% in order to exercise that right. This 10% may be made up b .....

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mes of the first three independent Directors. This phrase is defined in the second part of Article 110(c) as being persons who apart from remuneration as directors have no other material pecuniary relationship or transaction with company, its Promoters, its management or its subsidiaries and which, in the judgment of Yes Bank s Board, might affect their independence of judgment. Incidentally, this appears to be another place where the expression Promoters has actually been used. The IP Represent .....

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. Its purpose is to protect the interest of the initial promoters and founders of Yes Bank. It is saved from being subjected to the will of the majority of the shareholders of the company by incorporation in the articles themselves. He submits that these participatory rights are recognised as enforceable in Indian Law. (Vodafone International Holdings V. v Union of India, (2012) 6 SCC 613) The Articles are also contract between members and are binding not only on the members but also on the comp .....

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3). Further, he submits, the Articles of Association are a business document and must be construed so as to give them reasonable business efficacy, where such a construction is permissible or plausible. This interpretation is to be preferred to a result that might prove unworkable or is contrary to the Articles themselves. (Holmes v. Lord Keyes (1959) Ch 199 (CA) at 215; Rayfield v. Hands, [1958] 28 Com Cases 460; Union of India v. D.N.Revri & Co., AIR 1976 SC 2257). 8.19 Mr. Khambata s subm .....

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clude proprietary rights, according to Mr. Khambata, the participatory rights contained in the Article and which accrue or endure to the Indian Partners enjoy all the attributes of movable property. This includes heritability and assignability. Thus, even without the express provisions in the definitions contained in the Articles and without the express words of Article 110, any rights that were available to Ashok Kapur would pass on his death to his heirs and legal representatives. If the Artic .....

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exception is cases of contracts that are personal in nature or where rights are incapable of assignment either because of a statutory prohibition or because of an explicit provision in the contract itself. (Khardah Company Limited v. Raymond & Co (I) Pvt. Ltd. AIR 1962 SC 1810). Ordinarily, and unless there is a contrary intention either expressed or implied a contract is enforceable against the legal heirs, representatives, assignees and transferees of a party to that contract.( Ram Baran .....

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Durgappa Irappa Bhatkar (1940) 42 Bom LR 653; T.M. Balakrishna Mudaliar v. M. Satyanarayaona Rao (1993) 2 SCC 740; Shyam Singh v Daryao Singh (2003) 12 SCC 160. 8.20 The response from Mr. Kapadia and Dr. Tulzapurkar is that the right in Article 110(b) is entirely personal and is unlinked to any shareholding; i.e., that it was intended always to be a right personal to Ashok Kapur and Rana Kapoor. This right does not, therefore, they contend, survive to the two individuals successors, legal repres .....

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right to suggest, or does it necessarily imply the right to nominate? (d) As a corollary of the second and third questions above, are the Plaintiffs are entitled to what I will call, for want only of a better expression, a reserved seat on Yes Bank s Board? 8.22 Is the right in Article 110(b) (and Article 127A) personal to Ashok Kapur and Rana Kapoor? On a plain reading, such as the one Mr. Khambata advocates, one would have to say it is not. After all, the Articles define the term Indian Partne .....

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cense was on account of the personal qualifications and ability of Ashok Kapur and Rana Kapoor is not compelling. Every venture has its progenitor or promoter, and licenses are granted to the proposed venture because of that person s abilities. This does not colour the rights to be found in the Articles and I do not believe that any principle of interpretation can allow us this kind of a regression. Mr. Kapadia says further that the successors may not have any experience at all in banking and fo .....

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ht is personal is not correct. That is a possibility, not an inevitability. It might happen when both Indian Partners agree. In any case, I do not see how this helps Mr. Kapadia. If the right is personal, as he suggests, then it not only includes the right to foist oneself to the Board, but it must also include the right to foist some other unworthy to the Board. What, in essence, Mr. Kapadia s argument translates to is this: Ashok Kapur and Rana Kapoor might indeed have had the right to impose .....

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truction of a plainly worded clause in the Articles. 8.24 Mr. Kapadia then points out that there are other parts of the Articles that refer to Ashok Kapur and Rana Kapoor, and these are clearly meant as references to them as individuals without including their successors: for instance, Articles 111 and 127 providing for Managing Directorship and first Directorships of Yes Bank. If, he says, the expansive definition is to be used in Article 110(b), then it must be used in Articles 111 and 127 too .....

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nceptual difference between these. Certainly when it comes to Articles 111 and 127 there exists a repugnancy and the references in those Articles must be construed as references to the two individuals concerned. I do not think it is at all possible to extend this to every other such reference. Article 110(b) confers a right. Articles 111 and 127 make an appointment. The difference is crucial. 8.25 Mr. Kapadia s endeavour is to illustrate what he describes as absurd consequences that might result .....

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reholding). Mr. Kapadia then constructs various scenarios of buying and selling of stock to demonstrate the so-called absurdity. Here, too, the argument fails because it proceeds on the assumption that within each group, each successor and each assign and each affiliate can exercise the right separately. That is not correct. In fact, as regards, heirs, successors, legal representatives and Affiliates (the latter as defined) there is no difficulty at all in accepting Mr. Khambata s interpretation .....

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sion, that the right was entirely personal to the two individuals in question. For instance, if the Plaintiffs group divests itself of the entirety of its shareholding to a third party (or several such), could this entity (or the several entities coming together) invoke this right? First of all, this is an extreme scenario and it can hardly dictate or govern the interpretation of the clause as it plainly stands. Second, it is entirely possible that, in a given context, the word assigns might be .....

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r descend to one level below Ashok Kapur and Rana Kapoor and no further; a transferee from those might be able to invoke those rights, but not a transferee of a transferee. It seems to me that the clause in Article 110(b) has a defined and limited life-cycle. It is not one that can endure in perpetuity. Finally, it is common ground that both groups have in fact divested themselves of some of their shareholding. None of their transferees, qua assigns , have ever laid claim to this right. More imp .....

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apur and Rana Kapoor can be given full effect. Ex-facie, this seems incorrect. Were it so, the so-called definition of the two persons was entirely unnecessary and it would have been sufficient to include the phrase heirs, administrators, legal representatives and successors , or something of the kind, in Article 49(e). The inclusion of a general definition suggests that it must be used throughout except where (a) expressly excluded, which we find nowhere; or (b) implicitly excluded by a context .....

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(Article 111(a) and (b)), the Chairman and the Managing Director-and-CEO respectively. (Article 127(b)). 8.27 The Articles are, I find, cautiously worded. At this stage, it is not unreasonable to assume that had the draftspersons intended to word Article 110(b) in the manner Mr. Kapadia and Dr. Tulzapurkar suggest, they would have said so. The words heirs, legal representatives and assigns might have been excluded specifically from that Article. It is not. To the contrary, it is expanded to inc .....

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sider, i.e., someone who held no shares in it, to dictate and direct its course provided he could muster up the 10% qualification shareholding in Article 110(b). It is, I think, axiomatic that the Articles are a contract between a company and its shareholders, and it would be utterly bizarre to have in these articles a conferment of power or entitlement of this magnitude on a non-shareholder, one said to be performing a contract of personal service. 8.29 Mr. Kapadia s portrayal of Mr. Khambata s .....

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ale rewriting of Articles 110(b) and (c), 118(b), 127(b) and 127A(a), by doing away, where convenient to the Defendants, the words successors , etc., and elsewhere, the word assigns . 8.30 The references to situations that lie at the extremities are, I think, needlessly alarmist. Dr. Tulzapurkar says that it is necessary to test an interpretation against extreme situations. The authorities he cites do not support this proposition, or say that that an absurd result from an extreme test is determi .....

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10; i, AIR 1969 SC 9). Mr. Khambata agrees whole-heartedly with this much. Is it conceivable that the Official Assignee or Official Liquidator would be entitled to exercise these rights? ask Mr. Kapadia and Dr. Tulzapurkar. It is, and may well come to pass. But that was always a possibility from the time these Articles were drawn, and not one occasioned by Ashok Kapur s passing. There is nothing so very absurd about this; it only requires the Indian Partners to be more cautious in their affairs. .....

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in order to exercise that right, the class must hold shares above a certain percentage. It may be no more than chance that the two families do not each command an absolute majority in Yes Bank s equity and are, on that reckoning, a minority . The defined percentage is a threshold qualification for the exercise of the right; once the shareholding drops below that barometer, the right can no longer be invoked. The discussion about the ambit and purport of the Supreme Court s decision in Vodafone ( .....

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he Chairman and all whole time directors would be jeopardized for want of the Plaintiffs consent is unwarranted. Article 110(b) speaks of IP Representative Directors. Independent Directors are to be appointed under Article 110(c), and only the first three are to be proposed by the Indian Partners, subject to Rabobank approval. Similarly, under Article 127(b), the first Chairman, and the first Managing Director and CEO are named individuals, and these appointments obviously cannot extend to succe .....

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e done at all. 8.33 Mr. Kapadia s prediction of a corporate and financial Armageddon is more than somewhat misconceived. It cannot be happenstance that it arises only after, or because of, Ashok Kapur s passing. Every single one of these situations was possible had Ashok Kapur been alive today and disagreed with Rana Kapoor. Might that have resulted in the complete shutdown of Yes Bank? Or are we required to presume that Ashok Kapur and Rana Kapoor would never and in no circumstances have disagr .....

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t would confer a right independent of any shareholding, and divorce rights under the Articles from shareholding. It would then follow that that right would be enforceable at the instance of an outsider, a non-member. This is contrary to settled law, (Ramkumar Potdar v. Sholapur Spg. & Wvg. Co. Ltd. (1934) 4 Comp Cas 481 (Bom)(DB); Maj Gen Shata Shamsher v. Kamaru Bros. Pvt. Ltd., AIR 1959 Bom 201), and, closely read, Article 110(b), for instance, makes that abundantly clear. That Article req .....

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wo persons would not be eligible for consideration to appointment (which of course they would, as might any other titan in the banking industry), but would also be in a position to steer its course by making recommendations to the Board though they would, by then, be complete outsiders to the company. Mr. Khambata is, therefore, correct when he says that Articles 110(b), 127 and 127A are members rights and not those conferred on non-member outsiders. 8.35 Mr. Kapadia and, more emphatically, Dr. .....

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nvited a finding that these not only provided context but were permissible aids to interpreting the Articles. According to Dr. Tulzapurkar, these documents show that the rights in the Articles were personal to Ashok Kapur and Rana Kapoor. Of these four documents, the first three precede Yes Bank s incorporation on 21st November 2003; only the Master Investment Agreement is subsequent. The value of the first three pre-incorporation agreements is marginal at best, yet none of these seem to bear ou .....

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lear why the warranties and representations mentioned in those documents should not bind successors, etc., as the Defendants suggest. Moreover, the first Share Subscription Agreement does not have a lock-in clause; yet it uses the expansive definition. Therefore, to suggest that in the present Articles, the expansive definition applies only to the lock-in Article 49(e) is clearly incorrect. Interestingly, the Share Subscription Agreement of 5 November 2003 (pre-incorporation) seems to suggest th .....

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incorporation and it is indubitably important for it yields some clues as to how the parties themselves understood the Articles and acted on them. Here again, the term promoters was defined not only to include the two individuals but also three companies, and these promoters had a nomination right, one that could not, for that reason, be personal. These three companies were such that their shares could be held by the spouses and families of the two individuals. In other words, the right with wh .....

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r that must prevail. 8.37 Implicit in the Defendants argument is the presumption that Yes Bank s and Rana Kapoor s conduct is consistent with their interpretation that the right is entirely personal to Ashok Kapur and Rana Kapoor. We do not have to look far to see that this consistency does not exist. Rana Kapoor holds just about 5.55% of Yes Bank s paid up capital. He also does not, on his own, hold more than the required 50% of the paid up capital of Yes Capital and Morgan Credits. These do no .....

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y pass the 10% threshold criterion only if Rana Kapoor s personal 5.55% shareholding in Yes Bank is added to Madhu Kapur s (the 1st Plaintiff s) 9.74% stake. This also means that the right in Article 110(b) is, on Yes Bank s and Rana Kapoor s own conduct and understanding of it, available to their Affiliates , i.e., Yes Capital and Morgan Credits, neither of which is a natural person. 8.38 Mr. Khambata also submits that there is ample evidence to show that the Defendants have, by their conduct a .....

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f carry Mr. Khambata the distance he must go; for the admissions to which he refers do not show, on their own, that the Defendants have admitted the Plaintiffs entitlement to the exercise of those rights. An admission is a matter of evidence. It can always be explained. It can, for instance, be shown to have been used in a given context and therefore not to constitute an admission for other purposes. 8.39 But there are two telling documents. On 21st April 2009, Yes Bank s Nominations and Governa .....

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er family member would have to satisfy these conditions or alternatively nominate in consultation with the other Indian promoter any other person who may fulfil the same. (Emphasis supplied) 8.40 Yes Bank s Board took up this matter at its meeting on 22nd April 2009, a few days later. (Joint Compilation, pp. 505-507). It noted the NGC recommendation. It concurred. 8.41 There is no dispute that in interpreting a contract, and the Articles are nothing if not that, the conduct of parties is relevan .....

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t, remake them. The process of practical interpretation and application, however, is not regarded by the parties as a remaking of the contract; nor do the courts so regard it. Instead, it is merely a further expression by the parties of the meaning that they give and have given to the terms of their contract previously made. There is no good reason why the courts should not give great weight to these further expressions by the parties, in view of the fact that they still have the same freedom of .....

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thing when he knows that the first party is acting on reliance upon the interpretation (see Corbin on contracts, Vol. 3, pp. 249 and 254-55). 8.42 Unless explained, an admission furnishes the best evidence. (Ramji Dayawala & Sons (P.) Ltd. v. Invest Import (1981) 1 SCC 80). If ever there was unequivocal admission by conduct as to the meaning of a contractual document, this is probably it. Neither Yes Bank s NGC nor its Board said that the right in question was unavailable to Madhu Kapur; the .....

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Rana Kapoor. That, too, in unambiguous. If Mr. Khambata relies on this admission, then he must of necessity accept that the right in question can only be exercised jointly. In fairness, he does precisely this; but the consequence of this does not necessarily yield the results he desires. 8.44 This takes us immediately to the second question: how is that right to be exercised? I believe this question more or less answers itself. The right in Articles 110(b), 127(b) and 127A(a) must be exercised j .....

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ntitled to a separate exercise of the right. The term Indian Partners means both of them and though it is true that the singular is defined to mean each of them, in Article 110, 127 and 127A when the exercise of a particular right is introduced it is only vis-à-vis both of them together. For instance, Article 110(b) says that so long as the Indian Partners have the necessary qualifying shares, the Indian Partners shall have the right to ... ; it does not say that each of the Indian Partne .....

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ng to his successors, how might Ashok Kapur have been entitled to exercise those rights? Could he have done so unilaterally or were he and Rana Kapoor required to act together? Nothing in these Articles suggests that either of these two men could have done so. They were entitled to exercise that right jointly or not at all. Finding that the right passes on to their successors does not and cannot alter this position. The rights in the Articles are, consequently, are ones that can only be exercise .....

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the individual situations at hand, but the summary of that analysis is that several directorships are rendered vulnerable. 8.47 What precisely is the nature of the right in the Articles, specifically, the right in Article 110(b), Article 127(b) and Article 127A? Is it, as Mr. Khambata says, a right to nominate or is it, as Mr. Kapadia and Dr. Tulzapurkar would have it, merely a right to suggest, the final decision always being left to the Board? Mr. Khambata says that context and common sense de .....

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the names of the first three Independent Directors proposed by the Indian Partners, they shall be appointed . Curiously, this phrase is used only in this clause. This is because Rabobank s approval was a precondition; without it, there could be no appointment. Where no such approval is necessary, the appointment must happen straightaway. This is also the necessary result of the next provision of Article 110(c) regarding the other Independent Directors. Here, Rabobank and the Indian Partners were .....

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liable to retire by rotation. Only the other directors are to appointed by the general body. The initial appointment of these IP Representative Directors is, therefore, not subject to general body approval. If Article 110(b) is merely a right to suggest, Article 121 is meaningless. 8.50 But what appears to be determinative is this: if the right to recommend is merely a right to suggest, why have it in the Articles at all? Article 110(b) is then entirely redundant. After all, Section 160 of the 2 .....

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cles can only be a right to nominate. 8.51 I am not in the least persuaded by the arguments by Mr. Kapadia that the right in Article 110(b), worded as it is, can never be the right to nominate but is only a limited right to suggest. The authorities he cites do not, I think, carry the case at hand further.(A. Panduranga Rao v. State of Andhra Pradesh (1975) 4 SCC 709; Naraindas Indurkhya v. State of Madhya Pradesh (1974) 4 SCC 788; Union of India v. Telecom Regulatory Authority of India, (1998) 3 .....

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as this. 8.52 Mr. Kapadia insists that the rights in question were personal because of the special expertise, experience and abilities of Ashok Kapur and Rana Kapoor. This, he says, allowed them the privilege of suggesting names to the Board; and this is qualitatively different from the right of an ordinary member to suggest a name at a general meeting. But, Mr. Khambata ripostes, such a limited right surely yields only a trivial advantage, hardly commensurate with the much-vaunted special statu .....

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ia, AIR 1969 SC 9; V. S. Talwar v Prem Chandra Sharma (1984) 2 SCC 420). not one that results in a manifest absurdity or futility. (American Home Products Corp v. Mac Laboratories Pvt Ltd (1986) 1 SCC 465; Tillmanns & Co v. SS Knutsford Ltd, (1908) 2 KB 385). I regret that I am unable to understand what this absurdity might be, or why it should be treated as manifest. The mistake is, I think, to treat these rights as ones that endure for eternity. That is not so. The right in Article 110(b), .....

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trary to law. This is the common business sense that Mr. Khambata advocates. Yes Bank s argument seems to be that to extend these rights to successors is absurd. I have already held it is not, and, indeed, would venture to suggest that clear-words argument is one that can with success be deployed against Yes Bank itself. It is today Yes Bank that seeks to have unambiguous words read out of the Articles. 8.54 This is the pudding. What might we make of Yes Bank s and Rana Kapoor s consumption of i .....

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ffidavits in Reply dated 1st July 2013 and 24th July 2013, Rana Kapoor says that his nomination of Mr. S. L. Kapur was made without any reference to the Plaintiffs. He similarly made nominations of Defendant No.8 (Ravish Chopra) and Defendant No. 9 (M. R. Srinivasan) on his own. They were not shareholders suggestions, recommendations or nominations. They were made by Rana Kapoor to the Board. If indeed they were merely suggestions, they met with curious and telling warmth. (b) The IPO Prospectus .....

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to alternatively nominate (not merely suggest ) another candidate. This is carried forward in the Board s minutes of 22nd April 2009, ones that contain a wholehearted approval of the NGC s recommendations. (d) At a 20th October 2009 meeting of the NGC, (Joint Compilation, p. 649 at p. 650), Rana Kapoor informed the NGC that he was recommending Mr. S. L. Kapur as the nominee of the Indian Promoter as Executive Part Time Chairman of the Board. The next day, Yes Bank s Board said that Rana Kapoor h .....

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posed Promoter Nominee ; not as the person recommended or suggested, but as a nominee. (Joint Compilation, p. 1190 at p. 1192). (f) The appointments of both Ravish Chopra and M. R. Srinivasan were placed before the general body at the AGM on 8th June 2013. (Joint Compilation, pgs. 1242-1243). These were not routine shareholder recommendations (which require an accompanying fee). These were clearly stated to be nominations by Rana Kapoor, described as the Indian Promoter. 8.55 There is other mate .....

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tatutes and general body approval then they are nothing but suggestions properly so called. They can always be rejected by the general body (something that has, of course, never happened). But that, in my view, is misdirection. Everything a company and especially a banking company does is subject to oversight by statutory regulators. That does not detract from the nature of the right. What we must consider is the manner in which these suggestions come to be placed before the General Body. Does t .....

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bata correctly says that in this situation once a recommendation is made, the Board, bound by Yes Bank s Articles, has no choice in the matter of that appointment, one that is subject only to the mandated eligibility criteria and statutory compliance. It is only where a person is disqualified under the Banking Regulation Act, that the nomination can be rejected; and that is not because the Board disagrees with the nomination, for it cannot, but simply because the law will not allow it. The Board .....

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ence, applicable to 51% of the Board under Section 10A(2) of the Banking Regulation Act 1949, would not operate in respect of these nominees. At least as far as the Board is concerned, a nomination is akin to a reserved seat. But it must be jointly made or not at all. 8.58 Mr. Kapadia asks me to read certain paragraphs of the Plaint with him. He says that the Plaintiffs have admitted in their pleading that the Articles confer only a right to recommend the appointment of directors. I do not see w .....

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appoint and not merely to suggest. 8.59 This submission, that the powers of the Board are and must always remain unfettered, is one for which I can find no authority when stated in such absolute terms. Indeed, it seems to me that the law, the authorities and the commentaries all point to the contrary. A Board s powers are always subject to the company s Articles. Were it not so, the Board would be entitled to do things wholly outside the confines of the Articles; and here we do have a manifest .....

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o in LIC of India v Escorts Ltd. (supra) We need not travel further afield, but should we be of a mind to do so, the terrain is no different. Even the authorities cited by Yes Bank do not, correctly read, support its case. (Pennington, Company Law, 5th ed, pp. 696-699 at p. 697; John Shaw & Sons (Salford) Ltd v. Peter Shaw & John Shaw, (1935) 2 KB 113). I do not think it is necessary to repeat again and again that a company is bound by its Articles. That is far too well settled to admit .....

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ing is also inappropriate. That was an entirely different case. The questions before the Appeal Court were whether there was any principle that prevented every employee from becoming a union member; whether employee could include a manager ; and the true scope of the conflict of interest provision. Dissenting from Lord Justices Upjohn and Diplock, Lord Denning, MR held it would be unlawful to force managers, who could not be said to be employees within the meaning of the rule in question, to joi .....

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s, so long as the director is left free to exercise his best judgment in the interests of the company which he serves. But if he is put upon terms that he is bound to act in the affairs of the company in accordance with the directions of his patron, it is beyond doubt unlawful, or if he agrees to subordinate the interests of the company to the interests of his patron, it is conduct oppressive to the other shareholders for which the patron can be brought to book . . . 8.61 I am unable to understa .....

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ext-specific: The shareholders cannot infringe upon the Directors fiduciary rights and duties. Even Directors cannot enter into an agreement, thereby agreeing not to increase the number of Directors when there is no such restriction in the Articles of Association. 8.62 But the same paragraph goes on to say: The shareholders cannot dictate the terms to the Directors, except by amendment of Articles of Association or by removal of Directors. 8.63 Mr. Kapadia says, on the basis of Rolta and Boultin .....

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n, even in the slightest, is contrary to the interests of the company, and Rolta says these are paramount. It is for this reason that the Articles advisedly use the phrase right to recommend and not right to nominate . I think this overstates the position, and it is not at all what Mr. Khambata advocates. As we have seen, there is an inherent limitation in Article 110(b) (though not in the other Articles), requiring a qualifying threshold shareholding. This is an inbuilt safeguard. Secondly, the .....

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evented from discharging any of its fiduciary duties. These rights are targeted and specific. They are restricted to certain numbers and certain posts. They do not dictate the entirety of the composition of Yes Bank s 15-member Board. What Mr. Kapadia suggests is some sort of forensic synecdoche, where the nominee positions represent the entirety of the Board. They do not. The Board s powers are not constrained, and here the powerful dissent in Boulting may actually work against Mr. Kapadia, for .....

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8.64 There is also no statutory bar to such nominations. The Defendants argue that the RBI suitability criteria cannot be met if Mr. Khambata s interpretation is accepted. That is a patent misreading of his submission. I have not understood him to suggest, even remotely, that this right confers a power to nominate a person entirely unsuitable to the task. Mr. Khambata does not say that the Articles must be read such that the two Indian Partners, acting together, can nominate , say, a bus driver. .....

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mandated standards)? Here again, Mr. Khambata is entirely candid, and the Defendants only attempt to sidestep his direct answer: it is for the Board to determine compliance with eligibility criteria and none else. In fact, this in itself wholly undermines Mr. Kapadia s Rolta-based submission. Essential discretion is not taken away at all. The Board may well tell the Indian Partners that the person they nominate, suggest or recommend does not meet the necessary criteria, and the matter ends at th .....

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nds its Articles, obviously. The one option that is not available to either group is to take the Articles as they stand and then, on the basis of some very latter-day epiphany, attempt to warp and metamorphose them into what is, for all intents and purposes, not so much a professionals bank but one professional s bank. 8.66 There is one submission by Mr. Khambata that I must reject. It is simply not possible, on any interpretation, to accept that the Plaintiffs can unilaterally place any one of .....

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Plaintiffs nor the 1st Defendant s (Rana Kapoor s) group has the right or authority to make unilateral nomination to the exclusion of the other. 9. INDIVIDUAL DIRECTORSHIPS 9.1 Mr. Khambata makes an elaborate exposition of Board packing , suggesting that Rana Kapoor is deliberately filling up vacant seats on the Board, ones that are available for the second non-retiring IP Representative Director and to cause a frustration of the Plaintiffs rights. This argument must be rejected. The reasons ar .....

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appoint the minimum number of Independent Directors, i.e., one-third of the total strength, or five of the 15-member Board. It can appoint no more for that would exhaust the seats required for IP Representative Directors . More than one-third, he says, is not a statutory requirement; and to appoint more is ultra vires the Articles. 9.2 I must disagree. The argument again proceeds on the basis that there must necessarily be IP Representative Directors. That is not so. There are at least three sc .....

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strued to mean a cap or an outer limit. That would mean serving a narrow, private interest of one group (the two families taken as one) as opposed to the interests of the company itself. Finally, Article 110(b) is not compulsory. It does not say that the Ashok Kapur and Rana Kapoor shall recommend . It says they will have the right to recommend (subject to conditions, of course, as discussed). The existence of the right is embodied in the Articles; the exercise of that right is clearly a matter .....

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e Plaintiffs assail Rana Kapoor s appointment on the ground that it was not a joint recommendation as required by Article 127(b). Mr. Khambata also submits that the RBI s approval to this appointment was procured by way of a misleading application. Yes Bank represented that its Board was competent to make this appointment, citing only Articles 127(a) and 127(c) but omitting the crucial Article 127(b). A submission is made to quash the RBI approval. At this prima facie stage, without the necessar .....

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t the previous AGM, though it ought to have been since the Board resolution for his appointment was of 25th April 2012 and should have come up for shareholder approval at the 2013 AGM. In other words, Rana Kapoor continued to act as Managing Director and CEO from 2012 without shareholder approval till as late as 2014. (c) Mr. Kapadia and Dr. Tulzapurkar point out that this argument incorrectly places the appointment of the Managing Director and CEO under Article 127(b) on the same footing as the .....

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s are not required to make a recommendation of the Managing Director and CEO; they have that option. The non-exercise of that option does not result in that appointment not being made because the Board s powers immediately and automatically come into play. This does not happen under Article 110(b). (d) Mr. Kapadia also submits that Article 127(b) clearly contemplates an election, in that it requires the Rabo Representative Director to vote along with the IP Representative Directors to the appoin .....

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Yes Bank proceeded on the footing, vis-à-vis the RBI, that his appointment was in fact under Article 127(b), not in exercise of any inherent powers of the Board. The application to the RBI is dated 18th June 2012. (Plaint, Vol II, pp. 525-535, Exhibit M-XXIII). The covering letter is innocuous. (Plaint, Vol II, p. 525). It has several enclosures. One of these is Form B (Particulars) . (Plaint, Vol II, p. 527). This form requires a statement of who is the competent authority to make the re .....

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he relevant Articles does not. What is not in doubt that is that the appointment did in fact receive RBI approval and, too, shareholder approval (by an overwhelming majority of over 80%). The Plaintiffs case hinges entirely on the solitary reference to Article 127(b) in Form B on the application to the RBI. I am asked to infer from this that the RBI was misled. No such inference is possible. The RBI is not a party here. It previously approved the Articles and I think it is reasonable to assume t .....

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n their written submissions, that they will support the continuance of Rana Kapoor as Managing Director and CEO provided a full disclosure is made and Yes Bank s seeks his reappointment as a special resolution (on the footing that he is a Related Party ). I will turn to this argument regarding the need for a special resolution in a moment; but the rest seems to me to be clutching at straws. Before the general body a sufficient disclosure was made. The Plaintiffs complain that inspection was not .....

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not substance . At the end of the day, all these arguments are based in equity; supposedly for the betterment of the company. This branch of the submission (the insufficiency of notice and inspection) has nothing to do with special rights available to the Plaintiff. They are equally available to all other members. None appear to have complained. Whether or not his remuneration was appropriate was something the general body could, and did, decide. Given that it is nobody s case that the Board is .....

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by means of an ordinary resolution at an Annual General Meeting. Mr. Khambata submits that Rana Kapoor is a related party vis-à-vis Yes Bank and that under Section 188 of the 2013 Act, this requires a special resolution. (i) Section 314 of the 1956 Act required a special resolution for the appointment (or reappointments) of Directors holding an office or place of profit, but it specifically excluded Managing Directors, who could, therefore, be appointed by an ordinary resolution. (j) Mr. .....

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covered by this since his remuneration package includes certain perquisites (accommodation and so on). Section 196, which deals with appointments of Managing Directors, only speaks of a resolution , not specifically an ordinary or special resolution, and this section is, therefore, in Mr. Khambata s formulation, subject to the discipline of Section 188. Any Managing Director who receives, say, rent-free accommodation, must be appointed by a special resolution and in no other fashion. Section 18 .....

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ed as director, by way of salary, fee, commission, perquisites, any rent-free accommodation, or otherwise; (k) The change in law is, I think, in the direction Mr. Kapadia suggests, viz., that under the 1956 Act, a Managing Director could possibly have been appointed a sole selling agent without a special resolution. This is no longer possible. The appointment of a Managing Director is separately carved out and placed in Section 196. A special resolution is required if he is to be appointed a sol .....

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ansaction, and is excluded by the third proviso to Section 188(1). Critically, the RBI while granting approval, and before whom the remuneration details were placed, (Form D, Plaint, Vol II, p. 529. This specifically mentions free furnished house , the free use of the bank s car for official purposes and, on reimbursement to the bank, for private use, telephones, etc.) did not demand that his appointment be by way of a special resolution under Section 188. (l) The argument that Rana Kapoor s rea .....

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e fatal. Some regard must be had to shareholder approval obtained in such numbers and to the RBI approval. It is not as if Yes Bank is operating entirely without shareholder and regulatory oversight. (m) It is not possible to accept the Plaintiffs submissions in relation to the appointment of Rana Kapoor at this interim stage. 9.5 The appointment of Defendant No.8 (Ravish Chopra) as an IP Representative Director and as an Independent Director (a) In October 2012, Ravish Chopra was nominated as a .....

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on. It cannot be saved. It is ultra vires the Articles and is void. The subsequent election at the Annual General Meeting is irrelevant; the initial appointment was bad. (c) At the 10th AGM on 14th June 2014, Ravish Chopra was re-designated as an independent director. This just cannot be. Yes Bank itself says, as of 19th February 2014, that he was a promoter nominee non independent director. (Notice of Motion, Vol IV, p. 869) The fact that the initial appointment was as a promoter nominee in Oct .....

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irectors and IP Representative Directors. Article 127A introduced a category of Whole Time Directors. These are the only nominations that can be made by the Indian Partners. Mr. Chopra was not nominated as a Whole Time Director. He was, by the Defendants own admission, not nominated as an Independent Director. His nomination could, therefore, only fall into the category of IP Representative Director. This nomination could not have been made without the Plaintiffs concurrence. It was not sought. .....

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ra s appointment. The explanatory note says that the company has received written notices proposing his name. But the same note also says: Further since Mr. Ravish Chopra has been nominated by the Indian Promoter, Mr. Rana Kapoor may be deemed to be interested or concerned in the above resolution. (f) How could this possibly be? Mr. Chopra could not both be a nominee of Rana Kapoor and separately proposed by any member. If the latter was true, he was not Rana Kapoor s nominee and Rana Kapoor cou .....

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im as non-Independent. Mr. Chopra, given his status as supposed promoter director s nominee, is not within the definition of an independent director under Section 149(6) of the 2013 Act. (h) On 14th June 2013, M. R. Srinivasan, Defendant No.9, wrote to Shagun Kapur Gogia in response to her letter of the previous day.(Plaint, Vol. III, p. 568) In this response, Srinivasan claimed that Ravish Chopra had been inadvertently characterised as a non-Independent Director though he fulfils all the criter .....

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the company received notice from a member proposing him with a deposit of ₹ 1 lakh (up from the ₹ 500 in the earlier statutory scheme). There was no such proposal, and Mr. Chopra could not have been validly appointed even at the 10th AGM under Section 160 of the 2013 Act. 9.6 The appointment of Defendant No. 9 (M. R. Srinivasan) as Director and Chairman (a) Srinivasan was apparently appointed as an Additional Director, designated non-executive non-independent by a Board Resolution o .....

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uction on the Board, Srinivasan functioned as an advisor with remuneration to Yes Bank.(Joint Compilation, Vol. III, p. 1214) He was in no sense independent . Like Ravish Chopra, since Srinivasan was not a Whole Time Director or an Independent Director, he could only have been an IP Representative Director, as a purported nominee of Rana Kapoor. This nomination is ultra vires and bad for want of the Plaintiffs concurrence and assent. (d) I must clarify that the Defendants submission that there a .....

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the validity of his appointment as a director in the first place. If the latter fails, so must the former. (f) To the RBI, Yes Bank represented that Srinivasan was his nominee under Article 127(b). This is set out in Yes Bank s letter dated 7th March 2013 to the RBI.(Joint Compilation, Vol. III, p. 1209) Paragraph 1 of that letter expressly refers to the Article and to Rana Kapoor s nomination of Srinivasan as Non Executive Part Time Chairman of the Board. This letter was not disclosed by the D .....

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the Board. This approval was not sought at the 9th or 10th AGMs of Yes Bank. Shareholder approval was sought only to his remuneration. (h) Srinivasan s appointment at the 8th AGM is also bad since the Notice for that AGM (Joint Compilation, Vol. III, p. 1238 at p. 1243) proceeds on the basis that Srinivasan could have been validly nominated by Rana Kapoor in the first place. (i) In any case, Srinivasan is age-ineligible under the current RBI directives. The result is that the initial appointment .....

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not demand them. The law also does not prohibit them, and the Board might have been within its rights not to insist on shareholder approval for the chairmanship of Srinivasan. It did insist and it was bound to obtain it. (j) As a matter of fact, Srinivasan is no longer Chairman of the Board. 9.7 The appointments of Defendant No. 7 (Diwan Arun Nanda) and Defendant No. 18 (Ajay Vohra) as Independent Directors (a) Both Nanda and Vohra were directors before the 10th AGM and before the 2013 Act came .....

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ct. This kind of corporate bypass operation is unknown to law. But is this necessarily fatal to the appointment? The Plaintiffs were present at the 9th AGM. No point of order seems to have been raised about these appointments. Is it not, as Mr. Cooper for the directors argues, a mere irregularity, one that is by its nature curable in general meeting? ( Sunil Dev v. Delhi Cricket Association, 1990 (80) Comp Cas 174; V . N. Bhajekar v K. M. Shinkar, (1934) 35 Bom LR 483; MacDougall v Gardiner [196 .....

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iverse of appointment of Independent Directors. Indeed, it may well be redundant now; at the time when they were approved, the Articles presaged the statutory changes that would follow some years later. (d) It is true that Nanda and Vohra are not yet validly appointed as required by law. Whether or not this can be rectified is for Yes Bank to determine. The challenge is to the appointments as they now stand. 9.8 The appointments of Defendant No.10 (Rajat Monga), Defendant No. 11 (Sanjay Palve) a .....

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m the Board under Article 127A(b). Yes Bank says that the three appointments fell under this Article and did not need a recommendation. Defendants Nos. 7 to 18 veer from this course and suggest that the appointment under Article 127A(b) is not limited to sitting Board members, for that would result in the company being always unable to appoint its employees to whole time directorships. On a plain reading, this submission from the directors demands the complete effacing of the words one or more o .....

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cease to be the Managing Director/CEO, Yes Bank would be in an unviable position, being unable to appoint suitable employees to whole time directorship; and Section 203 of the 2013 Act requires a whole time director where there is no Managing Director. This argument by the directors proceeds on too stretched a hypothetical, and indeed there is nothing that prevents the company from appointing a suitable candidate from among the 15 who serve on its Board. (d) I must note for completeness that Ye .....

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ter of factual material. The essence of the Plaintiffs case is that since Rana Kapoor did not at any time and Yes Bank did not, till very late in the day, specifically say that he and it did not support Shagun s nomination, that nomination must be deemed to be a joint one. 10.2 The Plaintiffs say that Rana Kapoor s silence coupled with his conduct are sufficient to constitute his acceptance of her nomination;( Bharat Petroleum Corporation Ltd v Great Eastern Shippping Co. Ltd., (2008) 1 SCC 503) .....

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oubt that this is neither necessary nor desirable. What the Plaintiffs ask me to do is to hold that these views be relegated to the background and that conduct in correspondence be read to have this sort of an effect. I am not prepared to do anything of the kind. The correspondence indicates that there was much in discussion; including a proposal dated 5th June 2013, a day before the suit was filed, to have one IP Representative Director from each family and the third one by rotation,(Joint Comp .....

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nsidered by Yes Bank; not that it would be a choiceless nomination under Article 110(b). Srinivasan s email of 6th June 2013 sets out his stand.(Joint Compilation, Vol. IV, p. 1454) He says that the Plaintiffs could suggest Shagun or anyone else as a joint proposal, but goes on to say that his role is limited and does not extend to family issues. On that day this suit was filed and later that evening Rana Kapoor emailed Madhu Kapur.(Joint Compilation, Vol. IV, p. 1449) He said that he met her to .....

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entirely extraneous to the Articles. 10.4 It goes on in this vein: a word here, a phrase there. These are not pleadings. These are not even letters by lawyers. These are emails and letters between parties and there is a certain lack of formality that attaches to them. I do not think that from these linguistic pebbles it is possible to define even a molehill let alone the mountain of which Mr. Khambata attempts an ascent. On 10th June 2013, this court passed an order directing the NGC to consider .....

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rticle 110.(Joint Compilation, Vol. IV, p. 1502)This letter does not say that her nomination was a joint nomination with Rana Kapoor. The omission is critical; for, if indeed the Plaintiffs case then was what it is now, they ought to have said so. They did not, and that tells me that they did not understand this nomination to be a joint one. Rather, it was seen to be some sort of via media at finding a middle ground. Yes Bank s response, of that date,(Joint Compilation, Vol. IV, p. 1501) makes t .....

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be insignificant, nor can it be said that because it was not signed by Rana Kapoor, he must be deemed or held not to have disputed that the nomination was joint. 10.7 The NGC rejected Shagun s nomination. It did so after calling for a welter of information, material it has not sought from others it considered for appointment to the Board. Mr. Khambata sees this as vindictive, an attempt to deny the Plaintiffs their rights . It is possibly only circumspection or caution. The nomination was not o .....

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mination would be suspect and would be liable to be questioned at any stage. This is not what the Articles envisage. 10.8 Mr. Khambata then wants me to sit in judgment over the Board s and NGC s rejection of Shagun s nomination or application and to render a finding that it s reasons for rejection are perverse and untenable . This is not something that I am prepared to do. It would set a wholly unhealthy and unwelcome precedent. In short, what Mr. Khambata suggests is this: that because the Arti .....

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ound commensurate is not for me to assess. That is entirely outside my remit. The rightness of this decision can be debated ad infinitum, but to no end. 10.9 Nothing in the Articles leads to the conclusion that the Plaintiffs are entitled to a reserved seat on Yes Bank s Board. 11. OTHER MATTERS AND ISSUES 11.1 Two other matters must be addressed. First, the question of Yes Bank s (and Rana Kapoor s) applications to the RBI for a so-called de-classification of the Plaintiffs holdings, i.e., to h .....

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of the Defendants is decidedly odd. The Plaintiffs do not appear to have been given notice of the application, though it undoubtedly affected their rights. The RBI has not yet taken any decision on this. 11.2 The substratum of the argument is the one that was vigorously canvassed before me, one that I have now decided. I do not believe it is open to the RBI to now go into the question and arrive, possibly, at a contrary view. The question indeed is at the core of the Plaintiffs case and could no .....

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, I have not examined the credentials, capabilities, competence and achievements of any of the directors whose appointments are assailed. For that matter, neither has Mr. Khambata. I cannot do this for obvious reasons: it means sitting in appeal over the Board and over the General Body, on merits. The assessment has been only on law and seeing whether the Defendants have adhered to the mandated processes. Where they have not, the results must follow. Some directors will have to step off the bus. .....

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ts that are attached to shares, and flow from, and only from the shareholding of Ashok Kapur and Rana Kapoor. 12.2 Of these various rights, the right to recommend under Article 110(b) decidedly is not and never was personal to either Ashok Kapur or Rana Kapoor. It endures to each of their successors, legal representatives and assigns. This right is not in the nature of a contract of personal service and was not limited to the two individuals in question. There is no question of contextual repugn .....

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this right, when exercised by Rana Kapoor, to be a mere suggestion. His suggestions or recommendations have always only been taken to be nominations. It is inconceivable that he and only he is somehow qualified to nominate directors, but that nobody else has that ability. 12.4 That this right is not and was not personal to the two individuals and was not restricted to merely making suggestions is belied by Yes Bank s and Rana Kapoor s repeated representations to the RBI. The fact that Yes Bank a .....

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hat any recommendations made by the 1st Defendant, Rana Kapoor, without the concurrence and consent of the Plaintiffs are also ultra vires the Articles and are null and void. 12.7 Although the right to recommend is the right to nominate, it is an indivisible right and must be exercised jointly. It cannot be splintered into component rights with each group nominating its own person to Yes Bank s Board. The right to nominate is also distinct from the right to serve on Yes Bank s Board; there is no .....

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2nd Plaintiff as a joint nomination made under Article 110(b). It is also not for a court to question the sufficiency of the Board s decision in that regard. 12.8 For the reasons previously discussed, Defendant No. 8 cannot have been validly appointed as an IP Representative Director or an Independent Director. His appointment is invalid. The appointment of Defendant No.9 to the chairmanship of Yes Bank is ultra vires the Articles, and null and void, and the so-called approval of the RBI to that .....

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to be treated as an independent director. 13. THE THREE DETERMINANTS AT THE INTERIM STAGE 13.1 I turn now to the three determinants to which I must address myself at the stage of an application for interim reliefs. First, have the Plaintiffs made out a prima facie case. I have no hesitation in saying they have; and, indeed, that there is a very substantial prima facie case, not some fanciful construct conjured out of thin air. The Plaintiffs claim is actually straightforward: they claim that un .....

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Board. This right has been wholly denied to them and on a plain reading of the relevant Articles and statutes this denial is simply wrong and unsustainable. It must be given voice. 13.2 What of the balance of convenience and prejudice? Yes Bank is now a significant presence in the banking industry. Granting the Plaintiffs relief would jeopardize its operations, say the Defendants. This argument is as misleading as it is mischievous. Rana Kapoor seems to have exercised those very rights that the .....

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the two sides, the correspondence and, most of all, Yes Bank s and Rana Kapoor s repeated entreaties to the RBI to declassify the Plaintiffs shareholding and to have it treated as that of a non-promoter group. Again, there is no cogent explanation for this at all. 13.3 Would the Plaintiffs interpretation necessarily and inevitably prejudice Rana Kapoor? It might; but this makes very little difference, because the question of balance of convenience is not to be assessed in a matter such as this b .....

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ified and unlawful, but what is done is done and this is irreversible. 13.4 Mr. Khambata says that Rana Kapoor runs Yes Bank like his personal fiefdom. His word is law. He bends the company to his will. What Rana Kapoor wants, Rana Kapoor gets. This seems to me to be excessive. It calls into question the bona fides and credentials of every single member of Yes Bank s Board, and it does not sit well with the undoubted progress that the company has made in the short years since its inception. Perh .....

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Plaintiffs, chosen to adopt a course that is unsupported by the Articles or any fair reading of the relevant statutes. If that be so, neither can invoke any equity to continue acting in that vein. The result is an inevitability, and the chips must fall where they may. There is sufficient space and room for Yes Bank to correct its course in the time ahead. 13.6 There is, however, one problematic area for the Plaintiffs. The invocation of these rights, even construed to mean a right to nominate a .....

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risen had Ashok Kapur been alive today. It is not a situation that is in any way tied to Ashok Kapur s demise. The Plaintiffs suggestion earlier in correspondence, and one that, in fairness, Mr. Khambata placed with evident hesitation, viz., that each side should nominate one person to the Board, and then a third person should be appointed by alternate rotation, is obviously not something I can accept. It is entirely outside the Articles and the law. Apart from anything else, a demand for a seat .....

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dictive. But adjectival descriptions do not create a right where none exists. Nothing in Article 110 lends itself to an interpretation that the right to recommend, even when construed as a right to nominate, included a right to a unilaterally proposed reservation on the Board. This foisting may be the inevitable consequence of a joint nomination, and there the Board might have no say; in fact, it has not ever claimed to have one. But Shagun s nomination was considered by the Board this Court s o .....

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ve Directors and Whole Time Directors. There is an alternative to Mr. Khambata s one-seat-each-and-the-third-alternating proposal, the one that I have expressly rejected. This is an alternative that will possibly displease both sides in its starkness: where the two groups cannot agree on a nomination, there simply will be none. There is, as I have noted, another distinct possibility, a matter on which the two warring groups will have to make a studied decision, and that is to reduce their aggreg .....

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is much cannot be denied: that under his stewardship, in the seven years since Ashok Kapur s death, Yes Bank has grown and progressed exponentially, to the benefit of all, not least the Plaintiffs themselves. 13.9 It is not possible, in my view, to monetize as it were the Plaintiffs rights under the Articles. It is also no answer to say that since the value of their shares has gone up substantially the Plaintiffs have suffered no prejudice. To say this is not only to trivialize the Plaintiffs ca .....

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ough a trial is patently unfair. On the question of balance of convenience, commercial expediency cannot trump acts ultra vires or illegal. If reliefs are not granted, the Articles meaning is forever lost. The Articles of a company are to it very like what the Constitution is to citizens. Shareholders are truly invested in the enterprise: not merely for making profits and earning dividends, but also with a view to ensure that their rights, enshrined in the Articles, are always protected. It is o .....

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that, generally speaking, the purpose of a discretionary interim or interlocutory order should be to preserve the status quo where a prima facie case is made out and prejudice is shown. Dalpat Kumar & Anr. v. Prahlad Singh & Ors., AIR 1993 SC 276. There is also a possible argument that some of the interim reliefs sought are in the nature of final reliefs in the suit and should not, for that reason, be granted. But there is still a species of litigations in which the grant of such reliefs .....

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elding to a final hope of a mutually acceptable resolution, I broadly indicated my findings, and asked the parties to find a via media. I heard them briefly again on two days in the ensuing May 2015 vacation. Rana Kapoor was personally unavailable to give instructions, and Mr. Khambata and Mr. Kapadia were unavailable as well. I stood the matter over to 2nd June 2015, again after some hearing. I must point out that the vacation hearings in May 2015 were, at my instance, in camera since the attem .....

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decision of the Supreme Court in Afcons Infrastructure Ltd & Anr. v Cherian Varkey Construction Co (P) Ltd & Ors. 2010 (3) ILR (Ker) 917 to submit that the terms of the reference to mediation be left open and only a summary of disputes be formulated at this stage. Ordinarily, there would have been no difficulty in accepting this submission, because this is undoubtedly what needs to be done in any reference to mediation under Section 89 of the Code of Civil Procedure, 1908. In this parti .....

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the subject matter of a mediation and cannot be left open. At the same time, I have very little doubt that there are Articles that require amendment, both for consistency going forward and also to resolve the present disputes. Although I have attempted over a last month to frame the summary of disputes, I believe an agreement is necessary if the reference is to be meaningful and not left open-ended. Mr. Khambata submits that this might in fact be possible once the judgment is made available and .....

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onounce this judgment today. Authenticated copies of this order will be made available to the Advocates on record for the parties, namely, Federal & Rashmikant, M/s. Beri & Co. and M/s. Cyril Amarchand Mangaldas. (Mr. Singh undertakes to file a vakalatnama by M/s Cyril Amarchand Mangaldas in replacement of the earlier vakalatname by M/s Amarchand & Mangaldas & S. A. Shroff & Co.). The order is not to be uploaded at this stage. The parties are also directed for the present not .....

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Court. The matter is to be listed for this purpose on 17th June 2015 at 3.00 p.m. Should there be no agreement, the order will then be uploaded. Yes Bank and its directors will then be required to communicate it to the regulators in the usual course. 13.15 The next AGM of the Company is scheduled to be held on 6th June 2015. Mr. Khambata states that he opposes some of the agenda items at that AGM and may need to to move separate proceedings in that behalf. Should he do so, both sides will be at .....

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, M. R. Srinivasan, and as regards the injunction in that regard, this will not operate if, because of an age-bar, he is ineligible to continue on Yes Bank s Board. 14.2 It is not necessary to grant prayer (a)(xiii) since prayer (a)(v) has been allowed. Similarly, prayer (a)(iii) is unnecessary, being covered by prayer (a)(vi). 14.3 Prayers (a)(iv) and (a)(xiv) are expressly rejected. 14.4 Given the nature of this order, the fact that arguments spanned so many days and the time it has taken to d .....

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l, Mr. Ankoosh Mehta, Mr. V. P. Singh and their respective attorneys for their very considerable assistance in this matter. Mr. Singh states that a vakalatnama by M/s Cyril Amarchand Mangaldas will be filed in substitution of the original vakalatnama filed by M/s Amarchand & Mangaldas & S. A. Shroff & Co. This is noted. (G. S. PATEL, J.) 17th June 2015. 15A. This Judgment was pronounced on 4th June 2015. For reasons recorded on that day, the matter was kept pending without the judgme .....

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ow been carried out and incorporated in the foregoing judgment. In addition, I have myself noticed certain typographical errors which have been corrected. Parties are directed to use copies of the judgement that will be uploaded later today and not the copies made available earlier. 17. It is further clarified that the stay granted in paragraph 14.4 above shall operate for a period of five weeks from today, 17th June 2015. (G. S. PATEL, J.) ANNEXURE A PRAYERS IN THE NOTICE OF MOTION (a) that pen .....

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e Notice dated 17th April 2013, to vote at the AGM scheduled on 8th June 2013 (iii) that pending the hearing and final disposal of the present Suit, the Defendants be restrained by a temporary order and injunction from nominating and/or recommending the appointment of any Directors under clause 110(b) of the Articles of Association of Defendant No. 6 without consulting and obtaining the consent of the Plaintiffs. (iv) that this Hon'ble Court be pleased to issue such orders or directions as a .....

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slots for IP Representative Directors under Article 110(b) without the express concurrence of the Plaintiffs (or at least Plaintiff No. 1); (vi) restrain Defendant No. 1 from exercising and Defendant No. 6 from acting upon any purported exercise of rights under Articles 110, 118, 121, 127 and 127A of the Articles of Association of Defendant No. 6 to the exclusion of the Plaintiffs (or at least Plaintiff No. 1) and without their express concurrence (or at least Plaintiff No. 1's express conc .....

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this Hon'ble Court to disclose and furnish a copy of the video recording of the 9th Annual General Meeting of Defendant No. 6; (xii) Defendant No. 6 be directed to give inspection of the minutes of the Nomination & Governance Committee's meetings and the Board of Directors meetings recorded in the minute books in ordinary course, particularly the minutes of the meetings of the Nomination & Governance Committee held on 21st April 2009, 20th October 2009, 22nd October 2012 and 27t .....

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ent number of directors who are liable to retire by rotation in accordance with Section 149 read with Section 152 of the Companies Act, 2013 so as to comply with the provisions of the aforesaid Sections without requiring either of the two IP Representative Directors to compulsorily retire by rotation contrary to Article 121 of the Articles of Association of Defendant No. 6 company. (xiv) restrain Defendant No. 1 by a temporary order and injunction from acting or holding himself out as Managing D .....

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was not validly appointed the Non-Executive Part-time Chairman of Defendant No. 6 from the date of his purported appointment; (xvii) that the Hon'ble Court be pleased to order and direct Defendant No. 9 to repay to Defendant No. 6 all the payments received by him as the purported Non-Executive Part-time Chairman from Defendant No. 6 from the date of his purported appointment till date; (xviii) restrain Defendant No. 7 and Defendant No. 18 from acting or holding themselves out to be Directors .....

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ny steps (including, making representations to any regulators/authorities and acting on the representations already made to regulators /authorities) for de-classifying and/or changing the category of the Plaintiffs as the promoter of Defendant No. 6 in the Annual Reports of Defendant No. 6 or otherwise howsoever; (b) for ad-interim reliefs in terms of prayer clause a(i) to (iii) above; (c) for costs of the Notice of Motion; (d) Such other reliefs as this Hon'ble Court may deem fit and proper .....

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by the same person who, directly or indirectly, Controls Rabo or the Indian Partners, or (d) is a subsidiary of the same person of which Rabo is a subsidiary. For the purposes of this definition, the term "holding company" and "subsidiary" shall have the meaning ascribed to under Section 4 of the Act. "Ashok Kapur" means Mr. Ashok Kapur, an Indian National and resident of 11, Silver Arch, Napeasn Sea Road, Mumbai - 400006 and unless it be repugnant to the context, .....

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the directors, partners or other individuals exercising similar authority with respect to such person; "Indian Partners" Ashok Kapur and Rana Kapoor, are collectively referred to as the "Indian Partners" and each of Ashok Kapur, and Rarna Kapoor is individually referred to as the "Indian Partner"; "Rana Kapoor" means Mr. Rana Kapoor, an Indian National and resident of Grand Paradi Apartments, Rowhouse # 1, Mumbai - 400 036 and unless it be repugnant to the .....

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o his heirs, executors, administrator and legal representatives; 49. (a) An application for the registration of a transfer of any share (s) debenture (s) or any other securities or other interest of a Member in the Company may be made either by the transferor or by the transferee. (b) Where the application is made by the transferor and relates to partly paid Shares, the transfer shall not be registered, unless the Company gives notice of the application to the transferee and the transferee makes .....

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the aggregate his/her/its holding to a level of 5 per cent or more of the total issued capital of the Bank (or such other percentage as may be prescribed by the Reserve Bank from time to time) should be effected by such buyer(s) after obtaining prior approval of the Reserve Bank. The term 'group' will have the same meaning as contained in Section 2 (e) of the Monopolies and Restrictive Trade Practices Act, 1969 or any statutory enactment amending, modifying or repealing it. (e) Neither R .....

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Company. Provided further that in the event that the Reserve Bank relaxes its requirement for the lock-in then the release of the aforesaid locked-in shares shall be effected in a manner that is proportionate to the shareholding of the Indian partners and Rabo in the Company. 110. (a) Until otherwise determined by a General Meeting the number of Directors shall not be less than 3 (Three) and no more than 15 (Fifteen). (b) So long as the Indian Partners hold along with any of their Affiliates dir .....

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Representative Director". (c) Apart from the IP Representative Directors and the Rabo Representative Director, the other directors shall be independent ("Independent Directors"). The Indian Partners shall propose the names of the first three Independent Directors, who upon approval by Rabo, shall be appointed as such by the Board. Rabo and the Indian Partners may, recommend the names of the remaining Independent Directors to the nominations Committee of the Company. For the purpo .....

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fice by notice in writing addressed to the Company or to the Board; or (ii) he becomes disqualified under Article 112 (b); or (iii) he is disqualified for being appointed as a Director under any of the provisions of either of the said Acts. (b) If the office of any Director appointed by the Company is vacated before his term of office expires in the normal course, the resulting casual vacancy may be filled by the Board of Directors at a meeting of the Board and the Directors so appointed shall h .....

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nd a CEO and Managing Director. (b) The Indian Partners shall have the right to recommend the name of the Chairman. Ashok Kapur shall be the first Chairman. The Indian Partners shall have the right to recommend the name of the CEO and Managing Director of the Company. Rana Kapoor shall be the first CEO and Managing Director. Rabo shall cause the Rabo Representative Director to vote along with the IP representative Directors for appointment of the Chairman and the CEO and Managing Director to the .....

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o render such extra services on day to day basis, or by way of special assignment or in any other manner as the Board may decide. (e) The term for the Chairman, the CEO and Managing Director shall not exceed five years at a time, provided that the Chairman, the CEO and Managing Director should be eligible for reappointment. (f) Notwithstanding anything to the contrary, the Chairman and the CEO and Managing Director shall not be subject to retirement by rotation under Article 122 but shall; subje .....

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said Acts and these presents and of any contract between him and the Company) be fixed by the Board, from time to time and may be by way of fixed salary and/or perquisites or by any or all these modes or any other mode not expressly prohibited by the Act. (h) The appointment, reappointment, termination of appointment, remuneration payable to and other terms and conditions of service of the Chairman and the CEO and Managing Director shall be subject to the approval of the Reserve Bank and also su .....

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