Election of Shareholder Director: Court remanded case back to Nomination Committee, to look into Respondent’s election afresh
Civil Appeal No. 4820 of 2016
Bench: Justice Kurian Joseph; Justice Rohinton Fali Nariman
Case Brief: In the facts of the case, the basic controversies is shown to have arisen from the decision which was made by the nomination committee, under RBI Circular of 2013, through which the said Committee decided that the Respondent no. 1 here, was over aged (above 65 years) and also he has already served for a period of two terms as Director of the Appellant- Bank, as such he is disqualified from standing for any further election as Director of the said Bank. The said decision was challenged in High Court, which has earlier allowed the interim prayer, and granted interim mandatory injunction to deed the said respondent no. 1 as having been elected as shareholder director. This decision was challenged before Division bench, which affirmed the findings of the single judge and granted same relief. Now this bench decided to deal with the said interim order and also decided not to consider the merits in the suit.
The Bench further observed that prima facie, the RBI Guidelines of 2007 framed under Section 9 (3AA) of the Banking Companies (Acquisition and Transfer of Undertaking) Act, 1970 would apply to the facts of the case. Here, the bench found that the said section is basically providing for the fit and proper status of a person who wishes to be elected as Director in the Appellant- Bank based on the track record, integrity and other criteria which the RBI will notify from time to time in this connection. The RBI Guidelines as such were framed in the year 2007. Also this bench considered the letter of 2013 which was addressed to the Appellant- Bank by the Under Secretary, Ministry of Finance, Department of Financial Services. The said letter as in connection with said elections and bench also observed, prima facie that this letter applies to cases like the present. As such, the bench opined that the case to be remanded to the nomination committee for fresh decision on the issue of respondent no. 1’s fitness for election. As such, the present bench finally decided to set aside the order of the Single judge and also of Division Bench of the High court and remitted the matter back to the Committee. And such Nomination Committee as per this bench should decided the matter in given period, and thereafter, the Single Judge is directed to took up the hearing in the civil suit. As such, the appeal is disposed of.
Read the Judgement: UCO Bank Vs. Saumyendra Roy Choudhury & Ors