The Madhu Kapur family has questioned the appointment of three directors -- Diwan Arun Nanda, M R Srinivasan and Ravish Chopra -- on the YES Bank board on grounds that they do not meet the fit and proper guidelines of the Reserve Bank of India (RBI).

In rejoinders and draft amendment to their petition filed with the Bombay High Court today, the Kapur family has said "defendant numbers 7 (Nanda) and 9 (Srinivasan) do not meet the fit and proper requirement of age criteria of 35 to 65 years, as prescribed by the RBI circulars being relied upon...Both defendant numbers 7 and 9 as per the AGM (annual general meeting) notice are 69 years old." Business Standard has reviewed these documents.

YES Bank has opposed the amendments claiming it discloses a different cause of action.

Madhu Kapur, widow of co-founder Ashok Kapur, and her two children (Shagun Kapur Gogia and Gaurav Kapur) had moved the Bombay High Court alleging their right as co-promoters of the bank was violated. They claimed that as per the articles of association the Indian partners of YES Bank must jointly recommend appointment of directors on the bank's board.

While Madhu Kapur is the legal heir of Ashok Kapur, she was not consulted before appointing the three directors. Rana Kapoor, co-founder, managing director and chief executive of YES Bank recommended appointment of Srinivasan and Chopra and Nanda was inducted as an independent director on the bank's board.

The court had directed the bank board to consider appointing Gogia on its board.

The Kapur family also claimed that while filing her nomination, Gogia was asked to submit information that the three directors did not have to furnish. "Further, it is also clear that either the required data and information as sought for from plaintiff number 2 (Gogia) in respect of her nomination were not sought for from the said three directors," the Kapur family said.

The documents submitted to the court further claimed that it was not disclosed to shareholders of YES Bank that Srinivasan was earlier engaged as an adviser and was drawing monetary benefits from the bank. Also, the bank did not inform shareholders that Nanda was a director and a member of the audit committee of Kingfisher Airlines till September, 2011.

"The track record of Kingfisher Airlines in its dealings with the banks and financial institutions and the government is in public domain. In this regard, it is pertinent to note that the notice of the 9th annual general meeting fails to disclose the above and other material facts to the shareholders," the Kapur family said.

The Kapur family also alleged that the bank's annual general meeting (where majority of shareholders approved the appointment of the three directors) was not properly conducted. Srinivasan acted as chairman of the meeting even when the resolution concerning his own re-appointment as a director was being considered. "This is ex-facie illegal as he was interested/concerned in the resolution," they said.

The Kapur family claimed that some of the agenda items for the annual general meeting was neither proposed nor seconded by shareholders, a close friend of Rana Kapoor was appointed as one of the scrutineers and the signatures of proxies on the ballot papers were not verified by the scrutineers.

In the draft amendments, the Kapur family made the three newly appointed executive directors – Rajat Monga, Sanjay Palve and Pralay Mondal – parties to the suit.

Source : Business Standards