A fierce tug of war is currently on for Board seats at Kerala-based private sector lender, Dhanlaxmi Bank, with some former directors moving the Kerala High Court seeking representation on the bank’s Board.
The petitioners allege that their applications for Board seats were rejected despite the nomination committee clearing the proposal, including the reappointment of prominent investor Ravi Pillai.
The petition seeks to have Dhanlaxmi Bank and the board inform members of the general body meeting on the candidature of the petitioners for the office of Director, as mandated under Section 160(2) of the Companies Act.
The writ petition has been filed by KN Madhusoodanan, P Mohanan and Prakash DL against the Reserve Bank of India (RBI), Dhanlaxmi Bank and its board of directors.
The board directors include CEO Shivan JK, CK Gopinath, Suseela Menon, Subramania Iyer, G Rajagopalan Nair and the nomination and remuneration committee of Dhanlaxmi Bank.
The petitioners and other former directors, including prominent investor Ravi Pillai and PK Vjayakumar, had sought Board seats. The nomination committee is understood to have cleared their names. However, the Board did not approve the appointments, leading the petitioners to move court.
“If any change has occurred after the said recommendation in the director Board meeting, it can only be because of the undue influence exerted by the additional directors, who are nominees of the 1st respondent (the RBI),” says the petition.
Dhanlaxmi Bank comprises four non-executive directors, two additional directors (RBI nominees) and the managing director. The petitioners have alleged that though the nomination committee has recommended the names of three persons — Ravi Pillai and others — the application was rejected.
On September 9, the petitioners, along with B Ravi Pillai and PK Vijayakumar, had submitted their applications and relevant forms under Section 160 of the Companies Act, 2013, to be placed before the members during the AGM (annual general meeting) to be held on September 29.
However, the Board of Directors, in a letter dated September 20 “arbitrarily rejected the applications of all five Candidates,” the petition says.
Moneycontrol has a copy of the petition.
The petitioners have further argued that they are eligible as per the ’fit and proper’ criteria issued by the RBI.
Pillai is one of two major shareholders owning close to 10 percent each in the Thrissur-headquartered bank. CK Gopinathan, the other prominent investor, holds a little less than 10 percent along with two of his family members.
On July 20, Moneycontrol had reported on Pillai’s plan to rejoin Dhanlaxmi Bank’s Board.
Pillai was on the board of Dhanlaxmi Bank till May 2020 but had to exit on turning 70, the RBI-set age limit for directors. On April 26, 2021, the RBI issued a notification that raised the age limit for non-executive directors, including the chair of the board, to 75.
Pillai is the chairman of RP Group, which runs 12 companies. According to the company’s website, the group has executed projects worth over $20 billion in the last 10 years. Its activities include construction and infrastructure, real estate development, hotels and hospitality, healthcare and wellness, education, information technology, trading and retail, according to the website.
“Pillai can join as a board director at any time now since the RBI has changed rules. He was a director for many years and had to leave after he attained the age of 70 due to the RBI age limits. Now, that hurdle is gone,” said a board member on condition of anonymity.
Other shareholders of Dhanlaxmi Bank include MA Yussuffali (5 percent) and Kapil Wadhawan (5 percent). P Raja Mohan Rao (2.44 percent), Shital Raghu Kataria (2.63 percent) and Vespera Fund (4.43 percent) are among the other investors.
In the recent past, Dhanlaxmi Bank had witnessed a series of changes at the top, including the appointment of JK Sivan as managing director and CEO in place of Sunil Gurbaxani, who was ousted by shareholders in September 2020. Sivan is an SBI veteran with over three-and-a-half decades of experience as a banker.