The Kerala High Court on September 29 passed an interim order directing Dhanlaxmi Bank to refrain from concluding the Annual General Meeting (AGM) scheduled for today. Former directors had moved the High Court seeking judicial intervention to direct the Bank to place their candidature for the directorship of the Bank in the AGM of the Bank.
Moneycontrol has a copy of the order.
The petitioners are K M Madhusoodanan, P Mohanan and Prakash D L. The petitioners also sought direction for the bank to refrain from conducting the AGM scheduled on September 29.
The court, however, said the order will not preclude the bank from transacting the businesses included in the agenda for the meeting. “Needless to say that after transacting the businesses included in the agenda for the meeting, the meeting shall be adjourned to a day after one month,” the order said.
Also, the Bank would be free to issue appropriate communication to the Securities and Exchange Board of India concerning the businesses transacted in the AGM, the order said.
When contacted, Dhanlaxmi Bank MD&CEO Shivan JK refused to comment on this story. “The MD said he doesn’t want to comment,” said the secretary to Shivan.
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 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.