Former Managing Director and CEO of ICICI Bank, Chanda Kochhar’s case is now in the Bombay High Court where her former employer has moved court seeking intervention in the ‘clawback’ of incentives and bonuses paid to her during the period 2016 to 2018.
The term ‘clawback’ is being described as the process by which amounts already paid to an employee based on performance etc. can be recovered by the employer if the employee has been found to have indulged in acts of misconduct. There are cases where declining profits can also be cited for such ‘clawbacks’.
In the case of Chanda Kochhar, she submitted her resignation from the post of Managing Director and CEO of ICICI Bank in October 2018. Later, in December, in March 2019, ICICI Bank dismissed her from her services after seeking RBI’s approval. The dismissal order said it becomes effective from the day she was relieved, October 4, 2018. Chanda Kochhar then went to court against this action claiming that once she had resigned, her dismissal after the passage of several months was illegal. RBI was also asked to explain its action in approving the dismissal of Kochhar, which it did.
The present case has been filed by ICICI Bank which says that Chanda Kochhar had signed a claw back agreement in 2016 which inter alia states that in the event of gross negligence or an integrity breach by Kochhar, while acting as the MD and CEO of the bank, the amounts paid to her as variable pay etc. are recoverable by the bank.
The misconduct being referred here is the allegation that a committee headed by her had sanctioned loans worth Rs 3,250 crore to the Videocon Group. Chanda Kochhar’s husband Deepak Kochhar is reported to have benefitted from this loan. The loan is being described as ‘out of turn’ and there are investigations by the Enforcement Directorate on this case.
The case filed by ICICI Bank in Bombay High Court is limited to seeking the approval of the Bombay High Court to the dismissal of Chanda Kochhar and to the recovery of the amounts paid to her during the 2016-2018 period.
The Court has now asked the lawyer to Kochhar to study the petition and come up with the response and fixed the next hearing for January 20, 2020.