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This
appointment raised eyebrows
Venkatachari Jagannathan
3 April 2000
This is probably the first time in the Indian banking industry
that a court has set aside a bank chairman's appointment
as legally untenable. The dubious credit for this achievement
is earned by the Reserve Bank of India (RBI), the Chennai-based
private
sector bank, Bharat Overseas Bank Ltd (BOBL), and
its dismissed chairman and CEO, S. Srinivasan.
Recently, a two-member division bench, in an appeal by Srinivasan,
upheld the single judge's order setting aside his reappointment
as BOBL's head as void.
"It is poetic justice," reacts a beaming office
bearer of the All India Bharat Overseas Bank Employees'
Union, when asked for his opinion on the judgement. And
he has every reason to be happy, as the key officials of
the union were dismissed during Srinivasan's seven years
tenure at BOBL.
Never in the BOBL's history did the employees go on the
warpath against the bank's head, as they did during Srinivasan's
period. It may be recalled that the employees went on a
nationwide strike for a continuous period of more than 40
days during 1996. And when the issue was on the verge of
developing
into an industry-wide agitation, the centre banned the strike.
Srinivasan was appointed as chairman and CEO of BOBL initially
for a five-year period (December 1, 1992 to November
30, 1997). Subsequently, he was given a three-month
extension and later, he was re-appointed for two more years
(March 1, 1998 to February 28, 2000). For the beleaguered
union, his re-appointment under mysterious circumstances
gave the much-needed reason for protest. And now Srinivasan
is out of BOBL, with the Madras High Court ruling that his
re-appointment was not legal.
In early May, 1997, BOBL's board received a letter from
RBI, Chennai, advising the board to submit its proposals
for appointment/re-appointment of its chairman and CEO,
as Srinivasan's tenure was to expire on November 30, 1997.
The bank's board, in its meeting held on July 19, 1997,
decided to
advertise the post, inviting applications from eligible
candidates from the banking industry at large. The bank
also hired a consulting agency, Price Water House Associates
Pvt Ltd, Bangalore, for the purpose.
On August 12, 1997, an advertisement calling for applications
for the premier position in BOBL was carried by The Economic
Times. The ad stipulated that interested candidates should
be between 40-50 years of age and have at least five years
of experience at the top level in a bank.
Here, it should be noted that Srinivasan, aged 57, was having
the requisite experience but was barred by the age factor.
Nevertheless, he didn't show any interest/inclination for
applying for the position once again. Subsequently, on August
20, 1997, BOBL's board decided to relax the age limit by
five more years on the higher side, with other conditions
remaining the same. The revised ad was published by The
Economic Times on August 26,
which also stated that applications should be submitted
within 10 days of the ad.
The bank began to shortlist the applicants after that. At
this juncture, strange things started to happen. September
27, 1999, Srinivasan sent in his application, though he
was still over the age bar at the upper limit, according
to the board's decision and the ad's announcement.
Commenting on this development, the bench came down heavily
on the board's decision to accept Srinivasan's application.
The bench also came down heavily on Srinivasan for his non-participation
in the recruitment process before he decided to submit his
application. The bench also commented adversely on the manner
in which he caused the circular resolution, signed
by his private secretary, circulated amongst the bank's
board members, including his name for being interviewed
for the post on October 1, 1997.
While four of BOBL's directors gave their consent, one opposed
the resolution and two others did not indicate either one
way or other. However, the board, which met on October 4,
ratified the resolution passed earlier in the circular.
On this issue, the bench declared, "This court is of
the considered opinion that the appellant, by being cause
for sending the circular resolution for approval touching
his own application for re-appointment, has disentitled
himself by such conduct to be considered for the said post."
On the question of Srinivasan's style of functioning and
financial
irregularities about which RBI has received complaints and
made some investigations, the bench said, "We are not
for a moment holding or coming to the conclusion that the
appellant is guilty of
certain irregularities in approving the credit proposals.
But we would like to point out two aspects of the matter:
1. All complaints were not investigated against the appellant
2. There was some evidence against the appellant with reference
to those complaints but not sufficient enough to come to
a definite conclusion."
The bench went on to declare that RBI and Srinivasan gave
a go-by to all norms and procedures with respect to the
selection of BOBL's head. Denying Srinivasan's prayer to
allow him to continue in the position till February 29,
2000 -- the date on which his disputed term ended -- the
bench directed RBI and BOBL to relieve him immediately.
The latest heard on the issue is that the employee union
is consulting
legal experts on the validity of BOBL settling Srinvasan's
dues, as the High Court has ruled that his re-appointment
as chairman and CEO was held void.
List
of reports Bharat Overseas Bank
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