In a startling development, the Bombay High Court has pronounced the arrest of Chanda Kochhar, the former CEO and Managing Director of ICICI Bank, and her husband, Deepak Kochhar, as “unlawful”. The duo was detained by the Central Bureau of Investigation (CBI) in relation to the ICICI Bank-Videocon loan case.
The Kochhars were arrested on December 23, 2022. The CBI leveled accusations against ICICI Bank of sanctioning credit facilities totaling ₹3,250 crore to Videocon Group companies, in contravention of banking regulations, RBI guidelines, and the bank’s own credit policy. The CBI also claimed that a committee led by Chanda Kochhar had approved a term loan for Videocon International Electronics Ltd., in violation of the bank’s rules.
Detailed Accusations
The central agency asserted that ICICI Bank, under the helm of Chanda Kochhar, sanctioned credit facilities amounting to Rs 3,250 crore to Videocon Group companies promoted by Dhoot, in violation of the Banking Regulation Act, Reserve Bank of India guidelines, and the bank’s credit policy.
The CBI named Chanda Kochhar, Deepak Kochhar, Dhoot, along with Nupower Renewables (NRL), managed by Deepak Kochhar, Supreme Energy, Videocon International Electronics Ltd, and Videocon Industries Ltd as accused in the FIR filed in 2019 under Indian Penal Code sections related to criminal conspiracy and provisions of the Prevention of Corruption Act. It further alleged that Dhoot, as part of a quid pro quo, invested Rs 64 crore in Nupower Renewables through Supreme Energy Pvt Ltd (SEPL), and transferred SEPL to Pinnacle Energy Trust managed by Deepak Kochhar via a roundabout route between 2010 and 2012.
Venugopal Dhoot is a well-known figure in the Indian business landscape, hailing from the bustling city of Mumbai. He is the driving force behind Videocon, a multinational conglomerate that he founded and where he serves as the chairman and managing director. In 2015, Forbes magazine listed him as the 61st richest person in India with a wealth of $1.19 billion. An electrical engineering graduate, Dhoot has been instrumental in expanding Videocon’s footprint beyond India, establishing manufacturing plants in countries like Mexico, China, Italy, and Poland.
Court’s Viewpoint and Ripple Effects
The Bombay High Court labeled the arrest as “unlawful” and upheld a January 2023 interim order that granted bail to the couple shortly after their arrest. The court expressed its criticism of the CBI’s “casual and mechanical” approach to the arrest and the lack of due diligence. The court also acknowledged Kochhar’s cooperation with the central agency.
In the aftermath of the court’s decision, the Kochhars were released on bail. The Supreme Court urged the high court to expedite the hearing, noting the multiple extensions of bail. The CBI, however, argued that the interim order only took into account the arrest memo and did not include the case diary and remand application.
ICICI Bank’s Trust Crisis
The ICICI Bank-Videocon loan case has significantly dented ICICI Bank’s reputation. The bank, once a beacon of trust, has been under intense scrutiny since the allegations surfaced. The case has raised serious questions about the bank’s governance and internal controls. Despite the bank’s assertion of “no wrongful loss”, the reputational damage has been substantial. The bank’s former CEO, Chanda Kochhar, was found to have violated the bank’s Code of Conduct, leading to a withdrawal of her bonuses since 2009. The case has underscored the importance of strong internal controls and good governance, likely prompting the bank to invest heavily in damage control and system improvements.
Lessons Learnt
This case has underscored the importance of due process and the necessity to adhere to legal procedures during arrests. The court’s decision highlights the need for law enforcement agencies to exercise caution and diligence in the execution of their duties. As the case continues to unfold, the CBI is expected to present additional evidence to substantiate their allegations.
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