Retain Gurumani on board, HC orders SKS Micro
09 Oct 2010
Holding that the sacking of SKS Microfinance managing director and chief executive officer Suresh Gurumani earlier this week was not in accordance with the law, Justice G Bhavani Prasad of the Andhra Pradesh High Court on Friday directed the company to retain Gurumani on its board of directors till further orders. (See: SKS Microfinance sacks Gurumani )
The court also restrained new managing director M R Rao from taking any policy decision for the time being.
Justice Prasad passed this interim order while hearing a petition filed by some shareholders of the company. They had approached the court contending that the decision to sack Gurumani was not in the interest of the company's shareholders.
The petitioners told the court that they had invested in the company because of Gurumani and his track record in the banking sector. ''Gurumani was unanimously chosen and appointed by the shareholders of the company and only they have the right to sack him and not the management,'' the counsel for the petitioners argued.
''The company generated confidence in us by showing Gurumani at the helm and went for a public issue. Once the public issue was successful, the management is misleading investors (sic),'' the counsel for the petitioners argued. The petitioners also argued that after the company raised money from investors through its public issue, the management was paying scant regard to procedures.
The Hyderabad-based SKS, founded by Vikram Akula in 1998, had hired Gurumani two years ago and recently became the first Indian microfinance player to go public. But within two months of its successful IPO early this month, which saw the company raising over Rs1,600 crore, sacked him. Under the conditions of his appointment, Gurumani still had four years left in his tenure.
While sacking Gurumani, SKS had in a notice to BSE said its board of directors had terminated Gurumani's contract with the microfinance company. The company had, however, clarified that it did not terminate the services of Gurumani because of any financial irregularity.