Kathmandu, November 29

The Patan High Court has refused to issue a stay order on the case filed by Usha Pandey Karki of Mutual Trading Company, one of the promoters of Himalayan Bank Ltd (HBL), seeking an interim order from the court against the decision regarding the appointment of the bank’s board of directors.

Karki had filed a case against Chairman of Himalayan Bank Manoj Bahadur Shrestha, CEO Ashoke Shumsher Rana and the Office of the Company Registrar citing the anomalies in the appointment of board of directors. She had mentioned that one of the major promoters of the bank had been denied the opportunity to represent the board.

A joint bench of Judges Shekhar Paudel and Nita Dixit Gautam today refused to issue a stay order after recording the testimonies of the plaintiff and the defendants. “The case will move ahead for final proceedings, but it will not bar Himalayan Bank from making decisions for its operation,” Dhruba Kumar Upreti, deputy registrar of Patan High Court told The Himalayan Times.

The court, on November 17, had decided to summon both the plaintiff and defendants today and had also barred Himalayan Bank from making any decision until the court had summoned and recorded the testimonies of both sides. The next hearing on the case is yet to be scheduled, according to Upreti.

Since the Banks and Financial Institutions Act (BAFIA) came into enforcement, banks and financial institutions need to bring down the number of board members from up to seven to five. The dispute came to light as Mutual Trading Company, promoted by one of the prominent corporate giants — Khetan Group — was excluded from the board despite having 11.85 per cent stake in promoter shares.

However, current Chairman Shrestha and his brother Prachanda Bahadur Shrestha are both representing the board and their companies hold 11.38 and 8.89 per cent of promoter shares, respectively.

A close aide of Prem Prakash Khetan — owner of Mutual Trading — who did not want to be named, said that they had advised the bank to appoint only one from the Shrestha family — either Manoj or Prachanda. However, Company Secretary of Himalayan Bank, Bipin Hada, had written to Mutual Trading stating the board of directors meeting had decided against appointing the director recommended by the company and prmoted by Khetan citing the content of Nepal Rastra Bank’s circular to bring down number of board members.

As per BAFIA, the chairman and CEO cannot hold their positions for more than two terms of four years each. However, Manoj Bahadur Shrestha has been serving as the chairman of the bank since the last 12 years. BAFIA has introduced the provision of two terms for chairman and CEO to ensure strong governance in the BFIs.

The aide further informed that they have also written to the Office of the Company Registrar and Securities Board of Nepal to instruct the bank to call for a special general meeting to resolve the issue of appointment of board of directors. The letter, however, has not generated any response from either of the government agencies. The plaintiff, Mutual Trading, has also made the Office of the Company Registrar a defendant in this case.