In a fresh turn of events, Spandana Sphoorty’s founder and former managing director Padmaja Reddy has moved court seeking reinstatement as the head of the NBFC-MFI while the company announced the appointment of Shalabh Saxena for the position.

Separately, IndusInd Bank has not released Saxena from the position of MD at its wholly owned microfinance subsidiary Bharat Financial Inclusion (BFIL), two people familiar with the matter told ET.

“He is now technically in dual employment, which is not allowed. IndusInd Bank may take action on him if the bank wishes to,” said one of them cited above.

In her legal suit against Spandana Sphoorty and its directors, Reddy challenged their actions in coercing and forcing her to resign as the managing director through threats and intimidation, and sought recovery “for the enormous amount of loss suffered due to the actions of the defendants”. The suit termed the appointment of Saxena illegal and in violation of her employment agreement and the Articles of Association.

The suit was filed on March 8, 2022, before the special court for trial and disposal of commercial disputes at Hyderabad, according to people in the know.

Spandana called a board meeting on March 18 and announced the appointments of Saxena as MD and Ashish Damani as chief financial officer for five years with effect from March 19.

Damani, the CFO at Bharat Financial Inclusion, is yet to get a release from his current employer.

IndusInd Bank did not respond to ET’s mail seeking comments on the matter. “Shalabh Saxena has served the notice period with his previous employer,” Spandana said, responding to ET’s queries.

Sources close to the development said that the court will hear the case on March 24.

According to the legal suit filed before the court, the employment offer to Saxena was in contravention of a specific clause of Spandana’s employment agreement with Reddy that “no offer, equivalent or higher either in ranking or compensation, can be made to anybody during the tenure of the employment agreement.”

“Padmaja Reedy resigned as CEO of her own accord on November 2, 2021, and we duly informed the stock exchanges,” Spandana said in its response on behalf of the company’s board. Reddy continues to serve on the board because of her 15% holding in the company.

The board had entered into an employment agreement with Reddy on May 17, 2019 for three years. Reddy resigned from her position on November 2 following differences with Kedaara Capital on its plan to sell the company to Axis Bank at a “throwaway price.”

The Kedaara group holds 47% in the company.

Spandana had announced Saxena and Damani as its future MD and CFO, respectively, immediately after Reddy’s resignation. They are currently employed with BFIL. IndusInd held back their release as both of them were facing a probe after a whistleblower alleged evergreening of loans by the company. Deloitte, which conducted an external audit on the matter, said that the disbursement of loans without recording of client consent was due to technical glitch and a result of IT change management and process gap.