JUDGMENT : Sunil Ambwani, J. The Petitioner was appointed as a Class III employee in the U.P. State Handloom Corporation Limited (in short, the Corporation). In the year 1991 he was posted as Store Keeper at Kendriya Vastragar, Production Centre, Mallawan, District Hardoi. A charge sheet dated 11.1.1995 was served upon him ; imputing charges, of financial irregularities, and alleging that in the year 1991-92 a quantity of goods, namely 9550, pairs of cloths which were transported from the Godown, to the M/s Govind Calendering Company were not duly received by the Calendering Company, and that the receipt submitted by Petitioner was forged document, causing a loss of Rs. 5,42,925 to the Corporation. The then Managing Director of the Corporation placed him under suspension. The disciplinary enquiry was concluded with the finding that Petitioner was guilty of causing financial loss of Rs. 4.43 lacs to the Corporation in collusion with the proprietor of the calendering plant. 2. A second show cause notice dated 17.8.1998 was served upon Petitioner, proposing to impose major penalty. Petitioner submitted his reply dated 5.2.2001 enclosing therewith chalans/bills of the goods, which were duly received at the head office under the receipt, and requested to be exonerated. The Managing Director of the Corporation by his order dated 1.12.2001 did not accept Petitioner's explanation and directed the Petitioner to be dismissed from service. 3. The Petitioner preferred a departmental appeal under Rules 68.18 of the Service Rules applicable to the employees of the Corporation. The Chairman/Appellate Authority by his order dated 18.3.2002 allowed the appeal. The Chairman found that the goods were transported by a recognised transporter. The calendering company had acknowledged the receipt of the goods. Subsequently the calendering company wrote a letter dated 28.3.1994 denying receipt of goods and claimed that the receipts issued by the calendering company were forged. The owner/proprietor or any person from the calendering company did not appear during the enquiry proceedings. A number of dates were fixed but no one from the calendering company came to prove the letter dated 28.3.1994, and that there was no material brought on record to prove complicity between Petitioner and the calendering company. The Chairman found that charges were not established and that the Petitioner had not received any benefit either directly or indirectly and had no intention to cause loss to the Corporation. The Chairman found that charges were not established and that the Petitioner had not received any benefit either directly or indirectly and had no intention to cause loss to the Corporation. The appellate authority directed the Petitioner to be reinstated with all consequential service benefits. 4. The Managing Director of the Corporation refused to implement the Appellate Order on the ground that by the Government Order No. 11958/ 18301, dated 3.5.2001, the Chairman was stripped of the appellate powers. The Petitioner has prayed for quashing the order dated 23.4.2002, passed by the Managing Director and for reinstating Petitioner in service with all consequential benefits. 5. I have heard Sri. H.R. Misra for Petitioner and Sri. Shiv Nath Singh for Respondent corporation. 6. Counsel for the Petitioner submits that under Rule 68.18 a departmental appeal lies to the authority next higher in rank to the original authority. The authority next higher to the Managing Director, is the Board of Directors. By resolution No. 109.4 in the 109th meeting of the Board of Directors of the Corporation dated 30.6.1997, the Board had vide resolution No. 108.13, authorised/delegated the power to the Chairman, for disposal of appeals filed by the delinquent employees against the punishment imposed by the Managing Director to the Chairman of the Corporation. The State Government does not have the power or authority to cancel the resolutions of the Board of Directors of the Corporation. The Corporation is registered as Company under the Companies Act, 1956 and its business is regulated by the Memorandum and Articles of Association. Under the service Rules, the authority next higher in rank to the Managing Director is the Board of Directors and that the Board can authorise any officer, not lower than the Managing Director to decide the appeals. The Board of Directors had not authorised any officer who was so indicated in the service rules to decide the appeals. In any case the Government Order provided to cancel all the authorisations where the authority other than the authority indicated in the rules was authorised by the Board of Directors to decide the matters. In the alternative, Sri. Misra submits that the Board had adopted, the order of the State Government that the Articles to reconsider the same, on 17.7.2002. In any case the Government Order provided to cancel all the authorisations where the authority other than the authority indicated in the rules was authorised by the Board of Directors to decide the matters. In the alternative, Sri. Misra submits that the Board had adopted, the order of the State Government that the Articles to reconsider the same, on 17.7.2002. By that time the appeal was allowed and thus the resolution of the Board of Directors dated 17.7.2002 will not make the appellate order in operative or without jurisdiction. His last submission is that in any case, the Board was required to reconsider the appeal or to rectify the decision of the Chairman and that the appellate order cannot be made inoperative by the disciplinary authority. 7. Sri. Shiv Nath Singh, on the other hand, submits that the Chairman had no authority to decide the appeal. The State Government has both administrative and financial control, over the affairs of the Corporation which is an instrumentality of the State and that the State Government was authorised to cancel all authorisation and delegations. The Government Order was issued on 3.5.2001 cancelling the authorisation of the Chairman, and thus the Chairman had no power and authority left to decide the appeal. He further relies upon a resolution of Board of Directors dated 23.7.2001 filed along with supplementary affidavit of Shri Anil Verma, Office Superintendent in the Corporation by which the Board of Directors (by resolution No. 120-121) decided to request State Government to reconsider the matter and decided to implement the Government Order dated 3.5.2001 until a clear direction is received from the State Government. According to Sri. Shiv Nath Singh, the Government Order dated 3.5.2001 was adopted by the Board of Directors on 23.7.2001, and thus the Chairman was not competent to decide the appeal. 8. The Corporation was incorporated and registered as U.P. State Handloom and Power Loom Finance and Development Corporation Ltd. The name of the company was changed as U.P. State Handloom Corporation Ltd. vide the certificate of the Register of the Companies dated 20.12.1977. 8. The Corporation was incorporated and registered as U.P. State Handloom and Power Loom Finance and Development Corporation Ltd. The name of the company was changed as U.P. State Handloom Corporation Ltd. vide the certificate of the Register of the Companies dated 20.12.1977. The Article of the Association of the Corporation defines the Chairman under Articles 130 and 131 as follows: 130(a) Subject to the provisions of the Act, the Board shall, from time to time with the concurrence of the Government of Uttar Pradesh appoint any of the Directors to be the Chairman or the same Director as the Chairman Managing Director of the Company. (b) Subject to the provisions of Section 255 of the Act, and the superintendence, control and direction of the Board the Chairman shall exercise sub-powers and carry out such duties as may be conferred or imposed upon him by a resolution or resolutions of the Board passed in that behalf. 131. Subject to the provisions of the Act, the Chairman of the Board shall be subject to the same provisions as to removal, etc., as the other Director appointed by the Governor of Uttar Pradesh and he shall ipso facto and immediately cease to be the Chairman, if he cease to hold the office of Director from any cause. 9. Article 132 provides for the management of the Corporation. Its business and affairs are to be carried out by the Managing Director subject to the control and superintending of the Board. Article 133, provides, that the Board shall from time to time with the concurrence of the Governor of Uttar Pradesh where the same person is appointed as Chairman-cum-Managing Director under Article 130(A), appoint any of the Directors to be the Managing Director of the company. The Corporation is a Government (public) Company as defined in Section 617 of the Companies Act, 1956. The share capital of the company is owned by the State Government and that all its Directors at the time of incorporation were the Officers and Secretaries of the State Government. The Corporation is a Government (public) Company as defined in Section 617 of the Companies Act, 1956. The share capital of the company is owned by the State Government and that all its Directors at the time of incorporation were the Officers and Secretaries of the State Government. Article 203 of the Articles of Association, provides that the Governor of Uttar Pradesh, keeping with the statutory requirements of the Companies Act, may from time to time issue directives to the company as to the exercise and performance of its functions in matters involving the National Security and Special Public Interest, and such other directives as he may consider necessary in regard to finance and the conduct of the business and affair of the company and in the like manner may vary and annul any such directive(s). The Company shall give immediate effect to the directive(s) so issued the Governor. Sub-clause (2), provides that the Governor of Uttar Pradesh may call for such returns accounts and other information with respect to the properties and activities of the company as may be required by him from time to time. 10. The business and affairs of the company is to be carried out by the Managing Director under the control and supervision of the Board. The Service Rules applicable to the officers and staff of the corporation have been made by the Board of Directors in exercise of the powers conferred on it by Clause (ix) of Article 127 of Articles of the Association. Rule 68 provides for disciplinary proceedings. In the present case the disciplinary authority is the Managing Director and an appeal under Rule 68.18 lies to the authority next higher in rank to the original authority. Under the Articles of Association the next higher authority to the Managing Director is the Board of Directors. By resolution dated 30.6.1997, the Board of Directors authorised the Chairman to decide the appeals against the punishment orders awarding punishments to the delinquent officers. 11. The Government order dated 3.5.2001 was not issued or directed in respect of U.P. Handloom Corporation. It was issued to all the Corporations under the Commissioner of Industrial Development. By resolution dated 30.6.1997, the Board of Directors authorised the Chairman to decide the appeals against the punishment orders awarding punishments to the delinquent officers. 11. The Government order dated 3.5.2001 was not issued or directed in respect of U.P. Handloom Corporation. It was issued to all the Corporations under the Commissioner of Industrial Development. The Government Order took notice of the facts that the Board of Directors of these Corporations have delegated the powers to the Committees of the Board, Chairman and Managing Directors, but the extent and scope of powers of these delegated authorities have not been specified. In the absence of clearly defined position, with regard to their powers, doubtful situations have arisen. The State Government felt that in order to carry out the financial and administrative affairs there should be uniformity in the matter of delegation of the powers to the Board and the Managing Directors. With regard to the service rules it was found that the Corporations have a set of rules and there are well defined powers, but on account of resolutions passed by the Board of Directors some other levels have been authorised to exercise these powers, causing unnecessary litigation and interim orders are being passed, and in these circumstances, the State Government conveyed the decision of the Governor, that with regard to service matters of the employees the delegation of powers given to the Board of Directors and other authorities shall be cancelled and as a consequence the service matters of the employees of the Corporations shall be decided only by the competent officers so appointed under the rules and that all the delegation made by the Board of Directors shall stand cancelled. 12. The Board of Directors of the Corporation vide its resolution dated 23.7.2001 considered the matter and decided to request the State Government to reconsider its decision on the ground that a number of practical difficulties will arise in implementing the Government Orders. It was resolved that until the matter is clarified the Government Order dated 3.5.2001, may be implemented in the Corporation. The Managing Director of the Corporation, in pursuance of the aforesaid resolution dated 23.7.2001 of the Board of Directors, and the Government Order dated 3.5.2001 decided not to implement the appellate decisions of the Chairman. It was resolved that until the matter is clarified the Government Order dated 3.5.2001, may be implemented in the Corporation. The Managing Director of the Corporation, in pursuance of the aforesaid resolution dated 23.7.2001 of the Board of Directors, and the Government Order dated 3.5.2001 decided not to implement the appellate decisions of the Chairman. This matter was brought to the notice of the Board of Directors in its meeting dated 17.7.2002 and that by a resolution No. 122.22 the Board of Directors approved the decision of the Managing Director in respect of the decisions taken by the then Chairman on the appeals. 13. The State Government found that in many Corporations the Board of Directors have authorised the officers other than the officers authorised in the service rules to decide the matters. The State Government was concerned with only those matters where the Board of Directors had given authority by delegating powers to Committees and officers, other than those indicated in the service rules, and had cancelled only such authorisations. The last paragraph of the Government Order makes it absolutely clear that only those authorisations were cancelled where the Board of Directors had authorised the officers other than the competent officers indicated in the service rules. In the present case, Rules 66.18 of the service rules made by the Corporation did not indicate any specific authority. An appeal under Rule 66.18 lies to the authority next higher in rank to the original authority. The authority next higher in the rank in the present case was the Board of Directors. It could either exercise the appellate powers by itself, or authorise an officer to exercise these powers. Since the disciplinary authority was the Managing Director, it was obvious that the authorisation should have been given to an officer higher than the Managing Director and thus the authorisation was rightly given to the Chairman. The Counsel for the Corporation has not brought to my notice any Rule or other resolution which may have authorised any officers other than the Chairman to decide the appeals arise out of disciplinary matters. In the circumstances, it cannot be said that the Board of Directors had authorised any officers to decide the appeal other than the one who was so indicated in the service rules. The Government Order dated 3.5.2001 was, therefore, not applicable in the matter of deciding appeals in the Corporations. 14. In the circumstances, it cannot be said that the Board of Directors had authorised any officers to decide the appeal other than the one who was so indicated in the service rules. The Government Order dated 3.5.2001 was, therefore, not applicable in the matter of deciding appeals in the Corporations. 14. The Corporation rightly understood this situation and while making the representation to the State Government decided to implement the Government Order. The Board of Directors did not cancel the authorization of the Chairman and simply decided to follow the Government Order dated 3.5.2001. Counsel for Respondent has pointed out that under Article 203 of the Articles of Association, the Governor of Uttar Pradesh has a right to vary and annul any of the directives, of the company so as to the exercise and the performance of its functions in the matter involving the National Security or substantial public interest and such other directions as he may consider necessary in regard to the business and the conduct of business and affairs of the company. Firstly, the direction given by the Governor was not with regard to any of these matters and secondly the Board of Directors of the company through which the company's acts did not pass any resolution to annul the resolution dated 30.6.1997 or to modify it or substitute the authority of the Chairman by any other authority. The delegation of the powers to the Chairman, to decide appeal in disciplinary matters could not be cancelled by the Government Order dated 3.5.2001, by reference. The State Government does not have such authority either under the Articles of Association of the Corporation or under the Service Rules. The Board of Directors rightly understood the meaning and import of Government Order dated 3.5.2001 and decided to follow it. As a result thereof the Chairman rightly continued to be the Appellate Authority in the disciplinary matters against the officers and employees of the Corporation. 15. For the aforesaid reasons, I find that the Chairman had the power and authorisation to decide the disciplinary appeal and that since he had by his order dated 18.3.2002 set aside the order of the Managing Director of the Corporation dated 1.12.2001, dismissing the Petitioner from service, the Managing Director could not have ignored his order and refused to implement it. 16. The writ petition is allowed. 16. The writ petition is allowed. The order of the Managing Director dated 23.4.2002 Annexure-7 to the writ petition is set aside. A writ of mandamus is issued to the Respondent to reinstate Petitioner in service with all consequential benefits. Petitioner shall be entitled to the costs of the writ petition.