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2007 DIGILAW 1988 (PNJ)

P. C. Dewan v. State Of Haryana

2007-11-15

PERMOD KOHLI

body2007
Judgment Permod Kohli, J. 1. The petitioner was serving as an Engineer-in-Chief of Uttar Haryana Bijli Vitran Nigam Limited (hereinafter referred to as `the UHBVNL). State Government vide its order dated 31.8.1999 (Annexure P-1) appointed him as Director (Administration) on the Board of Directors of the UHBVNL with immediate effect. This appointment was made in exercise of the powers under Articles 30 and 31 of the Articles of Association of the UHBVNL. Vide a subsequent order dated 7.9.1999 (Annexure P-2), the petitioner was allowed the benefits with effect from 2.4.1999. Thereafter another order dated 9.9.1999 (Annexure P-3) came to be issued by the Managing Director, UHBVNL, Panchkula whereunder the post of General Manager (HR & Admn.) which was earlier held by the petitioner, was upgraded to that of the Director (Administration). This order also contains stipulation that after retirement of Shri P.C. Dewan (petitioner), the post of General Manager (HR & Admn.) be revived again. Petitioner was allowed to continue to look after all the matters relating to administration which he looked after as General Manager (HR & Admn.). While the petitioner was functioning and performing his duty as Director (Administration) with UHBVNL, the State Government issued the impugned order dated 27.12.1999 (Annexure P-4) removing the petitioner from the post of Director (Administration), UHBVNL with effect from 31.12.1999 (A.N.) on his retirement as Engineer-in-Chief on attaining the age of superannuation i.e. 58 years. Another communication dated 29.12.1999 (Annexure P-5) was issued by the Financial Commissioner & Secretary to Government, Haryana, Power Department addressed to the Managing Director, UHBVNL with a copy to the petitioner notifying terms and conditions of petitioners appointment as Director (Administration), UHBVNL, Panchkula. For the purposes of present petition, Clause (1) of the terms and conditions is relevant which is reproduced hereunder :- "1. Period of (sicc) With effect from 2.4.1999 till further appointment orders or his date of superannuation in his parent cadre, whichever is earlier." In terms of the aforesaid Clause, the period of appointment of the petitioner is indicated as with effect from 2.4.1999 till further appointment orders or his date of superannuation in his parent cadre, whichever is earlier. 2. Aggrieved of his removal, the petitioner filed representation dated 3.1.2000 (Annexure P-6) and thereafter with petition i.e. CWP No. 3507 of 2000. 2. Aggrieved of his removal, the petitioner filed representation dated 3.1.2000 (Annexure P-6) and thereafter with petition i.e. CWP No. 3507 of 2000. This petition came up for consideration before a Division Bench of this Court and the Honble Division Bench passed the following order on 31.3.2000 :- "Present : Shri P.C. Dewan, petitioner in person At the commencement of the hearing the petitioner requested that he may be allowed to withdraw this petition to approach the Government for grant of relief and to file fresh petition if it becomes necessary to do so. We accept the request of the petitioner and dismiss the writ petition with liberty in terms of the prayer made. March 31, 2000 Sd/- G.S. Singhvi, Judge Sd/- Iqbal Singh, Judge" As a consequence of the aforesaid order of the Honble Division Bench of this Court, the petitioner filed representation (Annexure P-8) and also relied upon his earlier representation dated 3.1.2000 (Annexure P-6). State Government considered the representation and passed the order dated 11.5.2000 rejecting his representation. On rejection of his representation vide order dated 11.5.2000 passed by the Financial Commissioner & Secretary to Govt. Haryana Power Department, Chandigarh (Annexure P-9), the petitioner filed a Review Application on 8.6.2000 (Annexure P-10) before the said Financial Commissioner & Secretary. The petitioner also approached the Joint Secretary, Department of Company Affairs, Ministry of Law, Justice and Company Affairs, New Delhi by his representation dated 29.5.2001 (Annexure P-13). Thereafter the present writ petition has been filed. 3. In the present writ petition, the petitioner has sought to challenge the order dated 27.12.1999 (Annexure P-4) removing him from the post of Director (Administration), UHBVNL and order dated 29.12.1999 (Annexure P-5) wherein terms and conditions of the appointment of the petitioner have been notified and his tenure has been fixed from 2.4.1999 till further appointment orders or his date of superannuation in his parent cadre, whichever is earlier. He has further sought a direction to treat him as Director (Administration) for a period of two years upto 1.4.2001 and claimed service benefits as also retiral benefits attached to the post of Director (Administration). While assailing the order of removal, the petitioner has placed reliance upto the Articles of Association of the respondents-Company. Extracts relevant for the purposes of this writ petition of various Articles of Association are reproduced hereunder :- "31(1). The Government shall appoint the Board of Directors. While assailing the order of removal, the petitioner has placed reliance upto the Articles of Association of the respondents-Company. Extracts relevant for the purposes of this writ petition of various Articles of Association are reproduced hereunder :- "31(1). The Government shall appoint the Board of Directors. The Directors (including the Chairman/Chairman-cum-Managing-cum-Director and the Managing Director) shall be paid salary and/or allowances as the Govt. may from time to time determine. 32(2). The Government may from time to time appoint a Chairman/Chairperson- cum-Managing Director, Managing Director and other Whole Time Directors/Directors on such terms and remuneration (whether by way of salary or otherwise) as it may think fit. The minimum term of these appointments will be for period of two years.... 31(3). All the Directors of the Company except the Chairman/Chairman-cum- Managing Director/Managing Director, Whole Time Directors and the Government representatives on the Board of Directors shall, unless otherwise specified in their order of appointment, retire at the end of three year from the date of their appointment. The Directors so retired, will be eligible for re- appointment. 31(4). Subject to the provisions of the Act, the Government shall have the right to remove the Chairman, Chairman-cum-Managing Director/Managing Director, Whole Time Director or the directors for any reasons whatsoever and shall have the right to fill in any vacancy in the office of the Chairman/Chairman-cum-Managing Director, Managing Director Whole Time Director or the directors caused by removal, resignations, death or otherwise. 31(5). Subject to the provisions of Section 292 of the Companies Act, the Board of Directors may, from time to time, entrust and confer upon the Managing Director for the time being such of the powers as they may think fit and may confer such powers for purposes and with such restrictions as they may think expedient and may, from time to time, revoke, withdraw, alter or vary all or any of such powers." While referring to Articles 31(1) & 31(2), it has been pointed out that the minimum tenure of a Director appointed by the Government is two years, and thus, premature removal of the petitioner is illegal and unwarranted. The impugned order of removal is further challenged on the ground that it is in violation of the principle of natural justice as it is stigmatic and punitive in nature. The impugned order of removal is further challenged on the ground that it is in violation of the principle of natural justice as it is stigmatic and punitive in nature. As far as challenge to the order dated 29.12.1999 laying down the terms and conditions of appointment are concerned, it has been stated that the respondents took a decision to remove the petitioner from service on 27.9.1999 and with a view to justify the said order, this order specifying the terms and conditions has been issued with mala fide intention. It has also been urged that in view of the specific provisions of Article 31(2) specifying the minimum term of appointment, the respondents are not entitled to fix the tenure of the petitioner less than two years or remove him prematurely prior to the expiry of the specified period. 4. Mr. Sidhu, DAG, Haryana, however, defended the impugned orders by referring to orders dated 9.9.1999 (Annexure P-3) whereby the post of General Manager (HR & Admn.) earlier held by the petitioner was upgraded to that of Director (Administration) with stipulation that the post of General Manager (HR & Admn.) will revive after the retirement of the petitioner. He has also referred to Article 3(3), which, inter alia, provides that the Government has the power to make appointment of the Director on such terms and conditions as it thinks fit. It is, thus contended that vide order dated 29.12.1999 (Annexure P-5), the Governor has fixed the terms and conditions and the tenure of appointment being one of the terms and conditions, the State has had the authority to prescribe and restrict the period of appointment as may be considered proper. The petitioner has no right to challenge the authority of the Government vested in it under Article 31(2). He has further referred to Article 31(4) whereunder the Government has the right to remove the Chairman, Chairman-cum-Managing Director/Managing Director, Whole Time Director or the directors for any reasons whatsoever and fill up the resultant vacancy. While referring to this Article, it has been stated that this Article contains doctrine of pleasure and thus, the petitioner cannot have any grievance against his removal. This Article confers absolute power upon the respondent-State. 5. I have heard the learned counsel for the parties at length and perused the paper-book. 6. While referring to this Article, it has been stated that this Article contains doctrine of pleasure and thus, the petitioner cannot have any grievance against his removal. This Article confers absolute power upon the respondent-State. 5. I have heard the learned counsel for the parties at length and perused the paper-book. 6. The petitioner has referred and relied upon the judgment of the Apex Court passed in the case of Dr. L.P. Agarwal v. Union of India and others, 1992(3) SCT 109 : AIR 1992 Supreme Court 1872 wherein it has been held as under :- "16 ... The High Court failed to appreciate the simple alphabet of the service jurisprudence. The High Courts reasoning is against the clear and unambiguous language of the Recruitment Rules. The said Rules provide "Tenure for five years inclusive of one year probation" and the post is to be filled "by direct recruitment". Tenure means a term during which an office is held. It is a condition of holding the office. Once a person is appointed to a tenure post, his appointment to the said office begins when he joins and it comes to an end on the completion of the tenure unless curtailed on justifiable grounds. Such a person does not superannuate, he only goes out of the office on completion of his tenure. The question of prematurely retiring him does not arise. The appointment order gave a clear tenure to the appellant. The High Court fell into error in reading "the concept of superannuation" in the said order. Concept of superannuation which is well understood in the service jurisprudence is alien to tenure appointments which have a fixed life span. The appellant could not therefore have been prematurely retired and that too without being put on any notice whatsoever...." Based upon the ratio of the aforesaid judgment it has been argued that the minimum tenure of appointment is fixed in the Articles of Association i.e. Article 31(2) and once the appointment is made, the tenure cannot be curtailed nor the petitioner is liable to be removed before the expiry of tenure on the ground indicated in the impugned order. 7. Mr. Sidhu, DAG, Haryana has referred to the judgment passed by the Honble Supreme Court in the case of Dr. D.C. Saxena v. State of Haryana and others, 1987(3) Supreme Court Cases 251. 7. Mr. Sidhu, DAG, Haryana has referred to the judgment passed by the Honble Supreme Court in the case of Dr. D.C. Saxena v. State of Haryana and others, 1987(3) Supreme Court Cases 251. In paragraph 9 of the aforesaid judgment, the Honble Apex Court has interpreted the terms of service to include tenure of service. He has also relied upon the observations wherein it has been held that where the Government reserves right to lay down the terms and conditions subsequently and the terms and conditions are notified later on, curtailing the tenure, the employer has the right to remove an employee in exercise of such authority. As such a condition in the appointment letter/order amounts to introducing doctrine of pleasure and the service of the employee is at the choice of the employer. Both the propositions enunciated in this judgment have not been disputed and cannot be disputed. He has further brought to the notice of this Court that the petitioner earlier challenged the order impugned in this writ petition in CWP No. 3507 of 2000 which writ petition came to the dismissed granting liberty to the petitioner to approach the Government and further liberty to file a fresh petition, if necessary. The petitioner did file a representation, in view of the liberty granted by the Honble Division Bench of this Court vide its order dated 31.3.2000 (Annexure P-7). The representation of the petitioner has been rejected vide order dated 11.5.2000 (Annexure P-9), but this order has not been challenged in the present writ petition. 8. I have gone through the prayer made in the writ petition. Admittedly, the order dated 11.5.2000 (Annexure P-9) has not been challenged in the writ petition. Though a reference is made to this order in paragraph 12 of the writ petition. It is argued by the learned counsel appearing on behalf of the petitioner that since this order did not deal with all the issues raised in his representation, therefore, the petitioner filed further representations, but the same has not been decided. Be that as it may, even though order dated 11.5.2000 (Annexure P-9) has not been challenged, but the petitioner was granted liberty by a Division Bench of this Court vide order dated 31.3.2000 (Annexure P-7) to file a fresh petition, if it becomes necessary. Be that as it may, even though order dated 11.5.2000 (Annexure P-9) has not been challenged, but the petitioner was granted liberty by a Division Bench of this Court vide order dated 31.3.2000 (Annexure P-7) to file a fresh petition, if it becomes necessary. The right of the petitioner was not restricted to challenge the decision of the Government on the representation, but also to challenge the orders impugned in CWP No. 3507 of 2000. Therefore, the petitioner has right to challenge the impugned orders after disposal of his representation. 9. The only question now raised is whether the respondents-State has had the right to curtail the period by notifying the terms and conditions and whether the appointment of the petitioner could be for a fixed tenure or he could have been retired de hors the period prescribed under Article 31(2) of the Articles of Association. Petitioners initial appointment is made by order dated 31.8.1999 (Annexure P-1) which reads as under :- "In pursuance to the powers conferred by the provisions contained in Articles 30 & 31 of the Articles of Association of Uttar Haryana Bijli Vitran Nigam Ltd., the Governor of Haryana is pleased to appoint Shri P.C. Dewan, EIC, UHBVNL as Director Admn. on the Board of Directors of the Uttar Haryana Vitran Nigam Ltd. with immediate effect." This order was followed by order dated 7.9.1999 (Annexure P-2) which reads as under :- "Governor of Haryana is pleased to allow all benefits w.e.f. 2.4.1999 to Shri P.C. Dewan, Director (Administration) on the Board of Directors of Uttar Haryana Bijli Vitran Nigam Ltd. on the basis of benefits to be availed by him had he been appointed Director on the Board of Directors of Uttar Haryana Bijli Vitran Nigam Ltd. w.e.f. 2.4.1999." 10. Initial appointment of the petitioner was in exercise of the powers vested with the Government under Article 31. The appointment was without any condition. This appointment was in terms of Article 31(1) of the Articles of Association which confers absolute power upon the Government to make appointment of the Director. Article 31(2) is supplementary in nature, though this Article too specified, that the Government may notify the terms and conditions of appointment, but such terms and conditions are circumvented by the condition incorporated in this Article itself, which, inter alia prescribes the minimum tenure of two years. Article 31(2) is supplementary in nature, though this Article too specified, that the Government may notify the terms and conditions of appointment, but such terms and conditions are circumvented by the condition incorporated in this Article itself, which, inter alia prescribes the minimum tenure of two years. Therefore, though the Government has the liberty to notify the terms and conditions and terms and conditions include the tenure of service, but in no case, it can specify any period less than the minimum tenure of service as prescribed under Article 31(2). The Government has the liberty to prescribe any longer period than the minimum tenure prescribed. Since the initial appointment of the petitioner was a clear case of appointment as a Director on the Board of Directors of UHBVNL, subsequent order of upgradation of the post cannot nullify the initial appointment nor does it indicate anywhere that the tenure of the petitioner will be upto the date of his retirement in the parent cadre. As a matter of fact, the petitioner was an employee of Public Sector Corporation and continued to be so, though he was inducted into the Board irrespective of the nature of his employment vide order dated 31.8.1999. Two orders i.e. dated 31.8.1999 and 7.9.1999 (Annexure P-1 and P-2) are sufficient to indicate the nature of appointment of the petitioner and his status on the Board of Directors. Under such situation, the stipulation of minimum period of tenure as contained under Article 31(2) of the Articles of Association will definitely be attracted and petitioners tenure cannot be curtailed on any ground much less the ground incorporated in the impugned order. I am also not impressed by the argument of Mr. Sidhu that the petitioner could be removed under the doctrine of pleasure as incorporated under Article 31(4). This Article empowers the respondent-Company to remove a Director, subject to the provisions of the Act and the Act means the Companies Act, 1956. In view of the interpretation clause in the Articles and Memorandum of Association for removal of a Director, procedure under Article 284 of the Companies Act, 1956 has been prescribed. Admittedly, no such procedure has been adopted. The judgment of the Honble apex Court in the case of Dr. L.P. Agarwal (supra) fully covers the case of the petitioner. In view of the interpretation clause in the Articles and Memorandum of Association for removal of a Director, procedure under Article 284 of the Companies Act, 1956 has been prescribed. Admittedly, no such procedure has been adopted. The judgment of the Honble apex Court in the case of Dr. L.P. Agarwal (supra) fully covers the case of the petitioner. This writ petition accordingly succeeds and the impugned orders dated 27.12.1999 (Annexure P-4) and dated 29.12.1999 (Annexure P-5) are hereby quashed. Consequently, the petitioner is deemed to be in service as Director (Administration) for a period of two years from the date of his appointment i.e. 2.4.1999 till 1.4.2001 and he shall be entitled to all his emoluments and other consequential benefits. Petition allowed.