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2024 DIGILAW 1693 (KER)

K. Vikraman v. State Of Kerala Represented By The Chief Secretary

2024-12-20

D.K.SINGH

body2024
JUDGMENT : D. K. Singh, J. Heard Mr T Sanjay, learned Counsel for the petitioner; Mr T K Sajeev, learned Standing Counsel for the Kerala State Warehousing Corporation; Mr Renjith Thampan (Sr), assisted by Mr V M Krishna Kumar, learned Counsel for the 6th respondent; and Mr Jafar Khan Y, learned Senior Government Pleader. 2. The petitioner, who claims to have 32 years of experience in the warehousing field and is an expert in the dynamics of warehouses and their management, was shortlisted for consideration for the post of Managing Director of the State Warehousing Corporation. Vigilance clearance was also obtained for him. However, the State Government appointed the 6th respondent, a retired Deputy Superintendent of Police (DySP), as the Managing Director of the Kerala State Warehousing Corporation (for short, ‘KSWC’). The petitioner has challenged the appointment of the 6th respondent as the Managing Director of the Kerala State Warehousing Corporation in the present writ petition. 3. The Kerala State Warehousing Corporation came into existence on 20th February 1959 and functions as per the provisions of the Warehousing Corporations Act 1962, which is a Central Act. KSWC is a statutory Corporation, holding a 50% share capital from the Central Warehousing Corporation and a 50% share capital from the Kerala State Government. The Kerala State Warehousing Corporation has its Corporate Office at Ernakulam with three zonal offices, nine regional offices and fifty-five warehouses scattered all over Kerala. The KSWC plays a vital role in augmenting and preserving scarce resources and commodities. 3.1 The statutory functions of the State Warehousing Corporation are as follows: a. Acquire and build godowns and warehouses at such suitable places within the State. b. Run Warehouses in the State for the storage of agricultural produce, seeds, manures, fertilizers, agricultural implements and notified commodities. c. Arrange facilities for transporting agricultural produce seeds, manures, fertilizers, agricultural implements, and notified commodities to and from Warehouses. d. Act as an agent of the Central Warehousing Corporation or the Government for the purchase, sale, and storage of agricultural produce, etc. e. KSWC undertakes Disinfestation Extension Services at the doorsteps of Farmers, Traders, Industrialists, etc., on short calls as well as on a yearly contract basis as per the customers' requests. 4. The management and affairs of KSWC are by the Board of Directors of the KSWC. e. KSWC undertakes Disinfestation Extension Services at the doorsteps of Farmers, Traders, Industrialists, etc., on short calls as well as on a yearly contract basis as per the customers' requests. 4. The management and affairs of KSWC are by the Board of Directors of the KSWC. Section 20 of the Warehousing Corporations Act 1962 provides that the general superintendence and management of the affairs of the State Warehousing Corporation shall vest with a Board of Directors which shall consist of five Directors nominated by the Central Warehousing Corporation, of whom one shall be nominated in consultation with the State Bank, and one at least shall be a non-official. Another five Directors are to be nominated by the State Government. A Managing Director is to be appointed by the State Government in consultation with the ten Directors mentioned above. The appointment of the Managing Director is to be intimated to the Central Warehousing Corporation. 4.1 Section 20 which prescribes the management of the State Warehousing Corporation reads as under: “Management of a State Warehousing Corporation. (1) The general superintendence and management of the affairs of a State Warehousing Corporation shall vest in a board of directors which shall consist of the following, namely:- (a) five directors nominated by the Central Warehousing Corporation, of whom one shall be nominated in consultation with the State Bank and one at least shall be a non-official; (b) five directors nominated by the State Government; and (c) a managing director, appointed by the State Government in consultation with the directors referred to in clauses (a) and (b) and under intimation to the Central Warehousing Corporation. (2) The Chairman of the board of directors shall be appointed by the State Government from among the directors of the State Warehousing Corporation with the previous approval of the Central Warehousing Corporation. (3) The managing director shall- (a) exercise such powers and perform such duties as the board of directors or the State Warehousing Corporation may entrust or delegate to him; and (b) receive such salary and allowances as the State Warehousing Corporation may, in consultation with the Central Warehousing Corporation, and with previous approval of the State Government, fix. (3) The managing director shall- (a) exercise such powers and perform such duties as the board of directors or the State Warehousing Corporation may entrust or delegate to him; and (b) receive such salary and allowances as the State Warehousing Corporation may, in consultation with the Central Warehousing Corporation, and with previous approval of the State Government, fix. (4) The board of directors shall act on business principles having regard to the public interest and shall be guided by such instructions on questions of policy as may be given to them by the State Government or the Central Warehousing Corporation. (5) If any doubt arises as to whether a question is or is not a question of policy, or if the State Government and the Central Warehousing Corporation give conflicting instructions, the matter shall be referred to the Central Government, whose decision thereon shall be final.” The KSWC performs very important functions regarding the storage of food grains and other articles and their preservation and distribution. However, improper management of food grains and other materials in the warehouses under the KSWC has been widely reported due to its improper functioning and mismanagement. 5. The State Government sent an Ext.P4 communication to the Central Board of Directors stating that the post of Managing Director of KSWC was being held on an additional charge basis by Sri James Jacob since 14.03.2022. Now, the State Government have resolved to appoint a new regular Managing Director through the Public Enterprises Board system being implemented in the State. However, it would require some more time for the constitution of the Public Enterprises Board. In the meantime, the State Government would like to appoint Sri S Anil Das, retired Deputy Superintendent of Police as interim Managing Director till a regular appointment is made through the Public Enterprises Board. For this purpose, the opinion/approval of the Board of Directors from the Central Warehousing Corporation would be required under Section 20(1)(c) of the Warehousing Corporations Act 1962. 5.1 All five Board of Directors of the Central Warehousing Corporation opposed the proposal to appoint the 6th respondent as the Managing Director of the Corporation on the ground that the retired DySP did not have the expertise, domain knowledge, qualification and experience to head a loss-making Public Sector Undertaking. It was said that Warehousing and Logistics are specialised sectors. 5.1 All five Board of Directors of the Central Warehousing Corporation opposed the proposal to appoint the 6th respondent as the Managing Director of the Corporation on the ground that the retired DySP did not have the expertise, domain knowledge, qualification and experience to head a loss-making Public Sector Undertaking. It was said that Warehousing and Logistics are specialised sectors. A person who does not possess the domain knowledge cannot be expected to contribute to the growth of KSWC. Accumulated loss amounts to crores of rupees. Neither the Central Warehousing Corporation nor the State Government was receiving any return on the investment made in KSWC by way of dividends. 5.2 The State Government was asked to appoint any other official as the Managing Director of the KSWC who has domain knowledge, expertise and experience so that KSWC can be turned around into a well-managed, profit-making Organisation which can contribute to the growth of Kerala’s Logistics sector. The Government of Kerala, as well as the Central Warehousing Corporation, can get a return on the investment made by way of dividends from the profit of KSWC. 6. Despite the strong opinions/reservations expressed by all five Directors of the Central Warehousing Corporation, the State Government, in its wisdom, decided to appoint the 6th respondent, a retired DySP as the Managing Director of one of the biggest Public Sector Undertakings of the State vide order dated 16.01.2023 in Ext.P9 temporarily for a period of one year or till such time the Public Enterprises (Selection and Recruitment) Board makes the appointment to the said post. 7. Learned Counsel submits that the 6th respondent, retired DySP, absolutely has no domain knowledge, expertise or experience in warehousing. As per the provisions of the Warehousing Corporations Act 1962, the appointment to the post of Managing Director has to be after effective consultation with the Board of Directors. Despite the strong objection taken by all five Directors of the Central Warehousing Corporation, appointing the 6th respondent as the Managing Director is wholly arbitrary, illegal, unfair, unjust, improper and violative of Articles 14 and 16 of the Constitution of India. 7.1 It is further submitted that the State Government did not come out with any reasons for overruling the objections/reservations of the five Directors of the Central Warehousing Corporation. 7.1 It is further submitted that the State Government did not come out with any reasons for overruling the objections/reservations of the five Directors of the Central Warehousing Corporation. No effective consultation took place with any other stakeholders before issuing an appointment order in favour of the 6th respondent, in Ext.P9. No reasons come forth for appointing the 6th respondent, who did not have any credentials and domain knowledge nor experience and expertise in the field. It is submitted by the learned Counsel that the appointment of the 6th respondent to the post of Managing Director, despite the strong objection by the five Directors of the Central Warehousing Corporation, is sullied by political considerations and consultations other than legal, merit and public interest and interest of the KSWC itself. 7.2 Section 20(1)(c) of the Warehousing Corporations Act 1962 provides that a Managing Director shall be appointed by the State Government in consultation with the Directors, i.e., five Directors nominated by the Central Warehousing Corporation and the five Directors nominated by the State Government. The consultation should be effective consultation and if the Government decides not to agree with the opinion of the five Directors nominated by the Central Warehousing Corporation, the State Government must come out with the reasons for overruling the opinion of the five Directors. 8. The learned Counsel for the petitioner places reliance on the definition of ‘consultation’ as provided in Black’s Law Dictionary, 10th Edition and Advanced Law Lexicon by P Ramanatha Aiyar 3rd Edition to say that the ‘consultation’ or deliberation would not be complete or effective unless parties thereto make their respective points of view known to others and examine the relative merit of their viewpoint. A consultation has to be meaningful, effective and conscious consultation. The Government did not put forth its viewpoint for overruling the opinion of the five Directors nominated by the Central Warehousing Corporation. Therefore, it was not an effective consultation. There should have been overwhelming reasons to overrule the opinion of the five Directors nominated by the Central Warehousing Corporation. However, the State Government has not stated any iota of reasons for overruling the opinion of the five Directors nominated by the Central Warehousing Corporation. 9. Therefore, it was not an effective consultation. There should have been overwhelming reasons to overrule the opinion of the five Directors nominated by the Central Warehousing Corporation. However, the State Government has not stated any iota of reasons for overruling the opinion of the five Directors nominated by the Central Warehousing Corporation. 9. The learned Counsel places reliance on the judgments in: (i) Chandramouleshwar Prasad v. The Patna High Court, (1969) 3 SCC 56 (ii) Union of India v. Shankalchand Himatlal Sheth, (1977) 4 SCC 193 (iii) Indian Administrative Services (S.C.S.) Association, Uttar Pradesh v. Union of India, 1993 Supp 1 SCC 730 (iv) Supreme Court Advocates on Record Association v. Union of India (1993) 4 SCC 441 (v) Dr Jaishri Laxmanrao Patil v. Chief Minister, 2021 (8) SCC 1 10. Learned Counsel, therefore, submits that as there was no effective consultation with the Directors of the Central Warehousing Corporation, the appointment of a novice, retired DySP over the petitioner who had domain knowledge, expertise and experience of more than 32 years in the field, is wholly illegal, and therefore, his appointment is to be quashed to prevent abuse of public office by an usurper or intruder. 10.1 Furthermore, the learned Counsel has also pointed out that the initial tenure of the 6th respondent expired on 16.01.2024. However, the State Government, ten months after the expiry of the tenure, on 16.11.2024 issued an order re-appointing the 6th respondent with retrospective effect for another year. The order of re-appointment is also under challenge in this writ petition. 11. The learned Senior Counsel appearing for the 6th respondent submitted that the Warehousing Corporations Act 1962 does not specify any qualification for the post of Managing Director. Therefore, the Appointing Authority may appoint any suitable person to the post of Managing Director. The views expressed by the Directors nominated by the Central Warehousing Corporation were not binding on the State Government. It would suffice to take their opinion before proceeding to appoint a person to the post of Managing Director by the State Government. Section 20(1)(c) of the Warehousing Corporations Act 1962 does not provide that the opinion expressed by the Directors would be binding on the State Government. 11.1 The post of Managing Director of the 5th respondent Corporation had been vacant for a long time. Section 20(1)(c) of the Warehousing Corporations Act 1962 does not provide that the opinion expressed by the Directors would be binding on the State Government. 11.1 The post of Managing Director of the 5th respondent Corporation had been vacant for a long time. Accordingly, the State Government appointed the 6th respondent as the Managing Director of KSWC on 16.01.2023 after finding him suitable for the said post. The initial appointment was made by the Government for a period of one year, which expired on 15.01.2024. Thereafter, the Government extended the term of the 6th respondent for another year. The petitioner was considered for the post of Managing Director, however, the Government received complaints against the appointment of the petitioner. Though the petitioner has worked for several years in the KSWC, his work has been in the field of Pest Control Management. On 31.05.2018, the petitioner retired from service. ‘Consultation’ does not mean ‘concurrence’. 11.2 Learned Senior Counsel has placed reliance on the following judgments in support of his submissions: (i) State of Uttar Pradesh v. M L Sreevasthava, 1957 KHC 481 (ii) Manohar Reddy M v. Union of India 2013 KHC 4097 It is further submitted that judicial review regarding the suitability of the 6th respondent for appointment to the post of Managing Director in KSWC is not permissible. 12. The same stand has been taken by the learned Senior Government Pleader. 13. I have considered the submissions advanced on behalf of the parties and perused the records. 14. The question which requires consideration is whether the State Government is empowered to appoint any person to the post of Managing Director of the KSWC, disregarding the opinion expressed by the Board of Directors of the KSWC, and if so, whether the State Government must give reasons for not accepting the views expressed by the Board of Directors who are required to be mandatorily consulted under Section 20(1)(c) of the Warehousing Corporations Act while making appointment of the Managing Director. 15. The KSWC is not a wholly owned Corporation of the State Government. 50% of the share capital is of the Central Warehousing Corporation, and 50% of the share capital is of the State Government. The Board of Directors of the KSWC consist of five Directors nominated by the Central Warehousing Corporation and five Directors nominated by the State Government. 15. The KSWC is not a wholly owned Corporation of the State Government. 50% of the share capital is of the Central Warehousing Corporation, and 50% of the share capital is of the State Government. The Board of Directors of the KSWC consist of five Directors nominated by the Central Warehousing Corporation and five Directors nominated by the State Government. The KSWC performs important functions, and it is a public establishment with fifty-five warehouses scattered all over Kerala, having three zonal offices and nine regional offices. Like any other Public Sector Undertakings or Corporations of the State Government, the affairs of the KSWC are not managed properly and professionally. Hence, it has been running into a loss for several years, except for a few years. 16. The Government invest the public money of taxpayers in Public Sector Undertakings, and the public interest requires that the affairs of the Public Sector Undertakings and the Corporations are managed properly, effectively and professionally so that the taxpayers’ money is not drained by creating white elephants. The question is whether the State Government has unbridled power to appoint any one of its choice to the post of Managing Director in complete disregard to the opinion expressed by the Board of Directors. The State Government is the trustee of the public fund and taxpayers’ money. The State Government cannot be allowed to act in its whims and fancies or for political or other consideration while appointing a person to the post of Managing Director or to any public office/post in any Public Sector Undertaking, in complete disregard to the domain knowledge, expertise and experience in the field. Such appointments would shake public confidence and would not be in the interest of the Corporation, and it would be against the public interest. The State Government is required to act to further the public interest and see that the affairs of the Public Sector Undertaking are managed effectively, properly and professionally by appointing competent, qualified, experienced persons solely on merit and not at its whims and fancies. 17. Section 20(1)(c) of the Warehousing Corporations Act 1962 mandates the State Government to have consultation with the Board of Directors including the five Directors nominated by the Central Warehousing Corporation. 17. Section 20(1)(c) of the Warehousing Corporations Act 1962 mandates the State Government to have consultation with the Board of Directors including the five Directors nominated by the Central Warehousing Corporation. The five Directors nominated by the Central Warehousing Corporation expressed their strong views/reservations/dissent against the appointment of the 6th respondent to the post of Managing Director who does not have any domain knowledge, expertise or experience in the field. The State Government, in total disregard to the opinion expressed by the five Directors nominated by the Central Warehousing Corporation, has appointed the 6th respondent, who is a retired DySP, to the post of Managing Director. No reasons are coming forth in the counter affidavit for disregarding the opinion expressed by the five Directors nominated by the Central Warehousing Corporation. The consultation required under Section 20(1)(c) of the Warehousing Corporations Act is not a mere formality, the views expressed by the Board of Directors are required to be given due consideration and only for overwhelming reasons should their views be disregarded. 18. This Court is of the opinion that the appointment of the 6th respondent to the post of Managing Director is not on merit, but for consideration, may be political or other and against public interest. Such an appointment to the post of Managing Director of a Public Sector Undertaking/ Corporation, which has a humongous role to play in food safety and security, should be only on merit, in the public interest and in the interest of the Corporation. This appointment is certainly not serving the public interest or the interest of the Corporation but may be political or other interests of the Appointing Authority. 19. The facts would disclose that there was no effective consultation with the Board of Directors and a novice in the field of warehousing and administration, who is a retired DySP, has been chosen without any domain knowledge, expertise or experience in the field. The writ of quo warranto is to seal the sovereignty of the State from invaders and to prevent abuse of the public office by a usurper or intruder [Halsbury’s Laws of England (4th Edition) Volume 1, paragraphs 179-80]. 20. ‘Consultation’ as provided under Section 20(1)(c) of the Warehousing Corporations Act 1962 is not ‘concurrence’, but it has to be effective and meaningful. 20. ‘Consultation’ as provided under Section 20(1)(c) of the Warehousing Corporations Act 1962 is not ‘concurrence’, but it has to be effective and meaningful. When the five Directors nominated by the Central Warehousing Corporation expressed their strong views against the appointment of the 6th respondent to the post of Managing Director, it was incumbent on the State Government to hold a further consultation and thereafter, must have given reasons for disagreeing with the views expressed by the five Directors nominated by the Central Warehousing Corporation. No such thing has been done by the State Government, and on its own, the State Government has appointed the 6th respondent to the post of Managing Director. Such an appointment goes against the spirit of Section 20(1)(c) of the Warehousing Corporations Act 1962, and this Court has no hesitation to hold that the State Government has violated the provisions of the Warehousing Corporations Act, particularly Section 20(1)(c) in appointing the 6th respondent to the post of Managing Director of KSWC. 21. The appointment to a public post must be just, fair, transparent and purely based on merit. Any appointment to a public office cannot be left to the whims and fancies of the Executive. Due process must be followed for giving an appointment to a public office. If the appointment to a public office is made in disregard of the procedure contemplated under the provisions of the law and relevant Service Rules, such appointment is certainly not in the public interest, and it shakes the confidence of the public. The 6th respondent does not have the requisite domain knowledge, expertise or experience in the field, and his appointment is nothing but a usurpation of the public office by a person who is not competent, and his appointment has been made in complete disregard to the procedure prescribed under the provisions of the Warehousing Corporations Act. 22. Therefore, this Court is of the view that the 6th respondent is not entitled to hold the Office of the Managing Director in the Kerala State Warehousing Corporation. The 6th respondent’s appointment is, therefore, quashed. The State Government is directed to appoint a new Managing Director, in effective consultation with the Board of Directors of the Kerala State Warehousing Corporation within two months from today, strictly in accordance with the law, from amongst the eligible candidates based on merit only. The writ petition is allowed. However, without costs. The 6th respondent’s appointment is, therefore, quashed. The State Government is directed to appoint a new Managing Director, in effective consultation with the Board of Directors of the Kerala State Warehousing Corporation within two months from today, strictly in accordance with the law, from amongst the eligible candidates based on merit only. The writ petition is allowed. However, without costs. All Interlocutory Applications regarding interim matters stand closed.