ORDER

By an order made on 13th January, 1998, a High Powered Committee came to be appointed to carry out investigations into five areas, as indicated in the order. The High Powered Committee was initially headed by Shri S. Venkatnarayanan (IAS) Retd., Former Chairman, National Power Finance Corporation, who was substituted later on by Shri P.K. Kaul, former Cabinet Secretary of the Government of India. The High Powered Committee (hereinafter referred to as the Kaul Committee) with the expert advice and assistance of M/s Central Power Research Institute, Bangalore and Indian Institute of Management, Lucknow, made an indepth investigation into the areas of reference and produced a Report in two volumes.

2. One of the issues on which the Kaul Committee had adversely commented is that transfers and posting of officers and staff are not made in the State Electricity Board in a transport and accountable manner. Although guidelines for transfer policy of officers of the State Government (see at Page 495 Volume IA of the Paper Book), are supposed to be the transfer policy of such officers of the Board also, they have been observed in breach. The State Government has power under the Electricity Act to issue directives in the nature of policy directives, but with Boards Chairman and top Executive heads packed by political boses, the State Government appears to be exercising unbridled power of interference in the day to day working of the Electricity Board. This interference in transfers and postings with political patronage has totally destroyed the autonomous nature of the Electricity Board, which has been identified as a serious malaise affecting the functioning of the Electricity Board.

3. The original Electricity Board has now been split into U.P. Power Corporation Limited (for distribution and Transmission), with five subsidiary distribution companies, namely, Kanpur Electric Supply Company Limited (KESCO), Purvanchal Vidyut Vitaran Nigam Limited, Varanasi, Madyanchal Vidyut Vitaran Nigam Limited, Lucknow, Paschimanchal Vidyut Vitaran Nigam Limited, Meerut and Dakshinanchal Vidyut Vitaran Nigam Limited, Agra. Thermal generation is entrusted to U.P. Rajya Vidyut Utpadan Nigam Limited and Hydro generation to U.P. Jal Vidyut Nigam Limited. All these companies are Government companies, though under the provisions of the Electricity Act, yet independent bodies subject only to the directives of the State Government only on matters of general policy.

4. That there has been large scale interference with the autonomous functioning of the Electricity Board (now transformed into eight autonomous Corporations), is evident from the highly critical report made by Kaul Committee, whose findings are as under:

"(a) The State Electricity Board is functioning as an extension of the State Government.

(b) The Government of U.P. and individual UP politicians have long regarded the UPSEB as a social service agency, not a commercial enterprise.

(c) Although the UPSEB is, on paper, an independent entity, its management services at the pleasure of Government of UP and changes frequently.

(d) The GOUP officially imposes non-commercial constrains on UPSEB pricing and personnel policies.

(e) While individual politicians interfere unofficially in personnel, operations, collections, procurement and more.

(f) Employee morale and productivity are low due to lack of accountability and incentives.

(g) Corruption is generally accepted to be serious at all levels."

(See: Kaul Committee Report Volume 1 Page 70)

5. Learned amicus curiae took us to the several paragraphs of the Kaul Committees Report which highlighted the deplorable state of affairs found by it.

6. When we queried the learned counsel appearing for the State of U.P. and the learned counsel representing the electricity Corporations as to under what authority there was governmental interference with the day to day affairs of the Corporations in the matters like transfers and postings of officers and staff, neither of the