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2019 Supreme(Kar) 1644
IN THE HIGH COURT OF KARNATAKA AT BENGALURU
G.NARENDAR, J.
G Ashok Kumar S/o Vasudeva Rao - Petitioner
Versus
State of Karnataka By Its Principal Secretary To Government And Ors - Respondent
Writ Petition No.33296 of 2019 (STR)
Decided On : 21-10-2019
Advocate Appeared:
For the Petitioner: Sri M.Nagaprasanna, Sr. Adv. For Smt. M.L.Suvarna, Adv.
For the Respondent: Sri T.S.Mahantesh, Smt. Rakshitha D.J, Adv. Sri V.Lakshminarayana, Sri Adv. Sri Pavan Kumar, Adv. Sri Sriranga, Adv.
Headnote:
Companies Act, 2013 - Section 152 – Constitution of India, 1950 - Article 226 - Post of Director - Violation of principles of natural justice – Employment and services - It is case of petitioner that he joined services of second respondent as an Assistant Engineer and subsequently was promoted to cadre of AEE and to cadre of Executive Engineer with effect - Thereafter to cadre of Superintending Engineer with effect - That on account of ruling of Hon’ble Apex Court rendered in case a review of promotions of certain candidates was necessitated and consequently promotions accorded to them were revoked and they were relegated to lower cadre and one such candidate was third respondent - That on account of demotion petitioner moved up in order of seniority and consequently petitioner stood promoted as a Chief Engineer with effect by order and third respondent was reverted to Superintendent Engineer - That thereafter State Government legislated and promulgated a special enactment called Karnataka Extension of Consequential Seniority to Government Servants promoted on basis of Reservation Act, 2017 - That a challenge was mounted calling in question virus of Act before Hon’ble Apex Court - Said petitions came to be rejected and validity of Act of 2018 was upheld resulting in one more round of churning and consequent to same persons who had been reverted and relegated to a lower cadre were once again restored to original seniority – Held, Claim of third respondent regarding assumption of office with effect is perse illegal and any argument to contrary cannot be countenanced in light of provisions of Companies Act read supra - Articles of Association which enables Government to nominate and appoint subject to provisions of Act leaves no room to respondents to maneuver an argument otherwise - Articles of Association mandates that appointment or removal ought to be subject to provisions of Companies Act then any action of Government which is not in compliance with provisions of Companies Act, stands vitiated – Hence contention that appointment of third respondent as a Director became effective with effect is to be rejected and is accordingly rejected - In fact in light of provisions of Act claim can only be boomerang against third respondent in light of provisions of Section 152 which prohibits any person from acting as a Director without being allotted a Director Identification Number – Hence claim to contrary would be illegal in terms of provisions of Act - To summaries appointment of a nominee Director under Article 74(a) does not get crystallized on passing of order but becomes effective only on passing of resolution by concerned Board - If that be so then order of Government tantamount to recommendation only and in light of provisions of Article 74 it is to be construed as a binding recommendation which Board is bound to implement but that by itself can by no stretch of imagination be construed as a resolution of Board appointing as a Director - In that view of matter claim of assumption of office with effect and claim of third respondent having functioned as a Director is of no consequence and Act/Acts are no nest in law - Now coming to aspect of validity of order same need not detain this court for long - This court has perused file pertaining to proposal forwarded by second respondent to Hon’ble Chief Minister for orders - Proposal is not backed by any reasons - Proposal for appointment of third respondent is found at Para - But there is no corresponding proposal for removal of petitioner from office of Directorship of 4th respondent Company’s Board - On contrary file note at Para only reveals a proposal for appointment of petitioner as a Managing Director of KAVIKA - File does not disclose any reason whatsoever much less any valid reason for appointing third respondent as a Director – Further file also does not disclose any valid reasons for removal of petitioner - Forget valid reasons file does not even contain a proposal for removal of petitioner from post of Director on Board of 4th respondent Company - In absence of a proposal for removal and approval of same by authority then appointment of third respondent in no manner curtails right of petitioner to continue as a Director of Board of 4th respondent Company - Writ petition is allowed
ORDER :
1. Heard the learned Senior Counsel Sri. M. Nagaprasanna on behalf of the petitioner, the learned Addl. Government Advocate on behalf of respondent No.1, learned senior counsel Sri. S.S. Naganand on behalf of respondent Nos.2 and 4 and the learned senior counsel Sri. V. Lakshminarayana on behalf of the third respondent.
2. The petitioner is before this court being aggrieved by the appointment of the third respondent as a nominated Director (Technical) on the Board of the fourth respondent Corporation in his place and the consequent appointment of the petitioner as Managing Director of KAVIKA under the impugned order dated 22.07.2019. The act of nomination is titled as a transfer-cum-nomination (Annexure-H).
FACTS OF THE CASE:
3. It is the case of the petitioner that he joined the services of the second respondent on 05.04.1984 as an Assistant Engineer and subsequently was promoted to the cadre of AEE on 29.11.1999 and to the cadre of Executive Engineer with effect from 22.08.2007. Thereafter, to the cadre of Superintending Engineer with effect from 30.04.2016. That on account of the ruling of the Hon’ble Apex Court rendered in the case of B.K. Pavithra, a review of the promotions of certain candidates was necessitated and consequently the promotions accorded to them were revoked and they were relegated to the lower cadre and one such candidate was the third respondent. That on account of the demotion the petitioner moved up in the order of seniority and consequently the petitioner stood promoted as a Chief Engineer with effect from 30.06.2014 by order dated 16.04.2018 and the third respondent was reverted to the Superintendent Engineer. That thereafter the State Government legislated and promulgated a special enactment called the Karnataka Extension of Consequential Seniority to Government Servants promoted on the basis of Reservation (to the posts in Civil Services of the State) Act, 2017. That a challenge was mounted calling in question the virus of the Act before the Hon’ble Apex Court. The said petitions came to be rejected and the validity of the Act of 2018 was upheld resulting in one more round of churning and consequent to the same the persons who had been reverted and relegated to a lower cadre were once again restored to the original seniority.
4. It is submitted by the learned senior counsel for the petitioner that the then Government was on its last legs having lost its majority and while functioning as a minority Government proceeded to indulge in mass transfers for extraneous reasons and that the order impugned is also one such order and stands tainted on this count alone. He would further submit that new Government in place, immediately on assuming charge issued a “Tippani” (instructions) directing all departments not to implement the orders and directions issued by the erstwhile government, if they had not been implemented. The copy of the same dated 26.07.2019 is produced and placed it before the court along with memo dated 13.09.2019. He would contend that in the light of the same the third respondent could not have taken charge as no resolution had been passed by the Board of the fourth respondent appointing the third respondent as a Director. But he would fairly concede the authority of the Government to nominate Director/Directors and also the corresponding right to remove in terms of Article 74 of the Articles of the Association the 4th respondent Company.
5. He would further contend that the appointments and removal are at the pleasure of the Government but the exercise of the pleasure doctrine cannot be in an arbitrary manner. Though an attempt was made to canvass that the third respondent was not qualified to be nominated as a Director in view of his earlier reversion learned senior counsel would not press the contention in the light of the Act of 2018. But he would contend that the seniority l
