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IN THE HIGH COURT OF DELHI AT NEW DELHI
C. HARI SHANKAR, GITA MITTAL, JJ.
ENERGY WATCHDOG - Petitioner
Versus
UNION OF INDIA & ORS - Respondents
W.P.(C)No.9269 of 2017
Decided On : 06-11-2017
Writ petition challenging the appointment of the Chairman-cum-Managing Director of the ONGC and a Non-Official Director on the Board of Directors of the ONGC. Challenge to the appointment of the Chairman-cum-Managing Director premised on the fact that he was under suspension or was facing disciplinary proceedings. Challenge to the appointment of the Non-Official Director on the grounds that the same was in violation of the criterion laid down by the government for consideration as non-official director; that the prescribed process for appointment of the Non-Official Director on the Board of a Central Public Sector Enterprises was not followed; that as per the mandate of Section 149(6), an independent director could not be related to any promoter whereas in the instant case, the respondent no.6 falls in a related category; and that, appointment of an independent director on the Board of the ONGC is in the nature of distribution of State largesse and in appointing the respondent no.6, the respondents have violated the principles on which the same could have been effected.
Fact of the Case:
The petitioner, a society registered under the Societies Registration Act (XXI of 1860), filed a writ petition challenging the appointment of the Chairman-cum-Managing Director of the ONGC and a Non-Official Director on the Board of Directors of the ONGC. The challenge to the appointment of the Chairman-cum-Managing Director was premised on the fact that he was under suspension or was facing disciplinary proceedings. The challenge to the appointment of the Non-Official Director was on the grounds that the same was in violation of the criterion laid down by the government for consideration as non-official director; that the prescribed process for appointment of the Non-Official Director on the Board of a Central Public Sector Enterprises was not followed; that as per the mandate of Section 149(6), an independent director could not be related to any promoter whereas in the instant case, the respondent no.6 falls in a related category; and that, appointment of an independent director on the Board of the ONGC is in the nature of distribution of State largesse and in appointing the respondent no.6, the respondents have violated the principles on which the same could have been effected.
Finding of the Court:
The court found that the challenge to the appointment of the Chairman-cum-Managing Director was completely untenable and devoid of any factual or legal merit and had to be rejected. The court also found that the challenge to the appointment of the Non-Official Director was also unfounded and had to be rejected. The court held that the appointment of the Non-Official Director was not in violation of the criterion laid down by the government for consideration as non-official director; that the prescribed process for appointment of the Non-Official Director on the Board of a Central Public Sector Enterprises was followed; that as per the mandate of Section 149(6), an independent director could be related to any promoter and that, appointment of an independent director on the Board of the ONGC was not in the nature of distribution of State largesse.
Issues: 1. Whether the appointment of the Chairman-cum-Managing Director of the ONGC was valid? 2. Whether the appointment of the Non-Official Director on the Board of Directors of the ONGC was valid?
Ratio Decidendi: 1. The court held that the challenge to the appointment of the Chairman-cum-Managing Director was completely untenable and devoid of any factual or legal merit and had to be rejected. The court found that the petitioner had not produced any evidence to support the allegation that the Chairman-cum-Managing Director was under suspension or was facing disciplinary proceedings. The court also found that the petitioner had not challenged the order of the Central Vigilance Commission which had cleared the Chairman-cum-Managing Director of any adverse remarks. 2. The court held that the challenge to the appointment of the Non-Official Director was also unfounded and had to be rejected. The court found that the Non-Official Director met the criteria laid down by the government for consideration as non-official director; that the prescribed process for appointment of the Non-Official Director on the Board of a Central Public Sector Enterprises was followed; that as per the mandate of Section 149(6), an independent director could be related to any promoter and that, appointment of an independent director on the Board of the ONGC was not in the nature of distribution of State largesse.
Final Decision: The writ petition was dismissed.
GITA MITTAL, J.
1. This writ petition, claiming to be filed in public interest, seeks to challenge the appointment of the respondent no.5 to the post of the Chairman-cum-Managing Director of the Oil & Natural Gas Corporation Ltd. (ONGC) effected by the respondent nos.1 and 2 vide the DOP&T Information Note dated 25th September, 2017. The writ petitioner also seeks setting aside of the appointment of the respondent no.6 to the post of Non-Official Director of the Oil & Natural Gas Corporation Ltd. (ONGC) which was effected by the respondent nos.1 and 2 vide DOP&T Information Note dated 29th September, 2017.
2. The petitioner has been represented by Mr. Jayant Bhushan, Senior Counsel while Mr. Sanjay Jain, Additional Solicitor General of India has appeared on advance notice in the matter along with Mr. Sanjeev Narula, Central Government Standing Counsel on behalf of the respondent nos.1, 2 and 4. Mr. Ravinder Agarwal, Advocate has appeared for the Central Vigilance Commission, respondent no. 3.
3. During the course of preliminary hearing, both sides have handed over certain documents which have bearing on the case. The documents were taken on record by the following order passed by us on 1st November, 2017 :
“1. This writ petition seeks issuance of a writ of quo warranto so far as the appointment of respondent no.5 as the Chairman-cum-Managing Director of the ONGC and that of the respondent no.6 as an Independent Director on the Board of Directors of the ONGC.
2. During the course of hearing, the following documents have been handed over by Mr. Sanjay Jain, ld. ASG :
(i) Order dated 14th July, 2016 issued by the Ministry of Petroleum & Natural Gas (Vigilance Division), Government of India.
(ii) Note dated 17th August, 2017 regarding the meeting of the Search Committee for selection of non-official Independent Directors on the Board of CPSEs.
(iii) Copy of the e-mail dated 14th May, 2015 of the respondent no.6 forwarding his bio-data.
(iv) Declaration dated 20th September, 2017 and the enclosed annexure submitted by the respondent no.6.
(v) Recommendations made by the Search Committee in the meeting dated 18th August, 2017.
(vi) Appointment letter dated 3rd of October 2017 by the Ministry of Petroleum & Natural Gas (Corporate Affairs Desk), Government of India appointing the respondent no.6 as a Non-Official Director on the Board of Oil & Natural Gas Corporation Limited.
3. Mr. Jayant Bhushan, ld. Senior Counsel for the petitioner has handed over a copy of the Annual Report 2016-17 of the ONGC. Copies of these documents have been exchanged between the parties and taken on record.
4. We have heard Mr. Jayant Bhushan, ld. Senior Counsel for the petitioner and Mr. Sanjay Jain, ld. ASG, who is appearing on behalf of the respondent nos.1 and 2. Submissions stand addressed on the above documents as well.
5. List this writ petition for orders on 6th November, 2017.”
4. We have accordingly heard ld. Senior Counsels on both sides at length on the petition and the above.
5. The petitioner claims to be a society, registered under the provisions of the Societies Registration Act (XXI of 1860) (Regn. No.: S/522/2013 dated 30.07.2013 at Delhi) working sincerely to protect the national interest and the interest of consumers in the energy sector and claims to have filed several Public Interest Litigations in the Supreme Court of India, Appellate Tribunal for Electricity (APTEL) as well as various Electricity Regulatory Commissions across India. Some of the cases filed by the writ petitioner have been enumerated in the writ petition.
Challenge to appointment of Respondent No. 5
6. So far as the challenge in the present writ petition to the appointment of the respondent no.5 to the post of Chairman-cum-Managing Director of the ONGC is concerned, it was contended by Mr. Jayant Bhushan, ld. Senior Counsel for the petitioner that by an order passed on 23rd of February 2015 by the Vigilance Division of the Ministry of Petroleum and Natural Gas, Government of
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