Judgment

Ali Mohammad Magrey, J.—The petitioner, Ex-Chairman of the Jammu and Kashmir Bank Limited, has filed this writ petition, principally, challenging communication no.FD/Bkg/21/2019 dated 08.06.2019 addressed by the Additional Secretary to the Government, Finance Department of the erstwhile State of Jammu & Kashmir, to the Company Secretary, J&K Bank Limited, conveying the decisions of the Government taken by it in exercise of the powers under Article 69(iii) of Articles of Association of the Bank, that the petitioner shall cease to be Director on the Board of Directors of the Bank and, consequently, be no longer the Chairman-cum-Managing Director of the Board of Directors of the Bank (the Board), and further about nominating Mr. R. K. Chibber, respondent no.4 herein, as Director on the Board and his appointment as the interim Chairman-cum-Managing Director of the Board/Bank. The petitioner has also sought reliefs ancillary to the aforesaid main relief which would be referred to later in this judgment.

2. The Jammu and Kashmir Bank Limited (hereinafter, the Bank) is a Public Sector Undertaking Bank, initially incorporated under the Jammu and Kashmir Companies Regulations no.XI of 1920 on 01.10.1938. Clause 1 of the Articles of Association of the Bank states that it is a Government Company within the meaning of Section 2(45) of the Companies Act, 2013 and it is an instrumentality of the State. The Union Territory of Jammu and Kashmir is its major shareholder, holding 68.18% of shares in the Bank. In these circumstances, the Bank is under the control of the Government of the Union Territory. The erstwhile State Administrative Council vide its Decision no.148/20/2018 dated 22.11.2018 also decided that the Bank shall apply the provisions of the J&K RTI Act, 2009; that like any other Public Sector Bank, the activities of the Bank shall conform to the CVC Guidelines; and that the Bank shall be accountable to the State Legislature to the extent other PSU Banks at the national level are accountable to the Parliament. It was, however, clarified that for all policy formulation and decision making in the Bank, the Board of Directors of the Bank is the competent authority, and that the business operations of the Bank shall be undertaken and regulated as per the provisions of the Companies Act, 2013, Guidelines of RBI, SEBI and other Regulatory authorities. The above decisions of the State Administrative Council were communicated to the Chairman/CEO of the Bank by the Under Secretary to the Government, Finance Department, vide communication no.FD/BKG/2019/13 dated 12.02.2019 to be placed before the Board for implementation.

3. Article 69(i) of the Articles of Association of the Bank under Chapter X with caption ‘Directors’ provides that the number of Directors shall not be more than fifteen or less than seven, and that not more than three of these shall be appointed by the Jammu and Kashmir Government, who will be called Government Directors; provided that no Director other than a Government Director shall be elected as Chairman of the Board. Clause (iii) of Article 69 further provides that Government Directors will continue in their offices so long as their appointment is not cancelled by the Government. Article 75 under Chapter XIII, captioned ‘Rotation of Directors’ provides that all the Directors shall retire by rotation except Government Directors who will continue in their offices so long their appointment is not cancelled by the Government.

4. The petitioner was initially appointed as Company Secretary of the Bank way back in 1998. In September, 2016, he was functioning as Executive President of the Bank. Since the term of office of the Chairman and CEO of the time was expiring, the Board, on the suggestion of the Commissioner/Secretary to Government, Finance Department, J&K, by Resolution no. 32 passed in its meeting held on 20.09.2016, proposed a panel of three candidates in order of preference for approval by the Reserve Ban