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2004 Supreme(All) 1200

2004 (4) AWC 2866
(ALLAHABAD HIGH COURT)
A. K. Yog and V. N. Singh, JJ.
C.M.W.P. No. 47555 of 2003
Decided on July 22, 2004
B. M. Varma
Versus
State of U. P. and others

Advocates:
Counsel for the Petitioners: V. B. Upadhaya, Chandan Sharma and U. N. Sharma.
Counsel for the Respondents: Sudhir Agarwal, Addl. A. G., Vishnu Pratap, Abhinav Upadhyay, S.C., and Ranjit Saxena.

The main legal point established in the judgment is that the termination of the Managing Director's services was in accordance with the Articles of Association and not in violation of any statutory provision. The court also emphasized that the termination was simpliciter and did not attach any stigma to the Managing Director's conduct, and rejected the petitioner's claim of mala fide.

Headnote:

Writ Petition - Termination of Managing Director - Companies Act, 1956, Section 284 - The court dismissed the writ petition seeking to challenge the termination of the Managing Director of a Government company, holding that the termination was in accordance with the Articles of Association and not in violation of any statutory provision. The court found that the termination was simpliciter and did not attach any stigma to the Managing Director's conduct. The court also rejected the petitioner's claim of mala fide, citing contradictory evidence. The court held that the appointment and termination of the Managing Director were within the authority of the Governor and were ratified by the Board of Directors of the company. The court concluded that the writ petition was not maintainable for enforcement of a contract of personal service and that the petitioner's remedy, if any, was a claim for damages for wrongful dismissal or breach of contract.

Fact of the Case:

The petitioner, a Managing Director of a Government company, challenged the termination of his services, claiming that it was arbitrary, illegal, and in contravention of the principles of natural justice. The petitioner alleged political considerations and mala fide in the termination process. The respondent company cited dissatisfaction with the petitioner's performance, disruption of power supply, and non-disbursement of employee salaries as reasons for the termination.

Finding of the Court:

The court found that the termination was in accordance with the Articles of Association and not in violation of any statutory provision. The court concluded that the termination was simpliciter and did not attach any stigma to the Managing Director's conduct. The court also rejected the petitioner's claim of mala fide, citing contradictory evidence. The court held that the appointment and termination of the Managing Director were within the authority of the Governor and were ratified by the Board of Directors of the company. The court concluded that the writ petition was not maintainable for enforcement of a contract of personal service and that the petitioner's remedy, if any, was a claim for damages for wrongful dismissal or breach of contract.

Issues: The issues involved in the case included the legality of the termination of the Managing Director's services, the applicability of principles of natural justice, and the authority of the Governor and the Board of Directors in the appointment and termination process.

Ratio Decidendi: The court held that the termination of the Managing Director's services was in accordance with the Articles of Association and not in violation of any statutory provision. The court also concluded that the termination was simpliciter and did not attach any stigma to the Managing Director's conduct. The court rejected the petitioner's claim of mala fide, citing contradictory evidence. The court held that the appointment and termination of the Managing Director were within the authority of the Governor and were ratified by the Board of Directors of the company. The court concluded that the writ petition was not maintainable for enforcement of a contract of personal service and that the petitioner's remedy, if any, was a claim for damages for wrongful dismissal or breach of contract.

JUDGMENT

A. K. Yog, J.—Earlier a Writ Petition (No. 45950 of 2003) was filed by the petitioner on more or less identical facts and grounds, as the present petition. It had several defects and, therefore, not entertained on merits and dismissed on the request of the learned counsel for the petitioner himself without prejudice to the right of the petitioner to file fresh writ petition so as to enable the petitioner to overcome the defects, which had crept inadvertently.

Petitioner, in the present writ petition, has claimed following reliefs :

“(i) to issue a writ, order or direction in the nature of certiorari quashing the impugned order of termination dated 20th September, 2003, passed by respondents (Annexure-6 to the writ petition) ;

(ii) to issue a writ, order or direction in the nature of mandamus commanding upon the respondents to continue the petitioner as the Managing Director of Purvanchal Vidyut Vitaran Company, Varanasi :

(a) to issue a writ, order or direction in the nature of certiorari calling for the appointment and quashing the appointment dated 18.10.2003 of Sri Mukul Singhal, Managing Director, Poorvanchal Vidyut Vitaran Nigam Limited, Varanasi ;

(b) to issue a writ, order or direction in the nature of mandamus commanding

upon the respondent to reinstate the petitioner on the post of Managing Director, Poorvanchal Vidyut Vitaran Nigam Limited, Varanasi ;

(iii) to issue any other writ, order or direction which this Hon’ble Court deems fit and proper, which the petitioner may be found entitled to, in the circumstances of the case ;

(iv) to award costs of the petition to the petitioner.”

2. Petitioner has prayed for issuing a writ of certiorari to quash impugned order of termination of his services as Managing Director of Purvanchal Vidyut Vitaran Nigam Limited/respondent No. 5 (Annexure-6 to the writ petition) as well as order dated 18.10.2003 appointing in his place on Mukul Singhal/respondent No. 6 as interim measure and a writ of mandamus to continue the petitioner as Managing Director of the said company on the following grounds :

“(A) Because the impugned action and order of the respondents is wholly arbitrary, illegal and in contravention of the principles of natural justice and, therefore, bad in law.

(B) Because the impugned action of the Government is clearly based on political consideration whereas a professional person like the petitioner has no role to play so far as the political considerations are concerned but in spite of this fact he has been made a scape goat.

(C) Because for removal of a director, Section 284 of the Companies Act itself contemplates that before removing a director he will be served with memo of charges and after considering his reply, the Government will take any action on the basis of the charges levelled and after considering the reply filed by the director.

(D) Because before passing the impugned order, the respondents neither provided any opportunity to the petitioner to explain his position nor he was informed of any ground on which action has been taken against him.

(E) Because the impugned action of the respondents entails serious civil consequences and, therefore, principles of natural justice had to be complied with.

(F) Because by change of Government all kind of actions are being taken against the officers appointed by the previous Government on the assumptions that they were close to the previous Government.

(G) Because there is absolutely no material before the State Government to infer on charges of misconduct against the petitioner.

(H) Because the petitioner was neither given to understand reasons for his removal nor he was given any show cause notice or copy of the resolution which was placed before the Committee as pointed out under Article 73, therefore the petitioner was in complete dark with regard to reasons for his removal.

(I) Because the C.M.D. deliberately withheld appraisal report from the committee and the committee did not have ch





































































































































































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