(Prayer: This writ appeal is filed under Section 4 of the Karnataka High Court Act, 1961 praying to set aside the order dated 21.10.2019 passed by the learned Single Judge in writ petition No.33296/2019 and to dismiss the writ petition filed by the 3rd respondent.)
Abhay S. Oka, CJ.
1. By this appeal, the appellant who is the 3rd respondent in the writ petition has challenged the Judgment and Order dated 21st October, 2019 passed by the learned Single Judge in Writ Petition No. 33296 of 2019 filed by the 3rd respondent in the present appeal.
2. With a view to appreciate the submissions made across the Bar, a reference to the few factual details will be necessary. The 2nd respondent - the Karnataka Power Transmission Corporation Limited (for short 'KPTCL) - is a company owned by the State Government. Initially, it used to transmit power throughout the State. In 2002, the State Government formed four distribution companies including the fourth respondent - the Bangalore Electricity Supply Company Limited (BESCOM) - which distributes power to eight districts. The appellant entered into the service on the establishment of the 2nd respondent - KPTCL as an Assistant Engineer on 28th October 1985. On 21st July, 2008, he was promoted to the post of Chief Engineer. But, he was reverted to the post of the Superintending Engineer, in view of the decision in the case of B.K. Pavitra (I) & Others -vs Union of India and Others (2017 (4) SCC 620). In view of the Karnataka Act No 21 of 2017, the appellant claimed that his seniority was restored by a deeming provision. On 15th June, 2019, he was posted to work as the Managing Director of the Karnataka Vidyuth Karkhane Limited (for short, 'KAVIKA'), another State Government owned company. According to the case of the appellant, the 3rd respondent (writ petitioner) was deputed to work as the Director (Technical) of BESCOM and DIN number was allotted to 3rd respondent on 5th September, 2018. On 9th October, 2018, an order of deputation to work dated 16th August, 2018 was placed in 91st meeting of the Board of Directors. Subsequently, Form No. DR3 was filed. On 22nd July, 2019, the appellant was appointed as the Director (technical) of BESCOM and on the very same date, a declaration was filed by the appellant expressing his intention to become a Director in accordance with Section 149 of the Companies Act, 2013 ( for short, 'the said Act of 2013). On 22nd July, 2019, the 3rd respondent-writ petitioner was appointed as a Director of 'KAVIKA' and on 23rd July, 2019, the 3rd respondent-petitioner handed over the charge of the post of the Director (Technical) BESCOM to the appellant. According to the case of the appellant, in the Board meeting of the BESCOM dated 7th August, 2019, the transfer of shares of ex-directors was resolved and approved to be transferred to the newly appointed Director. The 3rd respondent-petitioner challenged the appointment of the appellant made on 22nd July, 2019 as the Director (Technical) of BESCOM by filing a writ petition being Writ Petition No. 33296 of 2019 before the learned Single Judge.
3. The statement of objections were filed by the present appellant to the writ petition filed by the 3rd respondent-petitioner. It was contended that the appointment of the appellant as the Director (Technical) of BESCOM cannot be challenged without impleading the BESCOM as a party to the writ petition, as it is a company incorporated under the provisions of the Companies Act, 2013. It was contended that the 3rd respondent-petitioner does not possess the requisite qualification to hold the post of the Chief Engineer (Electrical). It was contended that the appellant has been promoted as the Assistant Executive Engineer on 5th February, 1992, whereas, the 3rd respondent-petitioner was promoted to the said post subsequently on 29th January, 1999. It was pointed out that all subsequent promotions to the posts of Executive Engineer, Superintending Engineer, Chief Engineer and the Director (Technical) of BESCOM were granted earlier to the appellant and subsequently, the 3rd respondent-petitioner was promoted to the said posts. It is contended by the appellant that pursuant to the decision of the Apex Court in the case of B.K. Pavitra (II) -vs- Union of India & Others (2019 SCC Online SC 694), the provisional list was prepared and in the said provisional list, the name of the appellant was at serial number-2 in the cadre of the Chief Engineer. As far as the 3rd respondent-petitioner is concerned, no eligibility date was fixed, as he did not put in the requisite five years of service as on the date of his appointment as the Chief Engineer. It is submitted that before the Government passed the orders in exercise of its power under Article-74 (a) and (b) of the Articles of Association and Memorandum of Association of the BESCOM, all the procedural formalities including the passing of the Board resolutions were complied with. It was submitted that the appellant has assumed the charge of the post of the Director (Technical) BESCOM on 23rd July, 2019 and the 3rd respondent- petitioner, after handing over the charge of the said post to the appellant, filed the writ petition and this fact has not been incorporated in the writ petition. It was contended that under clauses (a) and (b) of Article-74 of the Articles of Association, the Government of Karnataka is empowered to nominate and appoint the Director (Technical) of BESCOM and at the same time the Government has its absolute discretion to remove the Director. The appellant reiterated that for making appointment to the post of the Chief Engineer, experience of five years as Superintending Engineer is mandatory and when the 3rd respondent-petitioner was appointed as the Chief Engineer, he did not possess the requisite experience.
4. The learned Single Judge, in the impugned Judgment and order, extensively referred to the provisions of the said Act of 2013 and in particular, Section 152 and 161 of the said Act of 2013 and came to the conclusion that in view of sub-section (3) of Section 152 of the said Act of 2013, a person cannot be appointed as a Director unless he has been allotted with DIN number, as it is mandatory under Section-154. The learned Single Judge referred to the documents handed over to the Court which revealed that DIN number was allotted to the 3rd respondent-petitioner on 5th September 2018. The learned Single Judge noted that the appointment of the appellant was by company's resolution passed in its 98th meeting of the Board held on 7th August, 2019. The learned Single Judge, therefore, held that the contention of the appellant that he has taken over the charge of the post on 23rd July, 2019 is of no consequence. The learned Single Judge perused the file containing the proposal for appointment of the appellant as the Director (Technical) BESCOM and observed that the 2nd respondent-KPTCL had forwarded the proposal to the Hon'ble the Chief Minister which is not backed by any reasons. He observed that there is no proposal for removal of the appellant from the office of the Director of BESCOM and that there is only a proposal for appointment of the 3rd respondent-petitioner as the Managing Director of KAVIKA. The learned Single Judge observed that the Hon'ble Chief Minister merely approved both the proposals without recording reasons. Thereafter, the learned Single Judge referred to the law lay down by the Apex Court in the case of B.P. Singhal -vs- Union of India ((2010) 6 SCC 331) on the doctrine of pleasure. The learned Single Judge has referred to another decision of the Division Bench of the Bombay High Court in the case of Dhyaneshwar Digambar Kamble -vs- State of Maharashtra and others ((2016) 2 Maharashtra Law Journal 602 (DB)). The learned Single Judge, therefore, held that there are no reasons assigned for the removal of the 3rd respondent-petitioner and for the appointment of the appellant to the post of the Director (Technical) BESCOM and accordingly, proceeded to set aside the order of appointment of the appellant dated 22nd July, 2019 by allowing the writ petition filed by the 3rd respondent-petitioner.
5. The learned Senior Counsel appearing for the appellant has taken us through the pleadings and in particular, the grounds of challenge. He urged that there is not even a whisper in the ground of challenge regarding the violation of the provisions of and procedures prescribed by the said Act of 2013 and therefore, the findings recorded by the learned Single Judge that various provisions of the said Act of 2013 were not followed and that the allotment of DIN number must precede passing of the resolution appointing the Director (Technical) BESCOM are erroneous findings and cannot be upheld. He urged that even the finding that the appellant could not have taken over the charge of the post on 23rd July, 2019 rendered by the learned Single Judge has no foundation in the pleadings at all. He urged that the appellant was prevented from filing objections on factual aspects regarding compliance of the provisions of and procedure prescribed by the said Act of 2013. The learned Senior Counsel himself invited our attention to the law laid down by the Apex Court in the case of B.P. Singhal (supra) which was followed in the two decisions of the Bombay High Court. He urged that if the order appointing the appellant is to be set aside, the entire exercise must be ordered to be re-done in terms of the decision in the case of B.P. Singhal (supra). He also invited our attention to the decision of the Division Bench of this Court, in the case of S. Govindappa -vs- the Chief Secretary, Government of Karnataka (1991 SCC Online Kar. 377: (1992) 2 Kant LJ 296 (DB))
6. The learned counsel appearing for the 3rd respondent-writ petitioner supported the impugned Judgment by pointing out that the findings recorded by the learned Single Judge regarding violation of provisions of the Companies Act, 2013 are based on the documents and material produced before the learned Single Judge and therefore, there is no prejudice to the appellant. He submitted that the learned Single Judge, after perusal of the proposals placed before the Hon'ble the Chief Minister, noticed that there are absolutely no reasons assigned either in the proposals or in the order of the Hon'ble Chief Minister and therefore, he has rightly applied the law lay down in the case of B.P. Singhal (supra). He submitted that in paragraph-44 of the impugned order, the learned Single Judge observed that his Judgment will not prevent the Government to act in accordance with the law.
7. We have considered the submissions. At this stage, we must note one factual aspect that a copy of the amended writ petition was placed on record which shows that BESCOM was added as a party Respondent No.4 to the writ petition by way of an amendment.
8. Firstly, we must advert to the second ground on which the writ petition was allowed. For that purpose it is necessary to refer to the Articles of Association of BESCOM. What is material is clause (b) of Article-74 which reads thus:
"(b) So long the entire paid up share capital in the Company is held by the Government of Karnataka or by the Central Government or by the Government of Karnataka and the Central Government, or by a subsidiary of a wholly owned Government company, the Government of Karnataka shall have the right to nominate and appoint one or more of the Directors to the Office of the Chairman of the Board of directors or Managing Director or Whole Time Directors of the Company for such term and on such remuneration and/or allowance as it may think fit and may at any time remove him/them from office and appoint another/others in his/their place(s)":
Thus, it provides that the Government of Karnataka shall have the right to nominate and appoint one or more Directors to the office of the Chairman of the Board of Directors or the Managing Director or fulltime Director of the company and may, at any time, remove them from the office and appoint other persons in their places. It is this power which was exercised by the State Government to remove the 3rd respondent-petitioner from the post of the Director (Technical) BESCOM and to appoint the appellant to the said post. Therefore, we will have to consider the law laid down by the Apex Court on the doctrine of pleasure to decide this question arising in this appeal.
9. A proposal was prepared by the BESCOM. Paragraph 26 of the proposal was for appointment of the 3rd respondent as the Managing Director of KAVIKA and paragraph-27 of the proposal was for appointment of the appellant as the Director (Technical) BESCOM. The English translation of the remarks/ order of the Hon'ble Chief Minister reads thus:
"Para No.26 and 27 are approved".
10. There is no serious dispute that while according approval, in exercise of doctrine of pleasure by invoking clause (b) of Article 74, no reasons were recorded by the Hon'ble Chief Minister. Even the proposals did not contain any reasons. The main contention is that the appointment of the 3rd respondent as the Director (Technical) BESCOM was at the pleasure of the Government which could be cancelled anytime. It is, therefore, necessary to refer to the decision of the Apex Court in the case of B.P. Singhal (supra). The issue before the Apex Court was concerning appointment of the Hon'ble Governor. In paragraph 16 onwards, the Apex Court referred to the law relating to the doctrine of pleasure. Thereafter, the Apex Court distinguished the doctrine of pleasure, as prevailing in England and as prevailing in India. In paragraph 22, the Apex Court held thus:
"22. There is a distinction between the doctrine of pleasure as it existed in a feudal set-up and the doctrine of pleasure in a democracy governed by rule of law. In a nineteenth century feudal set-up unfettered power and discretion of the Crown was not an alien concept. However, in a democracy governed by rule of law, where arbitrariness in any form is eschewed, no Government or Authority has the right to do what it pleases. The doctrine of pleasure does not mean a licence to act arbitrarily, capriciously or whimsically. It is presumed that discretionary powers conferred in absolute and unfettered terms on any public authority will necessarily and obviously be exercised reasonably and for the public good".
In paragraph 23, the Apex Court relied upon the well known classic treatise on Administrative Law by Mr. H.W.R. Wade and C.F. Forsyth. Then, in paragraph 24, the Apex Court held thus:
"24. It is of some relevance to note that the "doctrine of pleasure" in its absolute unrestricted application does not exist in India. The said doctrine is severely curtailed in the case of government employment, as will be evident from clause (2) of Article 310 and clauses (1) and (2) of Article 311. Even in regard to cases falling within the proviso to clause (2) of Article 311, the application of the doctrine is not unrestricted, but moderately restricted in the sense that the circumstances mentioned therein should exist for its operation. The Canadian Supreme Court in Wells v. Newfoundland [1999 (177) DL (4th) 73(CanSC)] has concluded that "at pleasure" doctrine is no longer justifiable in the context of modern employment relationship".
The sum and substance of what is held by the Apex Court is that the decision of the Government by invoking the doctrine of pleasure must be for good and compelling reasons and it cannot be at the sweet will, whim and fancy of the State Government, but it can only be for valid reasons and the power referable to doctrine of pleasure can be used reasonably and only for public good.
11. Now coming back to the facts of the present case, one situation can be that the proposal contains valid reasons and the Hon'ble Chief Minister approves the reasons. To make the exercise lawful, the file must show application of mind by the Hon'ble the Chief Minister. The other contingency can be that even the proposal contains no reasons, but the order of the Hon'ble Chief Minister reflects the reasons. In this case, both the things are absent. Hence, it is a case of arbitrary exercise of the so-called doctrine of pleasure, which is not permissible in law. In fact it amounts to use of doctrine of pleasure at the whims and fancies of the State. Therefore, on this ground, we are inclined to hold that the view taken by the learned Single Judge is absolutely correct.
12. As far as the first ground regarding violation of the provisions of the said Act of 2013 is concerned, we have carefully perused the memorandum of writ petition filed by the 3rd respondent. There is absolutely no factual foundation for the said contention in writ petition. There is not even a contention raised that before the 7th August, 2019, the appellant could not have assumed the charge of the post of the Director (Technical) BESCOM. The fact that the charge that was taken over by the appellant on 23rd July, 2019 is suppressed. There are grounds pleaded in support of the challenge in the petition only in paragraphs 9 to 12 and none of the said paragraphs even refers to violation of provisions of the said Act of 2013. The findings recorded by the learned Single Judge regarding violation of the said Act of 2013 are based on the documents produced before the learned Single Judge. Violation of provisions of the said Act of 2013 is not merely a legal
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issue but it is based on the facts. If the learned Single Judge wanted to go into the said issue, he could have permitted the 3rd respondent to amend the writ petition so that, the appellant and the BESCOM could have dealt with the factual details. Only on this ground, the said finding of the learned Single Judge, insofar as it relates to violation of the said Act of 2013 is concerned, cannot be sustained. 13. According to us, one modification is necessary to the impugned order. After setting aside the order of the Hon'ble Chief Minister on the ground that there are no valid reasons recorded for exercise of doctrine of pleasure, the learned Single Judge ought to have directed the authorities to place the proposals submitted by the BESCOM before the Hon'ble Chief Minister for his decision, so that one way or the other, a decision could have been taken by the Hon'ble Chief Minister in accordance with law. For the foregoing reasons, we pass the following: ORDER i) We concur with the view taken by the learned Single Judge that the order dated 22nd July, 2019 stands vitiated due to arbitrary and illegal exercise of doctrine of pleasure. Therefore, the directions issued in paragraphs 42 and 43 of the impugned judgment are not disturbed; ii) We direct that the proposals submitted for cancellation of the appointment of the 3rd respondent-writ petitioner and for the appointment of the appellant shall be placed before the Hon'ble Chief Minister. It is obvious that the Hon'ble Chief Minister is free to pass the appropriate orders in accordance with law, keeping in mind the law laid down by this Judgment; iii) The file be placed before the Hon'ble Chief Minister immediately after expiry of six weeks from the date of this judgment and order is available on the website of the High Court; iv) With the above directions, the writ appeal stands disposed of, with no order as to the costs.