2004 (7) TMI 687 - HC - Indian Laws

Summary

Issues Involved:
1. Maintainability of the writ petition under Article 226 of the Constitution of India.
2. Alleged arbitrariness and violation of principles of natural justice in the termination process.
3. Applicability of Section 284 of the Companies Act, 1956.
4. Allegations of mala fide intentions behind the termination.
5. Validity of the Selection Committee's constitution and quorum.

Detailed Analysis:

1. Maintainability of the Writ Petition:
The respondents raised a preliminary objection regarding the maintainability of the writ petition under Article 226, arguing that the petitioner seeks enforcement of a contract of personal service, which is not maintainable. The court referred to several precedents, including Cooperative Central Bank Ltd. v. Additional Industrial Tribunal and Hanuman Prasad Gupta v. Hira Lal, to establish that Articles of Association do not have the force of law and are similar to contractual obligations. The court concluded that the writ petition is not maintainable for enforcing a contract of service, especially when no statutory provisions are violated.

2. Alleged Arbitrariness and Violation of Principles of Natural Justice:
The petitioner contended that the termination was arbitrary and violated principles of natural justice. The court noted that the termination was based on the recommendation of the Selection Committee under Article 73(g) of the Articles of Association, which does not require a specific procedure for removal. The court found no evidence of arbitrariness or violation of natural justice in the termination process, as the termination order was ratified by the Board of Directors and did not cast any stigma on the petitioner.

3. Applicability of Section 284 of the Companies Act, 1956:
The petitioner initially argued for the applicability of Section 284, which requires special notice and an opportunity to be heard before removing a director. However, this argument was not pressed during the course of the hearing. The court emphasized that the power to remove the Managing Director under Article 73(g) remains unaffected by Section 284, and the termination was in accordance with the Articles of Association.

4. Allegations of Mala Fide Intentions:
The petitioner alleged that the termination was politically motivated and based on mala fide intentions. The court examined the circumstances and found that the allegations were contradictory and not substantiated by evidence. The court noted that the termination was a result of dissatisfaction with the petitioner's performance, as documented in the minutes of the Selection Committee meeting, and not due to any political vendetta.

5. Validity of the Selection Committee's Constitution and Quorum:
The petitioner challenged the validity of the Selection Committee's constitution and the quorum. The court observed that the Selection Committee was constituted by an executive order and not under any statutory provision. The presence of representatives from I.I.M. and C.I.I. was consistent with the composition during the petitioner's appointment. The court rejected the argument regarding the quorum, stating that the issue was not raised in the writ petition or rejoinder-affidavit and that the majority of members present constituted a valid meeting.

Conclusion:
The court dismissed the writ petition, holding that it was not maintainable under Article 226 for enforcing a contract of personal service. The termination of the petitioner was found to be in accordance with the Articles of Association and did not violate any statutory provisions or principles of natural justice. The allegations of mala fide intentions were deemed unsubstantiated, and the validity of the Selection Committee's constitution and quorum was upheld. The petitioner was advised to seek remedy through a claim for damages for wrongful dismissal or breach of contract.