2017 (2) TMI 746 - HC - Companies Law

Appointments, probation and termination of service - appointment by deputation - Writ Petition seeking direction not to fill up 50% of the posts of Executive Director, henceforth by direct recruitment or deputation and/or on contract basis unless there is no eligible and suitable officer available internally in SEBI Held that - Executive Director can be a promotee. He can also be a deputationist. He can also come by direct recruitment and that direct recruitment is distinct from another mode of recruitment and that is on contract basis. However, 50% of the total posts are to be filled from internal candidates and the remaining 50% to be filled-in by deputation / contract and/or direct recruitment. In case of non-availability in any category, namely, internal and deputation / open market the post may be filled in from other categories. Thus, a person who has experience and special knowledge of law, investigation, finance, economics, accountancy, administration etc and found to be useful to the Board, can be recruited. The Petitioners have projected that though there are eligible departmental candidates available working in Grade-F posts having completed three years or more service in the said grades, they have not been considered for being appointed to the post of Executive Director by way of promotion and instead a practice has been followed to invariably bring persons for appointment by other methods, namely, deputation / contract basis. The appointment to the post of Executive Director by way of deputation is permissible only in terms of Regulation 7(3). The Petitioners have not projected the specific grievance of employees who have been over-looked and in preference to the deputationist. If the Petitioners are praying for safeguarding and protecting the just, legitimate right and interest of internal SEBI employees working in Grade-F and below in matters of promotion to the post of Executive Director, then, they ought to have indicated with clear example of individuals who have been adversely and prejudicially affected. The promotional avenues of the SEBI employees to the extent indicated in the Regulations are untouched and undisturbed. The general grievances as projected in the Writ Petition and in the representations / legal notice have been rightly answered by relying on the provisions of the Act and the Regulations. Notwithstanding anything in the employees Regulations the Board s right to appoint the officers of its choice has not been affected. The internal candidates and their interests are not sacrificed or surrendered much less defeated or frustrated. Once the recruitment even from open market enables Petitioner No.1 and its members to apply and they can be considered, then, all the more we do not see any substance in the Petitioners grievance. Further, paragraph 5 of the affidavit highlights as to how the eight positions have been filled in and/or are being filled in. The four positions of the Executive Directors have been filled in by promoting the officers from highest grade i.e. Grade-F. For the remaining four posts, two are filled in by the Executive Directors who have been appointed on contractual basis for three years, one by deputation and remaining two are vacant. They are to be filled in by the process of advertisement. In that process as well, the Petitioners have participated. If their understanding was as projected in the Writ Petition or their representations, possibly they would not have been able to apply at all. As a result of the above discussion, we do not find that the Petitioners have any pre-existing legally enforceable right to claim a writ of mandamus and direction in terms of prayer clauses (a) and (b). The Writ Petition is devoid of merits and it is dismissed. Rule is discharged. In the circumstances, there shall be no order as to costs.

Summary

Issues Involved:
1. Legality of SEBI's method of filling Executive Director posts.
2. Petitioners' claim for promotion to Executive Director posts.
3. SEBI's compliance with its own regulations regarding recruitment.

Issue-wise Detailed Analysis:

1. Legality of SEBI's method of filling Executive Director posts:
The Petitioners sought a writ of mandamus under Article 226 of the Constitution of India, directing SEBI not to fill 50% of the Executive Director posts by direct recruitment, deputation, or contract basis unless no eligible and suitable officer is available internally. They argued that SEBI should resort to these modes of appointment only in special circumstances. The Court examined SEBI's power under Section 9 of the SEBI Act, 1992, which allows SEBI to appoint officers and employees as necessary for efficient discharge of its functions. The Court found that SEBI's right to appoint officers of its choice is unrestricted by the Regulations, and SEBI can recruit from the open market, including internal candidates.

2. Petitioners' claim for promotion to Executive Director posts:
The Petitioners, including a registered association of SEBI employees, claimed that their members eligible for promotion to Executive Director posts were overlooked in favor of external candidates. They argued that SEBI's practice of filling 50% of Executive Director posts by deputation or contract basis violated their right to be considered for promotion. The Court noted that the Regulations allow for filling these posts by promotion, deputation, direct recruitment, or contract basis, with 50% of posts to be filled by internal candidates. The Court found no evidence that SEBI's actions violated the Petitioners' right to be considered for promotion.

3. SEBI's compliance with its own regulations regarding recruitment:
The Petitioners argued that SEBI's recruitment process did not adhere to its Regulations, particularly Regulation 6(4) and 7(3), which state that posts in Grade-D and above can be filled by deputation or contract only in special circumstances. The Court examined the Regulations and found that SEBI's recruitment practices are consistent with the Regulations. The Schedule appended to the Regulations specifies that 50% of Executive Director posts should be filled by internal candidates and the remaining 50% by deputation, contract, or direct recruitment. The Court found that SEBI's practice of filling these posts through various modes, including external recruitment, is permissible and does not violate the Regulations.

Conclusion:
The Court dismissed the Writ Petition, finding that SEBI's recruitment practices for Executive Director posts are consistent with the SEBI Act and the Regulations. The Petitioners' claims of being overlooked for promotion were not substantiated, and SEBI's right to appoint officers of its choice remains intact. The Court concluded that the Petitioners have no legally enforceable right to the reliefs sought, and there is no evidence of any arbitrary or unreasonable actions by SEBI.