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TMI Blog2004 (7) TMI 687X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r during course of arguments in Court. Case of the petitioner in the writ petition : 4. Petitioner, in brief, pleads that U. P. Power Corporation Limited (for short called 'U.P.P.C.L.') is a Government company, registered under Companies Act, 1956, engaged in transmission and distribution of power to consumers in the State of Uttar Pradesh, in order to have effective control and distribution four sub-companies, including the Purvanchal Vidyut Vitaran Nigam Ltd., with Head Quarter at Varanasi were formed and registered under the Companies Act, 1956, ; post of Managing Director of other companies including Purvanchal Vidyut Vitaran Nigam Limited (hereinafter referred to as 'P.V.V.N. Ltd.') were advertised ; an interview letter dated May 29. 2003 (Annexure-1 to the writ petition) was issued calling the petitioner to attend the interview and the petitioner appeared for interview before Selection Committee (referred in Article 73, Articles of Association of the Company) which comprised of the following : (i) Chief Secretary, Government of U. P.; (Chairman) (ii) Principal Secretary, Energy Department U. P. Government; (Member) iii) Chairman and Managing Dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the news report, which was printed in 'Amar Ujala' Varanasi Edition is Annexure-V to the petition. 8. In the aforementioned backdrop, it is contended by the petitioner that on a day's notice, a meeting of the Committee as convened as contemplated under Article 73 of the Articles of Association and impugned order of removal dated 20.9.2003, passed by the Governor (Annexure-6 to the writ petition), which is outcome of political consideration and in contravention of principles of natural justice and therefore, arbitrary and illegal. 9. According to the petitioner, respondent Company is a Government Industrial Company, Admittedly. State Government holds 100% share of the Company/P. V.V.N. Ltd. and, therefore, it is an 'Authority',/instrumentality of the State under Article 12 of the Constitution of India. Case of the respondent Nos. 1, 2 and 4 in counter-affidavit ; 10. In the counter-affidavit filed by the respondent No. 1 it is averred that rights of the petitioner as Managing Director were governed by the Articles of Association of the Company and petitioner is trying to enforce the contractual obligations enshrined under the Articles of Association o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paras 12 and 16 of the counter-affidavit of respondent No. 1). As an interim measure, one Mukul Singhal was appointed and posted as Managing Director of P.V.V.N. Ltd.. who took charge of the said post on 18.10.2003. The termination of the petitioner has also been ratified by the Company vide its resolution dated 20.10.2003 ; a true copy of the minutes of the Board of Directors of company is Annexure-C.A. 8 to the counter-affidavit. Other respondents have also filed their counter-affidavit, stating same facts as alleged in counter-affidavit of respondent No. 1 : Pleadings in rejoinder-affidavit in reply to the counter-affidavit of respondent No. 1 : 14. In the rejoinder-affidavit dated 8.12.2003, while facts stated in the writ petition has been reiterated, it is again alleged by the petitioner that Company is Government Company and is a State within meaning of Article 12 of the Constitution of India and every action should be according to the principles enriched under Article 16 of the Constitution of India. Once action of the respondent is colourable exercise of power the writ petition is maintainable and preliminary objection is liable to be rejected. 15. Petition has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in reply thereto. 20. Relevant extract of Articles of Association and Section 284 of the Companies Act, for ready reference reproduced below. 21. In the present case, services of the petitioner have been terminated by the Selection Committee referred to under Article 73 of the Articles of Association. For ready reference, relevant extract of Articles of Association (Annexure-9 to the writ petition) is given below : Articles of Association of Purvanchal Vidyut Vitran Nigam Ltd. Company Limited by Shares interpretation 1. In the interpretation of the Memorandum of Association and these Articles the following expressions shall have the following meanings, unless repugnant to the subject or context: The Act or the said Act means the Companies Act, 1956......... Company means the Purvanchal Vidyut Vitran Nigam Ltd. Directors means the Directors of the Company, or as the case may be Directors assembled at Board. Government means the Government of Uttar Pradesh. Government Corporation means (i) .................................. (i) a Government Company as defined in the Act. Managing Director means a director selected as such by the Sele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (4) Where notice is given of a resolution to remove a director under this section and the director concerned makes with regret thereto representations in writing to the company (not exceeding a reasonable length) and requests their notification to members of the company, the company shall, unless the representations are received by it too late for it to do so : (a) in any notice of the resolution given to members of the company, state the fact of their presentations having been made. and (b) send a copy of the representations to every member of the company to whom notice of the meeting is sent (which before or after receipt of the representations by the company). and a copy of the representations is not sent as aforesaid because they were received too late or because of the company's default, the director may (without prejudice to his right to be heard orally) require that the representations shall be read out at the meeting : Provided that copies of the representations need not be sent out and the representations need not be read out at the meeting if, on the application either of the company or of any other person who claims to be aggrieved, the Company Law B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Articles of Association of a Company incorporated under the Companies Act and such Articles of Association have never been held to have the force of law.................. (ii) Hanuman Prasad Gupta v. Hira Lal: The Apex Court held : ..........................It is well established that the Articles of Association constitute a contract between a company and its members in respect of their ordinary rights as members. (iii) Babaji Kondaji Garad and Ors. v. Nasik Merchants Co-operative Bank Ltd., Nasik. 26. Referring to the case of Co-operative Central Bank Ltd. (supra), Supreme Court noted : .................. Bye-law of a Cooperative Society can at best have the status of an Article of Association of a Company governed by the Companies Act, 1956 and as held by this Court in Co-operative Central Bank Ltd. v. Additional Industrial Tribunal, Andhra Pradesh, the bye-laws of a Cooperative Society framed in pursuance of the provisions of the relevant Act cannot be held to be law or to have the force of law. They are neither statutory in character nor they have statutory flavour so as to be raised to the status of law. 27. Sri Sudhir Agarwal, during course of argume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contingencies : (i) where the writ petition seeks enforcement of any of the fundamental rights ; (ii) where there is failure of principles of natural Justice ; or (iii) where the orders or proceedings are wholly without jurisdiction or the vires of an Act is challenged. (See Whirlpool Corporation v. Registrar of Trade Marks). The present case attracts applicability of the first two contingencies. Moreover, as noted, the petitioners' dealership, which is their bread and butter, came to be terminated for an irrelevant and non-existent cause. In such circumstances, we feel that the appellants should have been allowed relief by the High Court itself instead of driving them to the need of initiating arbitration proceedings. 30. It is argued by the petitioner that the two contingencies Nos. (ii) and (iii), enumerated by the Apex Court in the case of Harbanslal (supra), exist in the present case. 31. At the out set we may mention that petitioner (as also confirmed by Sri V. B. Upadhyaya, learned senior counsel for the petitioner), has not pressed submissions made regarding non-compliance of Section 284 of the Company Act. The short question in the instant case to be decided is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion of violation of petitioner's fundamental rights arises. 37. Similar view has been taken in the case of Smt. Farrel Futado v. State of Goa and Ors. 1994 (80) CompCas 659. 38. Consequently we find that petitioner is not entitled to any relief through this writ petition under Article 226, Constitution of India for enforcement of contract of service. Moreover, we find that under Section 284, Companies Act, petitioner is entitled to file suit for damages. No other point has been raised. 39. Petition falls and is accordingly, dismissed. 40. We make no order as to costs. V. N. Singh, J.-I agree with opinion of Hon'ble Mr. Justice A. K. Yog regarding dismissal of writ petition. However. I want to express my opinion separately on grounds taken by petitioner in writ petition and objections raised by respondents. 42. Preliminary objection raised by the learned counsel for the respondents is that, writ petition is not maintainable on the ground that there is no breach of statutory provisions. Article 73(g) of Articles of Association under which services of petitioner has been terminated by appointing authority is not a statutory provision. 43. Regarding non ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntract. But when a right of statutory statute is given to an employee and there has been a violation of provision of statute, while terminating the service of such an employee, latter will be entitled to get the relief of declaration that order is null and void and that he continues to be in service as it will not then be a mere case of master terminating service of a servant. The exceptions to the normal rule that no declaration to enforce contract of personal service will be granted are given below : (a) Public servant, who has been dismissed from service in contravention of Article 311 of Constitution ; (b) Reinstatement of the dismissed worker under industrial Law or by Labour or by industrial Tribunals ; (c) A statutory body when it has acted in breach of mandatory obligation imposed by the statute. 47. Dismissal though in violation of regulation framed under Agricultural Produces (Development of Warehousing) Corporation Act is not in breach of mandatory obligation under the Act, employee cannot claim reinstatement. Smt. J. Tiwari v. Smt. Jawala Devi Vidya Mandir 48. In above mentioned case. it has been held that, right and obligation of an employee of a priv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d case. It has been held that, it is really the nature of its personality as State which is significant and must characterize all its action, in whatever Held, and not the nature of function, contractual or otherwise, which is decisive of the nature of scrutiny permitted for examining the validity of its act. The requirement of Article 14 being the duty to act fairly, justly and reasonably, there is nothing which militates against the concept of requiring the State always to so act, even in contractual matters. There is a basic difference between the acts of the State which must invariably be in public interest and those of a private individual, engaged in similar activities, being primarily for personal gain. which may or may not promote public interest. Viewed in this manner, in which we find no conceptual difficulty or anachronism, we had no reason why the requirement of Article 14 should not extend even in the sphere of contractual matters for regulating the conduct of the State activity. Further it has been held that, it is now too well-settled that every State action. In order to survive must not be susceptible to the vice of arbitrariness which is the crux of Article 14 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch action is not taken in purported exercise of a statutory power at all. 56. The limitations imposed by rules of natural justice cannot operate upon powers which are governed by the terms of an agreement exclusively. The only question which normally arises in such cases is whether the action complained of is or is not in consonance with the terms of the agreement. 57. It has been argued by the respondents that according to Article 73 of the Article of Association on the recommendations of the Selection Committee, Managing Director shall be appointed. 58. In this connection attention of the Court has been drawn towards Annexure-III of the writ petition, according to which petitioner was appointed by His Excellency Governor under Article 73 of the Articles of Association. 59. Attention of the Court was also drawn towards the termination order of the petitioner, Annexure-VI to the petition, by His Excellency Governor under Article 73 of the Articles of Association. 60. Contention of the respondents is that, as the power of appointment includes the power of termination and as petitioner was appointed under Article 73 of the Articles of Association and his services were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Court has also been drawn towards Sub-section (7) (a) of Section 284 of the Companies Act, which reads as follows : 284 (7) Nothing in this section shall be taken : (a) as depriving a person removed thereunder of any compensation or damages payable to him in respect of the termination of his appointment as director or of any appointment terminating with that as Director. 67. In this connection, attention of the Court has been drawn towards Sub-section (7) (b) If Section 284 of the Companies Act, which reads as follows : 284 (7) (b) Nothing in this section shall be taken as derogating from any power to remove a director, which may exist apart from this section. 68. It has been argued by respondent that, as procedure under Article 73 of Articles of Association has been given for appointment and termination, which has been followed, it cannot be said that, wrong procedure has been applied for terminating the services of the petitioner. Moreover, It is in accordance with Sub-section (7) (b) of Section 284 of Companies Act. In such circumstances as there is no breach and mode prescribed in the Article 73 of Articles of Association was adopted and according to Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in support of such facts is not annexed to the writ petition or to the counter-affidavit, as the case may be, the Court will not entertain the point. There is a distinction between a pleading under the Civil P.C. and a writ petition of a counter-affidavit. While in a pleading, that is a plaint or a written statement, the facts and not evidence are required to be pleaded, In a writ petition or in the counter-affidavit not only the facts but also the evidence in proof of such facts have to be pleaded and annexed to it. Asif Hameed and Ors. v. State of Jammu and Kashmir In above mentioned case it has been held by the Apex Court that ratio of the decision in the United Commercial Bank Ltd. v. Their Workmen, is inapplicable to the Committee constituted by executive order for performing purely administrative function. Selection of the candidates for admission to Medical Colleges does not involve performance of any judicial or quasi-judicial function. 74. In the present case also Committee was constituted by Executive order for performing purely administrative function. In this connection attention of the Court was drawn towards Article 73 of Articles of Association, which reads ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ogramme, all Managing Directors of Company went to Lucknow to meet Chief Minister. He was lonely summoned by the Chief Minister and there it was told by Chief Minister that he should resign otherwise, he will be dismissed. After hearing the talk of the Chief Minister, Managing Director returned back. 80. It shows that allegation of mala fide is totally false and allegation in writ petition and news given in newspaper are contradictory to each other. 81. It has been argued by the respondents that contention of the petitioner in the rejoinder-affidavit that, State Government being a share holder has no business in the affairs of the Company regarding termination of the Managing Director, as contract is between the Company and its Managing Director. The argument of the respondents is that. as the appointment of the petitioner was made by His Excellency Governor and appointment includes termination and termination was also made by the same authority, argument of the petitioner has no force. 82. Moreover, the termination order was ratified by the Board as per Annexure-C.A. 8 to the counter-affidavit of respondent No. 1. 83. The argument of the respondent's counsel is tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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