TMI Blog2019 (8) TMI 917X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings are unconstitutional, void, wrong and against the principles of natural Justice and in contravention of provision of Article 311 of the Constitution of India. Validity of ex-parte report of Inquiry Committee dated 18.12.2018 and charge-sheet dated 21.08.2018 issued to the petitioner - holding of CBI/CVC Inquiry against the respondent no.6 for financial corruption being committed by the said respondent - HELD THAT:- The present petition has been filed at the stage when the Inquiry report dated 18.12.2018 was sent to the petitioner vide letter dated 24.12.2018 and one weeks‟ time was granted to him to make the representation. It is not in dispute that, at his request, vide letter dated 04.01.2019 he was granted further time to submit his representation by 11.01.2019 against the representation. However, instead of making the representation, the petitioner filed the present writ petition challenging the Inquiry report as well as charge-sheet - Further case of the petitioner is that the charge-sheet has been issued by an incompetent authority as it has been issued by the Senior Manager HR; under Section 178 of the Companies Act, 2013 the appointing authority of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 18.12.2018 and charge-sheet dated 21.08.2018 issued to the petitioner and further seeks direction to the respondents to hold CBI/CVC Inquiry against the respondent no.6 for financial corruption being committed by the said respondent. 2. The brief facts of the case are that the petitioner, who is an officer of President level and senior most permanent employee of the company, Petronet LNG Limited, is the victim of highhandedness OF corrupt officers present within the company. Since the petitioner is a whistle blower against the corruption and has made various financial corruption charges against the respondent no.6, he being in the commanding position victimizing the petitioner without any rhyme and reason so that the petitioner be kept silence against the corruption. 3. The Petronet LNG Limited is a joint venture company formed by the Government of India to import LNG and set up LNG terminals in the country. It involves India‟s 4 leading central public undertaking companies namely GAIL, ONGC, IOCL BPCL and these four PSU‟s have 50% share equity in the Petronet LNG Limited, thus, falls within the definition of State under Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng any position of President level at Dahej. Respondent no.6 favoured one Mr.Pushp Khetrapal who was a President (O M) and also Chief Ethical Officer (Chief Vigilance Officer) in the company and he was made President (BD Projects) and his reporting also got changed from Director (Technical) to Director (Finance) in order to promote unethical business practices as Chief Vigilance Officer, who is also made incharge of business development, head of procurements, head of projects and finance with him. 4. Being aggrieved by the aforesaid unethical practice of respondent no.6, the petitioner made a confidential letter/representation to the Chairman of the company as well as Chief Vigilance Commissioner and Director CBI. The petitioner on 02.07.2018 wrote a letter to the Chairman of the Petronet LNG Limited about the financial and procedural irregularities committed by respondent no.6 in awarding foundation day celebrating contract to M/s Pine Tree Pictures Pvt. Ltd. owned by his family friends on the basis of nomination despite of the fact that the candidature of M/s Pine Tree Pictures Pvt. Ltd. had not been considered by the tender committee and without inviting any fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. After recording of finding against the petitioner, the Senior Manager (HR) wrote a letter to the petitioner to submit his representation within one week upto 31.12.2018, failing which the competent authority will pass order on the charges levelled against him. After receiving the email dated 24.12.2018 sent by the company to the petitioner, on 31.12.2018 he sent an email to the Chairman with copy to Board of Directors, Prime Minister Office, Hon‟ble Corporate Office and Finance Minister, Petroleum Minister, Cabinet Secretary, CVC, CBI, CAG, Secretary, Minister of Corporate Affairs, CVO etc. 7. Learned counsel for the petitioner submits that it is established that respondent no.6 has repeatedly violated the Companies Act 2013, rules made thereunder and rules regulations of PLL and Board approved policy for doing corruption. The corruption by MD CEO (respondent no. 6) of a company having significant role in energy security of country is a matter of national concern and cannot be confined to company alone. If a MD CEO (respondent no.6) of the company is involved in corrupt practices, employees are duty bound to object and can write with supporting informa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eptember 2016 on holidays and used high end hired cars at the cost of PLL. 8. Learned counsel for the petitioner further submitted that the respondents in their counter affidavits could not specifically deny these corruption charges levelled by the petitioner but argued various points with respect to maintainability of the writ petition and justifying in issuing charge-sheet and proceedings etc. 9. On the issue of maintainability of the writ petition under Article 226 of the Constitution of India is concerned, learned counsel for the petitioner argued that the name of the Company is Petronet LNG Limited , so it is a public Limited Company as per Section 4- Memorandum (1) of Companies Act 2013 and not a Private Company as wrongly mentioned at several places in counter affidavits by the respondents. PLL was formed as a joint venture company by Government of India in 1998, in pursuance of cabinet decision on 04.07.1997. The PLL is the instrumentality of Government because it comes under purview of other authorities of state under Article 12 of the Constitution of India, because: (a) That the deep and pervasive control is exercis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... day-to-day responsibility on the shoulders of the nominee directors of GNCTD does not dilute their powers, responsibilities and privileges as directors of the petitioner company. 12. From the above judgement, it is obvious that four Directors from Central Govt. Public Sector Undertaking and Chairman from Ministry of Petroleum and Natural Gas and one Director from Govt. of Gujarat on the Board of PLL exercise substantial administrative, functional financial Control over PLL. 55. In the present case, the petitioner company had been initially incorporated/ established by the GNCTD. The equity share capital of the company, before GNCTD entered into the SHA with IDFC, had been fully subscribed to and paid-up by the GNCTD. Even after having entered into the SHA with IDFC, GNCTD s share capital contribution continues to be 50%, which is significant and therefore Substantial for the purpose of the Act. 13. From the above judgement, it is obvious that 50% shareholding subscribed by Central Government Public Sector Undertaking in PLL is a significant holding. 59. Merely because, the petitioner company is not receiving fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is not controlled, and is autonomous is irrelevant; indeed, the concept of non-government organization means that it is independent of any manner of government control in its establishment, or management. That the organization does not perform or predominantly perform public duties too, may not be materials, as the object for funding is achieving a felt need of a section of the public, or to secure larger societal goals. To the extent of such funding, indeed. The organization may be a tool, or vehicle for the executive government s policy fulfilment plan. This view, about coverage of the enactment, without any limitation, so long as there is public financing ... (Emphasis supplied) (Annexure J-4) 17. In the case of Ajay Hasia and Ors vs. Khalid Mujib Sehmavardi Ors: AIR 1981 SC 487, the Hon‟ble Supreme Court has also emphasized in para-11 as below: 11. The court emphasized that the concept of agency or instrumentality of the government is not limited to a corporation or society created by a statute but is equally applicable to a company or a society and in each individual case would have to be decided on a consideration of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y and it can be approved by a Subordinate to the Disciplinary Authority. The learned counsel for the petitioner contradicted to the argument of learned counsel for the respondents by arguing that charge memo/sheet issued to the petitioner is not approved by the Disciplinary Authority (Board of Directors) and it is signed by an officer five ranks junior to the petitioner and, therefore, is non-est in the eyes of law. 21. To strengthen his arguments on the point raised above, learned counsel for the petitioner cited the judgement of Hon‟ble Supreme Court of India in the case of Union of India Ors. vs. B.V. Gopinath: 2014 (1) SSC 351 wherein in paragraph 41 and 55 held as under: 41. We are unable to interpret this provision as suggested by the Additional Solicitor General, that once the disciplinary authority approves the initiation of the disciplinary proceeding, the charge sheet can be drawn up by an authority other than the disciplinary authority. This would destroy the underlying protection guaranteed under article 311(1) of the constitution of India. Such procedure would also do violence to the protective provision contained under Artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority subordinate to the appointing authority and another approval viz. The formal charge sheet to be issued, was not required. This view has been specifically rejected and not accepted in B.V. Gopinath (supra). The ratio in B.V. Gopinath (supra) has to be applied with full vigour force in cases where there is violation of rules 14(3) of the rules for after the departmental proceedings are over, possibility of ex-post facto approval is unacceptable and it is in this context that the term non-est has been used. (Annexure J-8) 24. Learned counsel for the petitioner argued that from the judgment of Hon‟ble Supreme Court of India in para 3(ii) and judgement of this Court in para 3 (v) above, it is well settled that charge memo/sheet require approval of Disciplinary Authority before conducting disciplinary proceedings. It is, therefore, inferred that charge-sheet issued to the petitioner having not been approved by the Board of PLL being Disciplinary Authority under section 178 (2) of the Companies Act 2013, is non-est in the eyes of law. The disciplinary process is to germinate from Board of PLL being the disciplinary authority. 25. It is further ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e memorandum or articles, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting: Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting. Section 179(3) (3) The Board of Directors of a company shall exercise the following powers on behalf of the company by means of resolutions passed at meetings of the Board, namely:- (a) to make calls on shareholders in respect of money unpaid on their shares; (b) to authorise buy-back of securities under section 68; (c) to issue securities, including debentures, whether in or outside India; (d) to borrow monies; (e) to invest the funds of the company; (f) to grant loans or give guarantee or provide security in respect of loans; (g) to approve financial statement and the Board s report; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the company act 2103, the board of directors of the company shall exercise power as per the provision in this Act and not inconsistent therewith. The powers of the board of directors are specified under 179(3) of the Act. (e) Board of Directors can delegate powers mentioned in sub clause (d) to (f) of section 179 (3) only. It is obvious that Board of Directors is not empowered to delegate disciplinary power to anybody. 27. Counsel for the petitioner further argued that the reliance placed by the respondents on the provisions of section 4.4.3 and 4.4.3.6 of H.R. policies section 4 standards of conducts performance is totally wrong, bad in law and utter violation of provision of section 6, 178 (2), 179 (2) and 179(3) of the Companies Act 2013. The Board of PLL has no power to delegate its disciplinary powers to anybody including MD CEO under section 179 (3) of the Companies Act, 2013. Such power has never been delegated by the Board of PLL to MD CEO i.e. respondent no.6. The H.R. Policies-Section 4-Standards of Conducts Performance (SA/1) are outdated, inconsistent and at variance with the provision under section 178(2), 179(1) and 179(3) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Learned counsel for the petitioner corroborated from the submissions made under para 3 (i) to (xii) mentioned above and the judgements mentioned above that the charge-sheet dated 21.8.2018, which does not have the approval of disciplinary authority (Board of PLL) is without jurisdiction, illegal, bad in law and non-est and deserves to be quashed. Moreover, the constitution of committee does not have the approval of Board of PLL being the disciplinary authority and therefore, it is illegal and without jurisdiction. 32. To strengthen his argument, counsel for the petitioner has relied upon the case of Union of India and Ors. vs. Mohd Nasseem Siddiqui ILLJ: (2005) 931 MP, of Madhya Pradesh High Court, which is held as under: 7. One of the fundamental principles of natural justice is that no man shall be a judge in his own cause. This principle consists of seven well recognised facets: (i) The adjudicator shall be impartial and free from bias, (ii) The adjudicator shall not be the prosecutor, (iii) The complainant shall not be an adjudicator, (iv) A witness cannot be the Adjudicator, (v) The Adjudicator must not import his personal knowledge of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a real danger of bias and it is on this score that the surrounding circumstances must and ought to be collated and necessary conclusion drawn therefrom. In the event, however, the conclusion is otherwise that there is existing a real danger of bias administrative action cannot be sustained: If on the other hand allegations pertain to rather fanciful apprehension in administrative action, question of declaring them to be unsustainable on the basis therefor would not arise. 36. It is submitted that appointment of Shri V.K. Mishra, who is a subordinate of the complainant (respondent No.6), as member of committee is in utter violation of principles of natural justice and court judgements mentioned above and vitiates the disciplinary proceedings. From the submissions mentioned above, it is substantiated that the committee has been constituted arbitrarily, unreasonably and colours with bias and, therefore, deserves to be quashed. 37. On the issue of findings of Committee, it is submitted by counsel for the petitioner that the petitioner has written several letters through e-mail informing respondents that his disciplinary authority is Board of PLL and c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CVC or CBI Director. In the contents of the letter dated 01.05.2018, there is nothing like highly confidential and sensitive as termed by respondent No.6 deliberately. As such charge no.1 is wrongly proved against the petitioner. 41. As far as charge no.2 is concerned, it is submitted that a complaint letter dated 02.07.2018 (P/3) and its enclosure approval note dated 01.06.2018 (P/21) written by the petitioner to Dr. M.M. Kutty, Secretary, Ministry of Petroleum and Natural Gas and copy sent to other various government authorities. Accordingly, the allegation against the petitioner is that the approval note neither belongs to the department of the petitioner nor its possession thereof belongs to the work domain of petitioner and that petitioner unauthorisedly got access to the approval note and communicated to various public authorities and thus misconduct. The findings of the Inquiry committee (EC) report as recorded under paragraph 15 of the EC report dated 18.12.2018 are reproduced below: 15 EC also finds that sharing of approval note amounts to unauthorised communication / disclosure of official document/information relating to the Company s b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licies, the company shall provide one club membership to V.P and above as admitted by EC under paragraph 1 of its report. It does not mention corporate club membership. The conclusion is arrived at by the EC, under paragraph6 mentioned above, by importing personal knowledge and is tainted with bias. It is as well in utter violation of provision under clause 17.4.2 of H.R. policies. 45. It is pertinent to mention here that Shri A.K Chopra, Senior Vice President (L D) is also having same type of membership of Chelmsford club as the petitioner, as would be evident from PLL‟s letter no PLL/HR-CM-CC/2018-19/002 dated 4th July 2018, copy annexed as P-24). Although petitioner has been charge sheeted on 21.8.2018 for allegedly having wrong membership of the club but no charge sheet has been issued to Shri A.K. Chopra along with petitioner. It is thus obvious that respondent No. 6 is not impartial and is biased vindictive against the petitioner. 46. On the other hand, Mr. Sudhir Nandrajog, Senior Advocate appearing for respondent nos.4 to 6 submitted that the petitioner did not attend the committee proceedings inspite a number of chance given to him and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as granted further extension to submit his representation against the report by 11.01.2019, however, instead of making the representation, the petitioner filed the present writ petition challenging the Inquiry report as well as charge-sheet. 49. Learned counsel further submits that main challenge of the petitioner is that; the charge-sheet has been issued by an incompetent authority as it has been issued by the Senior Manager HR; under Section 178 of the Companies Act, 2013 the appointing authority of the petitioner is the Board of Directors; since the approval of the Board of Directors was not obtained the charge-sheet is liable to be quashed and finding of guilt by Inquiry committee on the allegedly incompetent charges is violative of principles of natural justices. 50. Learned Senior Advocate submits that the petitioner was issued a charge sheet dated 21.08.2018. It was sent through his reporting officer i.e. Director (Technical) and was communicated by Senior Manager HR. It was duly approved by the MD CEO of PLL as stated below. The initiation of disciplinary proceedings is in accordance with the applicable rules of the company, including delegat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee concerned will be afforded reasonable opportunity of explaining and defending himself. The Enquiry Committee will establish the truth or otherwise of the charges and present its findings to the competent authority, which after due consideration of all relevant facts, will decide the action to be taken. In the event it is decided by the competent authority that employee is innocent, this fact will be so communicated to him in writing. If, however, the competent authority finds the employee to be guilty of some or all the charges and therefore decides to inflict punishment on him, a show cause notice will be issued to the employee concerned, informing the employee as to show cause within 7 days from the date of receipt of the communication by him as to why the proposed penalty should not be imposed on him. The reply to the show cause notice will then be considered by the competent authority and final orders communicated to the employee. 53. Hence it is evident that the MD and CEO is the competent authority and has full power for initiation of disciplinary action against any officer of PLL. 54. Relevant extracts of Section 178 of the Companies Act, 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing on 02.07.2019. 56. I have heard learned counsel for the parties at length and perused the material available on record. 57. Regarding maintainability of the petition is concerned, respondent company is Public Limited Company‟ as per section 4-Memorandum-(1) of Companies Act, 2003. The company was formed as a joint venture company by Government of India in 1998 in pursuance of Cabinet decision on 04.07.1997. Thus, it is an instrumentality of Government because it comes under purview of other authorities of State under Article 12 of the Constitution of India. 58. In addition, deep and pervasive control is exercised by Government over administrative, financial and functional activities of the respondent company. Moreover, there is significant financial control by 50% shareholding by four central Government PSUs mentioned above and it falls within the purview of CVC. Moreover, in case of Essar Steel Limited (Supra), the directive of Central Government to company under their letter dated 06.03.2007 was upheld by the Supreme Court of India on 19.04.2016. In case of Petronet LNG Limited (Supra), it is held by this court that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thority Manual, HR policy amended from time to time and is also not in variance with the Companies Act 2013 and rules thereof. 63. As per clause 4.14 of the DOA Manual, the powers pertaining to HR vests with the MD CEO in consultation with the Head of the HR Department. The said powers pertaining to HR will be exercised by CEO MD in consultation with the head of the HR Department. 64. As per clause 4.4.3.6 of the HR Policy, the competent authority (CA) towards disciplinary action and purpose of punishment is CEO MD for the officers and directors concerned for the operational and supporting staff. 65. Section 4 of the standard of conducts and performance of the HR Policy (PLL) which is duly approved by the Board of Directors and applicable on the employees including the petitioner clearly lays down the process to be followed by HR department in consultation with the functional head and the MD CEO for any action including disciplinary proceedings against a delinquent employee and powers of the MD CEO (respondent No. 6). Thus, MD and CEO is the competent authority and has full power for initiation of disciplinary action against an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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