Government guidelines quashed for not aligning with Companies Act. Administrative vs statutory law clarified.

The court held that the guidelines issued by the government were not in line with the Companies Act, specifically section 637AA, and were based on government policy rather than established public policy. It ruled that administrative guidelines cannot supersede statutory provisions and quashed the guidelines, directing the Central Government to reassess applications for managerial remuneration in compliance with the law. The court emphasized the distinction between government policy and public policy, emphasizing that actions should not be detrimental to the public good.

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Issues Involved:
1. Whether the policy of the Government for the time being is synonymous with public policy as contemplated by a statute.
2. Whether administrative or executive guidelines can fetter the specific provisions of a statute.

Issue-wise Detailed Analysis:

1. Whether the policy of the Government for the time being is synonymous with public policy as contemplated by a statute:

The court examined whether the government's policy could be equated with public policy under the statute. The petitioners argued that the guidelines issued by the Central Government were based on government policy, not public policy. The court noted that public policy is generally expressed through legislative acts and is distinct from government policy. Public policy aims to serve the public good and is usually enacted through laws, whereas government policy can be subject to judicial review and is not necessarily synonymous with public policy. The court emphasized that public policy is a principle of law that holds that no action should be injurious to the public or against the public good. The court concluded that the guidelines issued by the government were based on its policy and not on any established public policy, making them distinct and not interchangeable.

2. Whether administrative or executive guidelines can fetter the specific provisions of a statute:

The court scrutinized whether administrative guidelines could override statutory provisions. The petitioners contended that the guidelines issued by the Central Government were ultra vires the Companies Act, particularly section 637AA, which mandates the Central Government to consider specific factors while fixing managerial remuneration. The court examined the relevant sections of the Companies Act, including sections 198, 269, 309, 637A, and 637AA. It noted that section 637AA, enacted following a judgment by the Delhi High Court, provides clear guidelines for the Central Government to follow while fixing remuneration. The court observed that the guidelines issued by the government did not consider the factors mandated by section 637AA and were based solely on government policy. The court held that the guidelines were ultra vires the provisions of the Act and that administrative instructions must align with the statutory provisions. Consequently, the court quashed the impugned guidelines and directed the Central Government to reconsider the applications in accordance with the law.

Conclusion:

The court concluded that the impugned guidelines were ultra vires the Companies Act and not in accordance with the statutory provisions. It held that government policy could not be equated with public policy as contemplated by the statute and that administrative guidelines could not override specific statutory provisions. The court issued a writ of mandamus directing the Central Government to reconsider the applications for managerial remuneration in accordance with the law.

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