Representative board composition cannot be negated by circular when the statute requires employee representation through the scheme.

Section 9 scheme-making power for board composition must be exercised consistently with the statute's objective of genuine employee representation. The Court noted that representation of workmen and non-workmen officers had been implemented through selection from a representative body or panel, and that an executive circular could not replace that mechanism by allowing appointment of any officer of proven ability irrespective of association affiliation. A circular that cut across the representative principle was inconsistent with the Act and the Scheme, although the Government could alter the framework only by appropriate amendment. The circular was therefore ultra vires and void.

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Issues: Whether the circular dated 23-8-1982, which withdrew the earlier practice of selecting the non-workman director from a panel furnished by the majority association of officers, was ultra vires the Act and the Scheme.

Analysis: Section 9 of the Act empowers the Central Government to frame a scheme for the constitution of the board of directors and contemplates representation of employees and other specified categories by election or nomination in the manner specified by the scheme. The discretion to choose the mode is not unfettered and must be exercised to give effect to the legislative intent of creating a truly representative board. In the case of employees, especially workmen and non-workmen officers, the scheme had been consistently worked on the basis that representation would be drawn from the relevant representative body or panel. The later circular, by authorising appointment of any officer of proven ability irrespective of association affiliation, cut across that representative principle and was inconsistent with the statute and scheme. The Government could improve the machinery by appropriate amendment, but until then it had to administer the existing scheme in a manner that preserved the maximum scope for employee representation.

Conclusion: The circular was held to be ultra vires the Act and the Scheme and therefore void.

Ratio Decidendi: Where a statute requires representative board composition to be worked out through a scheme, the delegated authority must exercise its choice of election or nomination consistently with the legislative purpose of genuine representation and cannot, by executive circular, negate an existing representative selection mechanism.

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