TaxTMI 
TaxTMI 
2019 (8) TMI 917
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....ed, 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 12 of the Constitution of India. As per section 17.3.2 of HR policies of Petronet LNG Limited, the person equal to the post of Vice President and above is entitled for one club membership. The petitioner being in the position of senior Vice President applied for one club membership and the company made direct payment to the club and thereby he was allowed to take one club membership by the company itself in the year 2013 as per ....
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....rocurements, 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 further tender, respondent No.6 without approval of tender committee awarded contract in favour of M/s Pine Tree Pictures Pvt. Ltd. for Rs.55 lakhs and made advance payment without any bank guarantee violating rules and regulations of the company and with this letter the petitioner attached a copy of the approval note and the page of facebook showing, the proprietor of M/s Pine Tree Pictures Pvt. Ltd. family friend of respondent No.6 in evidence. 5. Being aggrieved....
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....r, 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 information/documents to higher authorities, various transparency, accountability, investigation bodies of Government etc. for urgent action in the matter to prevent damage to company and country. Accordingly, the petitioner being "Whistle Blower" informed about following serious financial irregularities by MD & CEO (respondent no.6), mentioned in paragraph 20k in a tabular form of "Grounds" in the petition to various authorities such as Chairman PLL, Board member of PLL, CVC as well as CBI. However, no action has ....
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.... 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 exercised by government over administrative, financial and functional activities of PLL. (b) That the central government directive dated 06.03.2007 to PLL regarding fixation of gas prices was upheld by Hon‟ble Supreme Court of India. (c) That there is significant financial control by 50% shareholding by four Central Government PSUs. (d) That the PLL fall within the purview of CVC. 10. Thus, it is submitted that the writ petition is maintainable as PLL is "state" within the meaning of Article 12 of the Constitution of India. To strengthen his arguments, reliance is placed on the case of Essar Steel Limited vs. Union of India and Others (Civil Appeal No. 4610 of 2009) the directive ....
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....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 financial aid or assistance in the form of debt from the government, and the salaries and other expenses of the petitioner are being paid out of the conclusion that the petitioner company is not "substantially financed" by the Government." (Annexure J-2) 14. Moreover, in the case of Petronet LNG Ltd. vs. Indian Petro Group and Another in CS(OS) No. 1102/2006, this court, under para 64 of its judgement pronounced on 13.04.2009 held as under: "64. Though the plaintiff disputes that it performs any governmental or public function, it does not deny being a company with an equity base of Rs. 1200 crores, of which 50% is subscribed by Central Government Public Sector Undertakings. Although such undertakings are not majority equity holders, and narrowly miss that description by one percent, nevertheless, they have a significant sharehol....
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....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 relevant factors."(Annexure J-5) 18. In case of Shree Anandi Mukta Sadguru Shree Muktajee Vandasjiswami Suvarna jayanti Mahotsav Smarak Trust & Ors. vs. V.R. Rudani: AIR 1989 SC 1607, the Hon‟ble Supreme Court of India in para 19 considered the scope and extent of power of High Court to issue writs to those bodies performing public functions. The Supreme Court after referring to De Smith‟s Judicial Review of Administrative action and relevant case law held as under: "19. The term "authority" used in Article 226, in the context, must receive a liberal meaning unlike the term in article 12. Article 12 is relevant only for the purpose of enforcement of fundamental right under Article 32. Article 226 confers power on the High Court to issue writs for enforcement of the fundamental rights as well as non-fundamental rights. The words "Any person or authority" used in Article 226 are, therefore, not to be confined only to statutory authorities....
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....teed under article 311(1) of the constitution of India. Such procedure would also do violence to the protective provision contained under Article 311(2) which ensures that no public servant is dismissed, removed or suspended without following a fair procedure in which he/she has been given a reasonable opportunity to meet the allegations contained in the charge sheet. Such a charge sheet can only be issued upon approval by the appointing authority i.e. Finance Minister." "55. Although number of collateral issues had been raised by the learned counsel for the appellants as well as the respondents, we deem it appropriate not to opine on the same in view of the conclusion that the charge sheet/ charge memo having not been approved by the disciplinary was non-est in the of law." (Annexure J-7) 22. Learned counsel for the petitioner argued that the respondents placed reliance on two judgements of Hon‟ble Supreme Court of India and had filed copy of these two judgements in the court during arguments of the present case on 26.04.2019. One judgement was in the case of Inspector General of Police vs. Thavasiappan and the second one was in the case of Transport Commissioner vs. A. ....
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....It is further argued that counsel for the respondents has shown the noting on the file to this court containing alleged approval of charge-sheet by MD & CEO i.e. respondent no.6 and placed reliance on this approval. Learned counsel further argued that the competent authority (CA) towards the disciplinary action and punishment is MD & CEO i.e. respondent no.6 and placed reliance on sections 4.4.3 and 4.4.3.6 of HR Policies-Section 4-Standards of Conducts & Performance annexed as Annexure SA-1 and copy of minutes of Nomination and remuneration committee meeting annexed as Annexure SA-2 with the supplementary affidavit filed by the respondent nos.4, 5 & 6. Thus, it is necessary for clarification in the matter to reproduce relevant sections 6, 178 (2), 179 (1) and 179 (3) of the Companies Act 2013 and the same are, therefore, reproduced as below: "Section -6 6. Act to override, Memorandum, Articles etc.-Save as otherwise expressly provided in this Act - a) The provisions of this act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement executed by it, or in any resolution passed by the company in gene....
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....ay, by a resolution passed at a meeting, delegate to any committee of directors, the managing director, the manager or any other principal officer of the company or in the case of a branch office of the company, the principal officer of the branch office, the powers specified in clauses (d) to (f) on such conditions as it may specify: Provided further that the acceptance by a banking company in the ordinary course of its business of deposits of money from the public repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, or the placing of monies on deposit by a banking company with another banking company on such conditions as the Board may prescribe, shall not be deemed to be a borrowing of monies or, as the case may be, a making of loans by a banking company within the meaning of this section." 26. Accordingly, on perusal of provision statutorily approval of the Companies Act, 2013, it is crystal clear that: (a) Disciplinary Authority in the petitioner is only Board of PLL under section 178(2) of the company act 2013 the petitioner being senior management level officer holding the post of "President" as board of PLL is the appointing / remova....
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....ost settled that the legislature can permit any statutory authority to delegate its power to any other authority, of course, after the policy has been indicated in the statute itself within the framework of which such delegatee is to exercise the power. The real problem or the controversy arises when there is a sub- delegation. It is said that when Parliament has specifically appointed authority to discharge a function, it cannot be readily presumed that it had intended that its delegate should be free to empower another person or body to act in its place." 29. Reliance is also placed on Government of Andhra Pradesh vs. M.A. Majeed & Anr.: 2006 (2) AIR Kar R 443 and submitted that a statutory authority is required to do something in a particular manner, the same must be done in that manner only. The state and other authorities, while acting under the statute, are the creatures of the statue and they must act within the four corners of the statute. 30. In the case of A K Kraipak vs. Union of India: (1969) 2 SCC 262, the Supreme Court has held as under: "The concept of natural justice has undergone a great deal of change in recent years. What particular rule of natural justice sh....
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....n of an independent adjudicator. He is not supposed to be a representative of the department/disciplinary authority/Government. His function is to examine the evidence presented by the department, even in the absence of the delinquent official to see as to whether the unrebutted evidence is sufficient to hold that the charges are proved." "28. When a department Inquiry is conducted against the Government servant it cannot be treated as a casual exercise. The Inquiry proceedings also cannot be conducted with a closed mind. The Inquiry officer has to be wholly unbiased. The rules of natural justice are required to be observed to ensure not only that justice is done but is manifestly seen to be done." 34. In the case of E. Busali v. The commandant, FLR: 1994 (68) Kar. HC. 993 it is held that "Inquiry conducted by a subordinate's officer of the complainant would be vitiated on the account of bias. The court held that in their view the learned Single Judge ought to have accepted the contention of the writ petitioner that the Inquiry officer, being a subordinate officer to the complainant, the entire proceedings relating to were vitiated." 35. The Hon‟ble Supreme Court in the ....
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....of the Inquiry Committee (EC) as recorded under para 5.6, 5.7 and 8 of the EC report dated 18.12.2018 (P/9) are reproduced below; "5.6 In the opinion of EC, all these authorities (except Secretary, MOPNG and Chairman PLL) are public functionaries of the country and any communication addressed to them amounts to putting the communication into public domain." "5.7 Disclosure of the confidential information relating to the tender process as contained in the letter dated 01.05.2018 clearly amount to "disclosing into public domain" and hence violation of secrecy and confidentiality of the said information relating to tender processes." "5.8 The said acts/omissions clearly amount to misconduct under clauses 4.3.1(o) and 4.3.1 (m) of General Standards of Conduct and Performance." 40. The conclusion arrived at by the EC under para 5.6, 5.7 &8 of its reports is not based on evidence adduced during the Inquiry but on conjecture. The opening words of para 5.6 viz "In the opinion of EC, all these authorities ...." itself that conclusion is arrived at on conjecture by importing personal knowledge by the Inquiry Committee and is tainted with bias. Writing confidential letter to CVC and ....
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....e director of M/s Pine Tree Picture Pvt. Ltd. Shri Gautam Chaturvedi, is a family friend of respondent No.6. Respondent No. 6 approved 75% advance payment without any bank guarantee in gross violations of rules and regulations. 43. As regards charge no.3 is concerned, it is as per clause 17.4.2 of HR policies that the petitioner is entitled for one club membership. Accordingly petitioner acquired membership of Chelmsford Club in Delhi. The charge against the petitioner is that he is entitled for corporate membership club and that he acquired individual membership of the Chelmsford club by misrepresenting the facts and thus misconducted. The findings of the Inquiry committee (EC) as recorded under paragraph 1, 6 and 7 are reproduced below; "1. A perusal of club membership policy (P/1) shows that the Management provides one club membership to V.P. and above." "6. Therefore, in the opinion of EC, the club policy of the company only refers to the Corporate Membership which is in favour of the Company and any eligible employee is required to be nominated by the Company under the said membership." ". It is clear that CSE was entitled only to a Corporate Club Membership and he fr....
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..... In email dated 13.11.2018 (P/31) petitioner informed respondent No.6 that appointing authority of the petitioner is board of directors through NRC (Nomination & remuneration Committee) and that approval of board had not been obtained before proceeding. On bogus charge sheet and that in the absence of approval of board, charge sheet cannot be issued to the petitioner. Petitioner further informed that it would be illogical for petitioner to attend unconstitutional Inquiry committee. 47. Accordingly, the petitioner has attempted to establish that the entire disciplinary 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. As such findings of the Committee are wrong, ultra vires and not impartial as the disciplinary proceedings are not held in good faith and without bias. 48. Learned Senior counsel submits that the present petition has been filed to challenge the Inquiry report of the Inquiry committee dated 18.12.2018 pursuant to a charge-sheet dated 21.08.2018. The writ had been filed at the stage when the Inquiry report dated 18.12.2018 was sent to the petitioner....
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....yees 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). The relevant clauses are extracted below :- "4.4.3 If any act of misconduct is proved against an employee any of the following punishments, commensurate with the offence can be inflicted. * Fine. * Warning or censure. * Stoppage not exceeding four days * Reduction to a lower grade or lower stage in the grade * Discharge or dismissal In the case of misconduct for which any of the above penalties other than the fine is proposed to be imposed, a chargesheet clearly setting out the allegations and charges, will be given to the employee concerned. He will within 7 days from the date of the receipt of said communication furnish his written explanation. An enquiry will be held by an Enquiry Committee nominated by the Management of the Company into the Competent Authority to drop the alleged charges arid the facts so communicated to the employee in writing. During the enquiry the employee concerned will ....
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....ty. Hence if any punishment is awarded other than 4.4.3 (e) and (f) of standards of conducts and performance of the HR Policy, MD& CEO is the competent authority. If the punishment falls under 4.4.3 (e) and (f) of standards of conducts and performance of the HR Policy, then the MD & CEO will forward the case to the NRC under section 178 of the Companies Act, 2013, since any removal or demotion of senior management personnel category should be recommended to the board by the NRC. However, section 178 has no role to play with respect to the initiation of the disciplinary proceedings. It will come into picture only at the time of imposition of penalty. The MD &CEO is clearly empowered and authorized under the delegation of authority as well as the standards of conducts and performance of the HR Policy (PLL) to initiate the disciplinary proceedings including the issuance of the charge sheet and the appointment of the Inquiry Committee. The original file showing that the MD &CEO has approved the issuance of the charge sheet has been perused by this Court during the hearing on 02.07.2019. 56. I have heard learned counsel for the parties at length and perused the material available on re....
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....epresentation, the petitioner filed the present writ petition challenging the Inquiry report as well as charge-sheet. 61. 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 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. 62. The charge sheet dated 21.08.2018 was issued to the petitioner and the same 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. The initiation of disciplinary proceedings is in accordance with the applicable rules of the company, including delegation of authority 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....