Premnath Ravindranath v. State of Kerala and Kerala Financial Corporation and others

## **IN THE HIGH COURT OF KERALA AT ERNAKULAM** ## **PRESENT:** ## **THE HONOURABLE MRS. JUSTICE ANU SIVARAMAN** ## **FRIDAY, THE 24TH DAY OF MARCH 2017/3RD CHAITHRA, 1939** **WP(C).No. 5133 of 2013 (N) ---------------------------** ## **PETITIONER(S):** **-------------** **PREMNATH RAVINDRANATH, GENRAL MANAGER (FINANCE & MARKETING), KERALA FINANCIAL CORPORATION, THIRUVANANTHAPURAM.** **BY ADVS.SRI.M.K.DAMODARAN (SR.) SRI.K.JAYAKUMAR (SR.) SRI.P.K.VIJAYAMOHANAN SRI.GILBERT GEORGE CORREYA SMT.DHANYA P.ASHOKAN** ## **RESPONDENT(S):** **--------------** **1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY TO GOVERNMENT, FINANCE DEPARTMENT, GOVERNMENT SECRETARIAT, THIRUVANANTHAPURAM - 695001.** **2. THE KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, THIRUVANANTHAPURAM - 695003, REPRESENTED BY ITS CHAIRMAN AND MANAGING DIRECTOR.** **3. N.ASOK KUMAR, GENERAL MANAGER,(ADMINISTRATION & RECOVERY), KERALA FINANCIAL CORPORATION, VELLAYAMBALAM, THIRUVANANTHAPURAM- 695033.** **SKG** ## **WP(C).No. 5133 of 2013 (N) ---------------------------** ## ***ADDITIONAL R4 IMPLEADED** **4. K.F.C. PROFESSIONAL FORUM, REP. BY ITS WORKING PRESIDENT, V.PRATHAPACHANDRAN, AGED 64 YEARS, SON OF S .VARADARAJA NAIR, RESIDING AT AMBUJAVILASAM, VANCHIYOOR, THIRUVANANTHAPURAM** ***ADDITIONAL R4 IS IMPLEADED AS PER ORDER DATED 24.03.2017IN IA.13329/2016** **R1 BY SPL. GOVERNMENT PLEADER SRI. SURESH BABU C.M. R2 BY ADVS. SRI.T.V.GEORGE, SC, KFC SRI.BASANT BALAJI, SC R3 BY ADVS. SRI.K.JAJU BABU SMT.M.U.VIJAYALAKSHMI R4 BY ADV. SRI.SIVAN MADATHIL** **THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 24-03-2017, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:** **SKG** ## **WP(C).No. 5133 of 2013 (N)** ## **---------------------------** ## **APPENDIX** ## **PETITIONER(S) EXHIBITS** ## **-----------------------** - **P1TRUE COPY OF THE NOTIFICATION DATED 16.11.2007 PUBLISHED BY THE 2ND RESPONDENT CORPORATION.** - **P2TRUE COPY OF THE APPLICATION SUBMITTED BY THE PETITIONER WHICH ELABORATES THE QUALIFICATIONS AND EXPERIENCE OF THE PETITIONER.** - **P3TRUE COPY OF THE MINUTES OF THE SELECTION COMMITTEE DATED 16.02.2008.** - **P3(A)-TRUE COPY OF THE NOTE TO THE BOARD MEETING HELD ON 14.03.2008.** - **P4TRUE COPY OF THE APPOINTMENT ORDER DATED 16.02.2008.** - **P5TRUE COPY OF THE SERVICE ORDER NO.PSL/1277/09 DATED 25.03.2009.** - **P6TRUE COPY OF THE OFFICE ORDER NO.842 DATED 03.03.2010 OF THE 2ND RESPONDENT.** - **P7TRUE COPY OF THE EXPLANATION SUBMITTED BY THE 2ND RESPONDENT VIDE COMMUNICATION NO.PSL/1212/2011 DATED 11.05.2011.** - **P8TRUE COPY OF THE ENQUIRY REPORT DATED 12.08.2011 SUBMITTED BY THE FINANCE INSPECTION (PU-A) DEPARTMENT.** - **P9TRUE COPY OF THE REPORT SUBMITTED BY THE VIGILANCE OFFICER TO THE 2ND RESPONDENT.** - **P10- TRUE COPY OF THE REPORT OF THE FINANCE INSPECTION (NT-E) WING OF THE FINANCE DEPARTMENT.** - **P11- TRUE COPY OF THE ENQUIRY REPORT OF THE FINANCE INSPECTION WING BY THE 2ND RESPONDENT UNDER THE COVER OF LETTER NO.KFC/CMD/174/2012-13 DATED 18.01.2013 ISSUED TO THE PETITIONER.** - **P12- TRUE COPY OF THE EXPLANATION DATED 01.02.2013 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT.** ## **SKG** ## **WP(C).No. 5133 of 2013 (N) ---------------------------** - **P13- TRUE COPY OF THE EXTRACTS OF THE PERFORMANCE RATING OF THE YEAR 2008-2009.** - **P14- TRUE COPY OF THE EXTRACTS OF THE PERFORMANCE RATING OF THE YEAR 2009-2010.** - **P15- TRUE COPY OF THE EXTRACT OF THE PERFORMANCE RATING RECORDED BY THE MANAGING DIRECTOR FOR THE YEAR 2011-2012.** - **P16- TRUE COPY OF THE EXTRACT OF THE PERFORMANCE RATING RECORDED BY THE MANAGING DIRECTOR FOR THE YEAR 2012-2013.** - **P17- TRUE COPY OF THE LETTER OF APPRECIATION DATED 28.12.2011 ISSUED BY THE CHAIRMAN AND MANAGING DIRECTOR IN APPRECIATION OF THE PERFORMANCE OF THE PETITIONER IN VARIOUS NOVEL VENTURES OF THE CORPORATION.** - **P17(A)- TRUE COPY OF THE LETTER OF APPRECIATION DATED 04.02.2012 ISSUED BY THE CHAIRMAN AND MANAGING DIRECTOR IN APPRECIATION OF THE PERFORMANCE OF THE PETITIONER IN VARIOUS NOVEL VENTURES OF THE CORPORATION.** - **P17(B)- TRUE COPY OF THE LETTER OF APPRECIATION DATED 04.04.2012 ISSUED BY THE CHAIRMAN AND MANAGING DIRECTOR IN APPRECIATION OF THE PERFORMANCE OF THE PETITIONER IN VARIOUS NOVEL VENTURES OF THE CORPORATION.** - **P17(C)- TRUE COPY OF THE LETTER OF APPRECIATION DATED 01.08.2012 ISSUED BY THE CHAIRMAN AND MANAGING DIRECTOR IN APPRECIATION OF THE PERFORMANCE OF THE PETITIONER IN VARIOUS NOVEL VENTURES OF THE CORPORATION.** - **P18- TRUE COPY OF THE COMMUNICATION NO.912295/PU-A1/2010/FIN. DATED 31.12.2012 OF THE PRINCIPAL SECRETARY, FINANCE ADDRESSED TO THE 2ND RESPONDENT.** - **P19- TRUE COPY OF THE COMMUNICATION DATED 7.11.2007 RECEIVED FROM THE SIDBI IN RESPONSE TO EXT.R2 © REQUEST.** - **P20- TRUE COPY OF THE LETTER HEAD OF THE 'KFC PROFESSIONALS FORUM' SHOWING THE OFFICE BEARERS** - **P21- TRUE COPY OF THE COMPLAINT DATED 25.7.2011 BEFORE THE HON'BLE MINISTER FOR FINANCE** - **P22- TRUE COPY OF CIRCULAR NO.26/FIW.A1/2010/FIN.DATED 10.3.2010** - **P23- TRUE COPY OF THE ATTENDANCE REGISTER FOR THE MONTH OF MARCH, 2009** **SKG** **WP(C).No. 5133 of 2013 (N) ---------------------------** - **P24- TRUE COPY OF THE ATTENDANCE REGISTER FOR THE MONTH OF FEBRUARY, 2005** - **P25- TRUE COPY OF THE ATTENDANCE REGISTER FOR THE MONTH OF MARCH, 2005** - **P26- TRUE COPY OF THE REPRESENTATION DATED 13.2.2013 SUBMITTED BY THE PETITIONER BEFORE THE 2ND RESPONDENT** - **P27- TRUE COPY OF THE MINUTES OF THE BOARD MEETING HELD ON 28.3.2008 WITH THE ATTENDANCE OF THIS DEPONENT** - **P28- TRUE COPY OF THE NOTE TO THE BOARD PROPOSING THE AMENDMENT TO THE STAFF REGULATION** - **P29- TRUE COPY OF THE MINUTES OF THE MEETING OF THE BOARD OF DIRECTORS OF THE CORPORATION DATED 12.10.2007** - **RESPONDENT(S)' EXHIBITS -----------------------** **R2(a) TRUE COPY OF CHAPTER II OF KFC STAFF REGULATION 1966** **R2(b) TRUE COPY OF THE MINUTES OF THE BOARD MEETING DTD.30.7.07** **R2(c) TRUE COPY OF LETTER DTD 22.9.07 FORWARDED TO SIDBI** **R2(d) TRUE COPY OF MINUTES OF THE BOARD MEETING DTD.12.10.07** - **R2(e) TRUE COPY OF CERTIFICATE DTD.22.10.03 ISSUED BY THE FEDERAL BANK** - **R2(f) TRUE COPY OF CALL LETTER DT.21.1.08 ISSUED TO THE PETITIONER** - **R2(g) TRUE COPY OF ENQUIRY NOTES AND ITS REPORT DT.13.8.12 DESCRIBING THE CLARIFICATION OT THE QUERIES RAISED BY FINANCE INSPECTION WING (NTE)** - **R2(h) TRUE COPY OF REPORT DTD.22.11.11. SUBMITTED BY CORPORATE SECRETARY TO THE 2ND RESPONDENTS** - **R2(i) TRUE COPY OF EVALUATION SHEET OF THE SELECTION COMMITTEE DTD.14.2.08** **R2(j) TRUE COPY OF CERTIFICATE ISSUED BY EXIM BANK DTD 30.4.08** **SKG** ## **WP(C).No. 5133 of 2013 (N)** ## **---------------------------** - **R2(k) TRUE COPY OF DRAFT REPORT DTD.3.3.08 ADDRESSED TO PETITIONER AND APPROVED BY THE MANAGING DIRECTOR WITH HIS REMARKS** - **R2(l) TRUE COPY OF MINUTES OF BOARD MEETING DTD.14.3.08.** - **R2(m) TRUE COPY OF COMPLAINT DTD.8.12.10 SUBMITTED BY ADV.PUSHPADAS TO SUTHARYA KERALAM** - **R2(n) TRUE COPY OF MINUTES OF BOARD MEETING DTD.8.11.2011** - **R2(o) TRUE COPY OF LETTER DTD.27.10.2011 ADDRESSED TO THE 1ST RESPONDENT BY THE 2ND RESPONDENT** - **R2(p) TRUE COPY OF WORK ALLOCATION ORDER DTD 3.2.08 ISSUED BY THE MANAGING DIRECTOR** - **R2(q) TRUE COPY OF CHARGE MEMO DTD.21.7.2011 ISSUED TO THE PETITIONER BY THE MANAGING DIRECTOR** - **R2(r) TRUE COPY OF ORDERS OF THE CHAIRMAN AND MANAGING DIRECTOR DTD.22.9.2011** - **R2(s) TRUE COPY OF THE MINUTES OF THE BOARD MEETING DTD.18.6.2010** - **R2(t) TRUE COPY OF LETTER DATED 24.9.2010 DECLINING THE REQUEST OF the 2ND RESPONDENT FOR THE CREATION OF THE POST OF GENERAL MANAGER (FINANCE)** - **R2(u) TRUE COPY OF ATTENDANCE REGISTER SIGNED BY THE 3RD RESPONDENT AND FORMER GENERAL MANAGER** - **R2(v) TRUE COPY OF THE QUICK VERIFICATION REPORT IN QV/02/2014/SIU-II DATED 31.12.2014** - **R1(a) TRUE COPY OF THE DETAILS OF GENERAL MANAGERS APPOINTED FROM 1981-2007** - **R1(b) TRUE COPY OF THE COMMUNICATION NO.KFC/HRD/2740/2011-12 DATED 27.10.2011** ## **/TRUE COPY/** **P.S. TO JUDGE** **SKG** ## **ANU SIVARAMAN, J.** ## **= = = = = = = = = = = = = = =** ## **W.P.(C).No.5133 of 2013 = = = = = = = = = = = = = = = Dated this the 24[th] day of March, 2017** ## **JUDGMENT** 1. The challenge in this writ petition is against Exhibit P10 report submitted by the Finance Inspection Wing of the Government of Kerala, after conducting enquiry in the 2[nd] respondent organisation. It is alleged that on the basis of the said report, steps had been taken by the Government to take action against the petitioner. The petitioner apprehended his removal from the post of the General Manager on the strength of a finding contained in the report that the qualification fixed for the post of General Manager (Finance) was improper and that the post was filled up with undue haste without getting sanction from the Government. - 2.Heard the learned Senior counsel for the petitioner and the learned special Government Pleader for the Finance as well as the learned standing counsel for the 2[nd] respondent Corporation. W.P.(C).No.5133/13 2 3.It is submitted that the petitioner had been appointed as General Manager on 26.03.2008 pursuant to the notification of the vacancy and after a due selection process. Pursuant to an inspection conducted by the Finance Department, the Vigilance Officer of the Kerala Financial Corporation had conducted an enquiry and reported that the selection and appointment of the petitioner was in accordance with the Act and Regulations. In August 2012, a further inspection was conducted by the Finance Inspection Wing and Exhibit P10 report was furnished alleging irregularity in the appointment of the petitioner and recommending the cancellation of the selection and conduct of a fresh selection as also recommending disciplinary action against the petitioner for negligence in marking his attendance. On the basis of the said report, the petitioner apprehended that the action would be taken to terminate his services, which prompted him to file this writ petition. - 4.By order dated 22.02.2013, this Court granted a stay of all further proceedings pursuant to Exhibit P10, pending the writ W.P.(C).No.5133/13 3 petition. Thereafter, exhaustive pleadings were placed on record, principally on the point of the power of the State Government to cause an inspection by the Finance and Inspection Wing of the Government as also the power to give instructions to the Corporation as such. 5.The 2[nd] respondent is a financial corporation established under Section 3 of the State Financial Corporations Act, 1951. Section 9 of the Act provides that the general superintendence, direction and management of affairs and business of the Corporation shall vest in the Board of Directors. The Board of Directors contains two Directors nominated by the State Government also. Section 23 provides that the Financial Corporation may appoint such officers, advisors and employees as it considers necessary for the efficient performance of its functions and determine, by regulations, their conditions of appointment and service and the remuneration payable to them. Section 48 provides that the Board is to make regulations, after consultation with the Small Industries Bank and with previous sanction of the State W.P.(C).No.5133/13 4 Government. Section 37A provides that the Small Industries Bank may, at any time, with the approval of the Central Government, and on being directed so to do by that Government, cause an inspection to be made by one or more of its officers of the working of any Financial Corporation and its books and accounts. Section 37A(4) states that the State Government, on being served with a report of inspection by the Small Industries Bank, may give such instructions to the Board as it considers necessary. - 6.Section 39 gives power to the State Government to give instructions to the Corporation on questions of policy. The relevant provision reads as follows:- “Section 39. Power to give instructions to Financial Corporation on questions of policy-(1) In the discharge of its functions, the Board shall be guided by such instructions on questions of policy as may be given to it by the State Government in consultation with and after obtaining the advice of the Small Industries Bank. (2) If any dispute arises between the State Government and the Board as to whether a question is or is not a question of policy, the decision of the State Government shall be final. (2A) Nothing contained in sub-section (1) and sub-section (2) W.P.(C).No.5133/13 5 shall apply in a case where a State Government holds less than fifty one per cent of the enquiry shares in the Financial Corporation. (2B) Notwithstanding the equity share holding of a Financial Corporation by a State Government, the State Government may advise the Financial Corporations on the matters of policy. (3) If the Board fails to carry out the instructions on the question of policy laid down by the State Government under sub-section (1) of this section or the instructions given to the Board under sub-section (4) of section 37A, the State Government shall have the power to supersede the Board and appoint a new Board in its place to function until a properly constituted Board is set up and the decision of the State Government as to the grounds of superseding the Board shall not be questioned in any court. “ 7.It is therefore clear that the power of the State Government to conduct inspections and issue directions are hedged in by the provisions of law as contained in the State Financial Corporations Act. It is further submitted that going by the Kerala Financial Corporation Staff Regulations, 1966, the Board was empowered to fix the number of posts in all categories as well as the pay scales of officers and employees. The appointing authority for Class A and B posts is the Managing Director and for posts in Class C and D is the W.P.(C).No.5133/13 6 General Manager. It is submitted that the appointment of the petitioner was made in strict compliance with the provisions contained in the Act and Regulations and that the State Government did not have the power to conduct an inspection into matters of administration and the very inspection and submission of report being ultra vires the enabling statue, no action could be taken as against the petitioner pursuant thereto. The learned Senior Counsel also relies on a decision of this Court in **Kerala Financial Corporation Officers Association and another v. Kerala Financial Corporation and another** [2007 (2) KHC 730] to contend that prior sanction of the Government is not necessary for revision of pay scales as also for the position that the State Government has no authority to interfere with the powers of the Board as provided in the regulations. The learned senior counsel also raised contentions as to the constitution of the Finance and Inspection Wing of the Government of Kerala as a body to conduct inspections with regard to financial matters alone as also with regard to the specific powers of the said wing. W.P.(C).No.5133/13 7 - 8.Counter affidavit has been placed on record by the 1[st] and 2[nd] respondents raising contentions with regard to the power of the Government to conduct inspections and to issue instructions to the Corporation even in matters of administration. 9. I have considered the contentions advanced. The contentions are substantially based on Section 39 of the Act. Section 39 of the Act provides for issuance of directions on matters of policy. Section 37A provides for an inspection by the Small Industries Bank. On an anxious consideration of the provisions of the State Financial Act, 1951 as also the Staff Regulations framed thereunder, I am unable to find any provision which enables a direct inspection by the State Government into the administrative affairs of a Financial Corporation without the junction of the Small Industries Bank. The learned counsel appearing for the respondents are also unable to point out any provision of law which enables the issuance of directions in the nature of the one apprehended in the writ petition. It is further brought to the notice of this Court that a complaint was W.P.(C).No.5133/13 8 preferred before the Enquiry Commissioner and Special Judge, Thiruvananthapuram on the same set of allegations and a quick Verification Report has been submitted by the Vigilance and Anti Corruption Wing after conduct of preliminary enquiry finding that the allegations raised with respect to irregularity in selection are baseless. - 10.In the above view of the matter, I am of the opinion that the inspection conducted into the administrative functions of the 2[nd] respondent organization by the 1[st] respondent and Exhibit P10 report submitted pursuant thereto cannot have any binding effect. In the result, Exhibit P10 is set aside. The writ petition is ordered accordingly. Sd/- **Anu Sivaraman, Judge** sj