Delhi High Court
Shri A.K. Verma vs Union Of India (Uoi) And Ors. [Along With ... on 16 April, 2004
Author: Pradeep Nandrajog
Bench: Pradeep Nandrajog
JUDGMENT Pradeep Nandrajog, J.
1. WP(C) 6542/2002, WP(C) 6543/2002 and WP(C) 6544/2002 which lay a challenge to the Annual Confidential Reports of the petitioner for the years 1999-2000, 1998-99 and 1997-98 respectively, WP(C) 6575/2003 which challenges the order dated 24.9.2003 not extending the tenure of the petitioner as Director (Electrical) under Satulej Jal Vidyut Niagam Ltd. (SJVN)and WP(C) 7508/2002 which challenges the shortlisting of respondent No.4 for appointment as Chairman-cum-Managing Director of Nathpa Jhakri Power Corporation (NJPC) renamed as Satulej Jal Vidyut Niagam Ltd. (SJVN) are being disposed of by a common judgment as factual matrix and legal issues raised are common to all petitions.
2. Petitions prompts the question: Is it a wise policy to seek adjudicating of termination and allied matters, affecting public sector appointments at the top level through docket bound, time consuming judicial process having inherent limitations on the mode and extent of relief or is it desirable to seek redressal within the inbuilt processes of redressal?
3. As the nation strives to open its markets under General Agreement on Trade and Tariffs, (GATT) the economic might of the Public Sector Undertakings, (PSU) which have been nurtured by public funding, needs acceleration. Persons who are in the charge of the Public Sector Undertakings, can prove their worth if their undivided energies are utilized in the building of these undertakings and not being locked in court battles. This Court is witness to the growing litigation involving board level executives of Public Sector Undertakings; talented, tested and seasoned men struggling critically for survival. Their energies, diverted, can the nation fulfilll it's chershed goal of food, clothing and house for all?
4. Appointment at the board level of Public Sector Undertakings are effected for a term of five years (normally) by the President of India after a selection process is carried out at the highest level. The administrative ministry of the concerned PSU is involved, the Central Vigilance Commission is involved, the Public Enterprises Selection Board (PESB) is involved. Final approval is that of the Cabinet Committee on Appointments (ACC). Once the ACC approves, order for appointment is issued by the President of India. A fairly credible and wide ranging process in which no particular individual person holds primacy of position.
5. Man has yet to evolve a system and design of selection, where under, the suitability of an individual can be assessed with 100% precision. Law recognises the right of every employer, to keep under watch a new recruit. This is called being on probation. It is the time when the employer evaluates his judgment and decision of recruiting, whom he considered to be the best and most suitable. How the new incumbent fits into the organization and proves himself to be an asset, justifying his retention, is evaluated during this period. At the end of this evaluation period, the employer decides whether or not to continue with the employment or dispense with the same. A bona-fide decision to dispense with the services of the probationer cannot be questioned, because the probationer has no right to seek permanent absorption. `No right-no infringement'.
6. Every employment has an offer and an acceptance and to that extent has a contractual element. But once the contract is entered, the service may acquire a 'Status' where service conditions are governed by Statute. They may well be protected under Industrial Laws or service rules framed by the employer. Where none exist, hire and fire rule would apply.
7. Good governance lies in the Rule of Law. A transparent policy based on a rational criteria is a good guide to the exercise of discretionary power. Governance by law through the medium of guidelines and executive instructions not only brings transparency to governmental action but also acts as a check on misuse of power.
8. Pertaining to top posts in PSUs, guidelines have been framed pertaining to preparation of appraisal reports, appraisal at end of first year to decide whether to continue with the tenure and at end of five year period, to consider for further retention.
9. Pertaining to appraisal at the end of 1st year's service, to decide on termination or extension up to 5 years, following guidelines have been framed :-
"The undersigned is directed to refer to the Ministry of Finance (BPE) Resolution of even number dated 5.8.77 on the above subject and to refer to the guidelines relating to "tenure of appointment". It was stated therein that orders of appointment to Top Posts issued by the administrative Ministries should incorporate a suitable clause for review of performance of the appointee after a year. The intention is that the government should be able to assess the work at the end of a year in a five year's contract and terminate the contract if his performance is found to be not quite satisfactory.
2. The procedure for the review of performance after a year has been considered by the Government in consultation with the Public Enterprises Selection Board. It has been decided that the following procedure should be adopted for undertaking the review:
(i) Since each administrative Ministry is responsible for the performance of the Public Enterprises under its control, it should remain responsible for the proposed review of performance of appointees to top posts at the end of the first year of a longer term contract;
(ii) The review should be carried out by the Ministry in relation to the targets set out for the Corporation within a period of 3 months from the end of the first year of the tenure. The targets may have been included in the annual performance budget of the Corporation and/or may have been set out by the Board of the company in terms of its corporate goals;
(iii) It is necessary for the PSEB to get first hand information regarding the performance of the candidates it recommends for first and second level appointments so that it can, where necessary attempts to improve its selection systems and procedure. It is, therefore, suggested that after the concerned Secretary has completed his assessment of the Chief Executive, he could orally convey his views to the Chairman, PESB. If the recommendation made by the Ministry is to withhold confirmation of a Chief Executive, the Secretary should meet the Chairman PESB to explain and discuss the areas in which the Chief Executive has failed.
(iv) A similar procedure can be adopted for the second level posts except that the consultation would be between the Chief Executive of the Company, Secretary of the Administrative Ministry and the Member of the PESB concerned with the selection."
10. Pertaining to the annual performance appraisal of top management incumbents of public sector enterprises, on 21.1.1983, the Government laid down the following appraisal procedure:-
"As you are aware, since 1980 a uniform form and procedure has been prescribed for writing of annual confidential reports of all top and senior level managers of Central public enterprises down to the level of General Managers and their equivalents who do not belong to any organized service of the Central or State Governments. From time to time, the Bureau of Public Enterprises has received references from various organisations requesting for clarifications regarding the levels at which the confidential reports of General Managers/Functional Directors/Managing Directors should be initiated, reviewed and counter-signed. The matter has been examined carefully and it has been decided that henceforth the following procedure should be observed in this regard.
i. In the case of full-time Chairman or full-time Chairman-cum-Managing Director, the Secretary of the administrative Ministry/Department may initiate the confidential report, which should also contain the observations of the Minister in-charge.
ii. .........
iii. .........
iv. Confidential reports on full-time Functional Directors should be initiated by the Managing Director if there is one and reviewed by the part-time/full time Chairman and then sent for countersignature of the Secretary of the administrative Ministry and observations, if any, of the Minister.
v. In case there is no separate post of Managing Director, the part-time / full-time Chairman or Chairman-cum-Managing Director will initiate the confidential reports of Functional Directors and then send them for review by the Secretary of the administrative Ministry and observations, if any, of the Minister.
vi. In case of General Managers and other officers of equivalent level the confidential reports should be written normally by the Functional Directors under whom they work and reviewed by the Managing Director/ Chairman-cum-Managing Director. In case there are separate posts of Managing Director and part-time or full-time Chairman the report can be reviewed by the Managing Director and countersigned by the Chairman.
Vii. In cases where the General Managers and officers of equivalent level work directly under the Managing Director, their report should be initiated by the Managing Director and reviewed by the part time/ full-time Chairman. In cases where such officers work directly under the Chairman /Chairman-cum-Managing Director their reports should be initiated by the Chairman / C.M.D and sent to the Secretary of the administrative Ministry for review. In other words, it has to be ensured that the report on all such officers are at least reviewed by an officer who is in a position superior to that of the Reporting Officer."
2. ... .... ...
3. It has also been observed in many cases that the annual confidential reports are not written in time. You will certainly appreciate that a systematic, objective and regular performance appraisal system requires that all confidential reports are written immediately after the end of the relevant year. For the sake of uniformity it may, therefore, be kindly ensured that the confidential reports of all top and senior level managers are written, reviewed and counter-signed within 45 days of the expiry of each Financial Year so that the duplicate/triplicate copies of the reports to be sent to the administrative Ministry/BPE, are received by them latest by the 20th May of each year.
11. If there be an adverse entry against a top management incumbent in a public sector enterprises, it requires the same to be communicated in terms of Government of India instructions dated 25.4.1985. Same reads as under:-
"1. Instructions regarding the procedure to be followed in connection with the Annual Performance Appraisal of Top Management Incumbents of the Public Enterprises were issued vide this Ministry's secret D. O. letter No. 5/11/82-GM-II dated 21.1.1983. It has now been brought to the notice of this Ministry that the adverse entries made in the ACRs of the Top Management incumbents of Public Enterprises are communicated very late, in some cases after a period of two years or so.
2. It has now been decided that all adverse entries recorded in the ACR of an officers should be communicated with-in one month by the Reviewing Officer after they have been seen by the countersigning authority, if any. The communication should be in writing and a record to that effect should be kept in the Confidential Roll of the officer. Where there is no Reviewing Officer, the adverse entry should be communicated by the Reporting Officer likewise.
3. While communicating the adverse remarks to the officer concerned, the identity of the superior officer making such remarks should not be disclosed, while doing so, the substance of the favorable entries may also be communicated. It, however, needs to be ensured that the remarks are communicated in such a form that the identity of the officer making particular remarks is not disclosed.
4. Regarding representations received against the adverse entries from the concerned officers, these should normally be made within six weeks of the date of communication of adverse remarks. While communicating the adverse remarks to the officers concerned, the time limit as stated above may be brought to their notice. The competent authority may at his discretion entertain the representation made beyond the time specified above, if there is satisfactory explanation for the delay. All representations against adverse entries should be decided expeditiously by the competent authority and in any case not later than six weeks from the date of submission of the representation. All representations against adverse remarks need to be examined by an authority superior to the reviewing officer, in consultation, if necessary, with the reporting and the reviewing officers. For instance, in case there is any representation against the adverse remarks from the General Manager or above in an enterprise, this could be considered at the level of the Chief Executive and at the level of Secretary of the administrative Ministry and the Minister in charge, in the case of functional Directors/Chief Executives.
5. The contents of this letter may please be brought to the notice of the public enterprises under the administrative control of your Ministry/Department for compliance."
12. Pertaining to further retention on completion of 5 years term following guidelines have been framed by the Government on 12.12.1986 :
"According to the existing procedure proposals for appointment to the posts of Chief Executives/Functional Directors in public sector enterprises, on the basis of the recommendations of the Public Enterprises Selection Board, are submitted to the appointments Committee of the Cabinet for its consideration, as per the provisions contained in the Govt. of India (Transaction of business) Rules, 1961 as amended from time to time. Similarly proposals emanating from the Ministries/Departments for further extensions of tenure, based on a performance appraisal during the tenure approved by the appointment Committee of the Cabinet are also submitted to the committee. So far, cases wherein the Ministries decide not to seek further extension of the term of appointment of a Chief Executive/ functional Director beyond the term of appointment approved by the Committee were not referred to the Committee for a decision.
2. It has come to the notice of the Prime Minister, in a recent case, that the terms of competent Chief Executive of a Public Sector Enterprise was not extended by the Administrative Ministry. The matter also did not come up before the Appointment Committee of the Cabinet as only extension of the term of appointment is presently being submitted to the Committee.
3. In order to ensure that the cases of competent executive are not disposed off by the Administrative Ministries at the end of their term without further consideration either with the PESB or ACC, it has been decided that in future, in cases where the terms of Chief Executive/ Director is not proposed to be extended beyond the term already approved by the ACC except on superannuation of the officer, the Administrative Ministries/Departments should carry out, in consultation with the PESB, an appraisal of the past performance of the Chief Executive/ Director four months in advance of the end of the term. After such appraisal, these cases would broadly into the following three categories:-
(i) Cases in which on the basis of the positive approval, the Administrative Ministry and PESB decided to seek extension at his term and send a proposal to E.O. for approval of the same.
(ii) Cases in which a change in the incumbency of Chief/ Director is considered necessary on account of :
(a) that the dismal performance of the Chief Executive/ Director as well as of the Company necessitating a change in the leadership. In such cases the administrative ministry after consulting PESB will come to ACC through EO for appointment of the new Chief Executive/Director.
(b) Cases in which the performance of the Chief Executive/Director is considered satisfactory positive or due to certain other reasons the Administrative Ministry and or PESB desired to have a change in all such cases, the Administrative Ministry would just consult the ACC invariably before terminating the appointment. Such cases, which were not being referred to ACC here to by the Administrative Minister would now require approval of the ACC before termination of appointment as per directions of the Prime Minister."
13. Following further guidelines were framed on 21.11.1996 :
"You would be aware that as per Govt. of India's Resolution No.27(21)/EO/86-ACC dated March 3, 1987 (copy enclosed), one of the functions of the Public Enterprises Selection Board (PESB) is to make recommendations on the proposals pertaining to extension of tenure of full-time Board-level incumbents (i.e. Chief Executives and functional directions) in the Central Public Sector Undertakings (PSUs). For processing such proposals of the administrative Ministry/ Department, the PESB has the standard practice of considering such proposals in the context of the data based performance report of the PSU in the prescribed format, a special performance report and the CR dossier of the concerned. The recommendations of the PESB are then forwarded to the administrative ministry concerned for obtaining the approval of the ACC.
In so far as the proposals of non-extension of tenure of Board-level incumbents are concerned, these are processed in the light of the Govt. of India's instructions contained in the Cabinet Secretary's d.o. Letter No. 27(18)/EO/86-ACC dated December 12, 1986 (copy enclosed). According to these instructions, the administrative Ministry/ Department concerned cannot suo moto terminate the tenure of full-time Board-level incumbent immediately on the expiry of tenure unless joint appraisal is carried out by the PESB and the concerned administrative Ministry/Department and a final decision is taken on the joint appraisal report with the approval of the ACC. While carrying out the joint appraisal the PESB has the standard practice of inviting the concerned Chief Executive/Director of the PSU. Thus, the incumbent is given the opportunity to meet the Board and explain his/her stand before recommendations are made by the PESB. In other words, the individual is, once again, assessed by the PESB.
The PESB has now decided that in so far as the cases of extension of tenure of full-time Chief Executives/ Directors of the Central PSU are concerned, the incumbent, whose case for extension of tenure is concerned, should hereafter be advised to meet the Board so that an objective view of his/her performance could be made by the Board before finalizing their recommendations. Secretary of the administrative Ministry/ Department as also the Chief Executive of the concerned PSU (in the case of functional Directors) are also to be associated with this exercise. It is the considered view of the Board that this revised procedure will not only facilitate quick finalization of the cases by obviating the need of back references to the Ministry to seek clarification on any point but would also help the Board in having an objective view. This practice comes into force with immediate effect.
All Ministries/Departments are requested to hereafter process all such cases of extension/ non-extension of tenure of all Board - level o officers in the Central PSUs under their charge accordingly."
14. Necessary and relevant facts may now be taken note of before one grapples with the legal issues raised at the Bar and debated hotly by the learned counsel appearing for the parties. On being empaneled after undergoing the process of selection, vide order dated 12.8.1997, the President of India was pleased to appoint the petitioner who was then working as the General Manager of Power Finance Corporation as Director (Electrical) on the board of NJPC. Now renamed SJVN.
15. Petitioner claims that in recognition of his excellent performance and impressed by his work, the Chairman-cum-Managing Director (CMD) directed that the General Manager (Project) and Assistant General Manager (Corporate) would report to the petitioner. Petitioner states that earlier they were reporting directly to the CMD. Petitioner further states that due to his excellent work, petitioner was given additional charge of Director (Civil) on 1.1.1998.
16. Petitioner alleges that in the course of his duties, it came to his notice that for the work of concrete lining of Head Rest Tunnel at the site at Jhakri, the contractor, NJJV, an Indo-Italian Joint Venture was being paid by the Corporation in spite of the fact that against the contract specified item "cement" to be used, the contractor was using 'fly ash'. Petitioner learnt that not only was an item of contract being substituted but the fly ash was being procured free of cost by the contractor. Petitioner alleges that vide letter dated 11.1.1999, in his capacity as Director (Electrical/Civil), he directed recovery of excess payment made to the said contractor. Petitioner alleges that as a result of his aforesaid vigilant and prompt action, not only further payments were not released but recoveries got effected, petitioner states that in this manner the corporation saved revenue.
17. Petitioner alleges that this was not to the liking of Sh.Arun Gupta, the Chairman-cum-Managing Director of the Corporation and his coterie. Petitioner alleges that this would be evident from the fact that hurdles and obstacles were put when petitioner issued order on 11.1.1999 to effect recovery from the contractor.
18. Petitioner alleges that the Director (Finance), Shri O.N. Singh and the CMD were not in favor of effecting recovery and were in fact desirous that the contractor continued to make illegal gains at the cost of the Corporation.
19. To support the plea of malafide, and obstruction to the just cause which the petitioner espoused, petitioner places reliance on the note dated 15.1.1999 issued under the signatures of the Director (Finance). The said note reads as under:-
"Sub: Recovery of payment made to M/s. NJJV towards flyash used for concrete lining of HRT.
It is understood that we had accorded approval to M/s. NJJV to use flyash for concrete lining in the tunnel about more than a year back. It is difficult to believe that EIC would not have taken the action for a fresh rate.
While it is agreed that 'flyash' need not be paid at the rate of 'cement' but this being a new item, not provided in BOQ, a new rate, as per usual practice could be a better solution rather than instructing abruptly for recovery. Such a step is again going to add additional issues for disputes. While we were to proceed site by 15th, mutual discussion and examination of the facts could have been a better solution. I would still, suggest that we may see this case, in detail, during our ensuing visit at site and keep on hold on recovery for the time being to create an atmosphere of mutual trust and faith with NJJV particularly when we are entrusted to settle much bigger old outstanding issues.
Sd/-
O. N. Singh Director(Finance)"
20. Petitioner relies upon the note appended by the CMD to the aforesaid note of the Director (Finance). Note dated 18.1.1999 appended by the CMD on which the petitioner relies reads as under:-
"We must ensure that the contractor is paid for the work done. In case flyash is mixed with cement and this rate does not exist in BOQ, then new rate is to be worked out. And in case this is taking time, some adhoc rate could be arrived at ICWF. No step be taken which would stop/hinder the work."
21. Petitioner alleges that he detected major deviations in the works being executed by the contractor. These deviations were ignored and the Corporation had made payments running into several crore rupees to the contractor. Petitioner states that he intended to raise these issues at the Board meeting which was to be held on 30.3.1999. Being a member of the Board of the Corporation, petitioner alleges that he had a bonafide and legitimate right to submit to the CMD an agenda for discussion on the subject prepared by the petitioner. Petitioner alleges that he prepared a draft of the agenda for discussion, which petitioner wanted to be taken up for consideration in the Board meeting scheduled for 30.3.1999. The petitioner alleges that as per the said draft agenda, petitioner wanted the Board to discuss 7 major items of deviation/changes effected unilaterally by the contractor and overlooked by the Corporation, resulting in excess payments being made to the contractor.
22. Petitioner alleges that in spite of the fact that he not only raised the issue orally with the CMD but even gave a draft of the agenda items to be considered at the Board meeting, at the Boarding meeting the CMD did not allow discussions to take place. The CMD did not include any item proposed by the petitioner as an agenda item to be discussed by Board. Petitioner states that on 19.4.1999, he received a letter from the CMD in response to the draft of the agenda items which the petitioner wanted to be placed at the Board meeting. As per the said letter, the CMD informed the petitioner that he did not include any of the items sought to be included in the agenda items in the Board Meeting by the petitioner, without being backed by adequate evidence and legal scrutiny. In the said letter, the CMD took exception to the petitioner circulating the draft agenda items to all the Directors. The CMD wrote in the said letter that affairs of the Corporation are to be managed by the Board as a composite body and the Chairman of the Board was to regulate the conduct of the meeting of the Board and place before the Board the business required to be conducted in the Board Meetings.
23. Petitioner states that he responded to the Chairman's letter dated 19.4.1999 under cover of his letter dated 30.4.1999. He brought to the notice of the Chairman the urgency of the matter and his justification for circulating the draft agenda items to the members of the Board.
24. Petitioner alleges that recovery from the contractor became a bone of contention between him and the CMD as also the coterie of persons who had surrounded the CMD.
25. Petitioner alleges that he persisted to set at right the wrongs which were being ignored by the Corporation and due to his persistent effort a committee was constituted. The committee found justification in what the petitioner was stating and made a recommendation that recovery be effected from the contractor pertaining to the issue of fly ash. Petitioner alleges that the said committee recommended that as against payment made at the rate of Rs.3/- per kg. to the contractor which payment was to be made if cement was used, since fly ash was used, payment be made at the rate of Rs.0.70/- per kg. Difference be worked out and recovery effected. Petitioner alleges that ignoring the recommendations of the committee which consisted of senior officers, the Director (Finance) put up a note to the effect that the committee had not applied its mind. Director (Finance) wrote that it appeared that the deliberations of the committee had been over-shadowed and over-burdened by the apprehensions of an enquiry being conducted at the behest of Central Vigilance Commission. The committee adopted a soft approach and shied away from taking unpleasant decisions. Petitioner alleges that this note was accepted by the CMD. Surprisingly, in spite of the contractor's stipulated rate of Rs.3/- per kg. and in spite of the committee recommending payment to be made at the rate of Rs.0.70/- per kg., the CMD agreed to make payment @ Rs.4/- per kg., evidenced by the noting on the file dated 28.2.2001.
26. Petitioner wrote to the Central Vigilance Commission. The said commission took congnizance of this irregularity and other irregularities detected by the petitioner and directed the Corporation to constitute a proper committee. Pursuant thereto the Government of India vide office memorandum dated 5.7.1999 constituted a committee consisting of :-
a)Sh.Anil Razdan, Joint Secretary & CVO, Ministry of Power Chairman.
b)Sh. M. K. Sehgal, Chief Technical Examiner, CVC. Member.
c)Nominee of Chairman, Central Electricity Authority (not below the rank of Director) Member.
d)Nominee of Chairman, Central Water Commission Member.
e)Director or his nominee from the Central Soils & Material Research Station (CSMRS), New Delhi Member.
f)An expert in the field (to be nominated) Member
g)Chief Vigilance Officer, NJPC (Sh. V. Gopalkrishnan) Member
27. Petitioner alleges that based on the recommendations of the said committee, the Central Vigilance Commission directed cost adjustment on fly ash and also directed further investigation to identify the persons responsible for the various lapses.
28. Vide office memorandum dated 19.12.2001, the CVC instructed the Ministry of Power:-
" OFFICE MEMORANDUM Sub: Allegation regarding irregularities / corruption in the executing of the project of `Head Race Tunnel' Contract No. 2.2 by NJPC to M/s. NJJV.
******** Ministry of Power may refer to their DO letter No.C-13011/19/99/V&S dated 14.09.2001 submitting there with a copy of Expert Committee Report on above cited subject.
2. The Commission has considered the Expert Committee Report and would advise the Ministry of Power to take following action:-
(i) Ministry of Power /NJPC should undertake detailed investigation of points brought out by the Expert Committee and also on various paras referred by the CTE's Organisation, CVC vide letter number NDD-E-26-NE-108 dated 24.11.99 and 08.08.2000 and submit an investigation report to the Commission within 3 months from receipt of this OM.
(ii) Ministry of Power/NJPC should also identify the executives responsible for various lapses and initiate suitable action in consultation with the Commission.
(iii) NJPC should make cost adjustment on account of the following from the contractor immediately:-
a) Adjustment due to use of flyash in work.
b) For not carrying out back filling with M- 10 concrete before lining.
c) Cost of plant and machinery unauthorisedly removed from the site by the Contractor.
d) Short recovery of various outstanding advances and advances extended to Contractor which were not due to be paid.
e) Insurance premium saved by the Contractor.
f) Hire Charges of machinery not returned by the Contractor in time and cost of repair charges, if any, incurred by NJPC.
g) Outstanding recoveries on account of power consumption charges etc. along with interest on delayed/deferred payments.
h) On account of deletion of Hydrostatic test.
Receipt of this OM may be acknowledged."
29. Petitioner alleges that pursuant thereto recoveries were effected from the contractor but the CMD and the Director (Finance) and other coterie of persons ploted revenge against the petitioner.
30. Petitioner alleges that at the first instance, the charge of Director (Civil) was withdrawn from the petitioner on 21.4.1999. Petitioner alleges that a conspiracy was hatched to spoil Annual Confidential Report of petitioner.
31. Petitioner alleges that before he joined the Corporation as Director (Electrical), he had an unblemished service record spread over 34, years never once was he issued even a memo. Petitioner alleges that the following would show how the CMD created adverse material against the petitioner.
32. Since the first year appraisal to decide continuation of the petitioner in service had to be completed within 15 months of the petitioner joining, on 5.3.1999 the CMD wrote to the Secretary (Power) recommending continuation of the petitioner and clearance of his probation. Following was the letter which was written :-
"The Secretary (Power), Ministry of Power, Shram Shakti Bhawan, NEW DELHI.
Dear Sir, This is with reference to the recommunication from the Hydel Wing of the Ministry of Power regarding the performance review of Shri A.K. Verma, Director (Electrical), NJPC with respect to the clearance of his probation period.
In this connection a note from Shri A.K.Verma, Director (Electrical) highlighting his achievements during the first year of his tenure as Director (Elect) with NJPC is enclosed for perusal. As his performance has been very good it is recommended that his brobation be cleared.
Thanking you, Yours faithfully, Sd/-
Chairman & Managing Director"
33. Surprisingly in the ACR in respect of the year 28.8.1997 to 31.3.1998 the CMD made adverse entries against the petitioner. This ACR which should have been written within 45 days of 31.3.1998 i.e. on or before 15.5.1998 was written on 23.8.1999. Similarly, ACR for the year 1.4.1998 till 31.3.1999 which should have been written by 15.5.1999 was actually written on 6.5.1999, prior to writing the ACR for the year 1997-98, which ACR, as noted above, was written on 23.8.1999. Again, adverse entries were entered in the ACR. Adverse entry pertaining to the year 1997-98 dated 29.9.1999 was communicated to the petitioner on 5.10.1999. Adverse entry pertaining to the ACR for the year 1998-99 though dated 5.10.1999 were communicated to the petitioner on 15.10.1999. How is it that the CMD who vide letter dated 5.3.1999 rated the performance of the petitioner very good and recommended that petitioner be continued up to the period of five years as Director (Electrical) came to adversely comment upon the petitioner on 6.5.1999 and 23.8.1999? Petitioner alleges that ex facie, the CMD acted malafide and with bias. In any case, CMD acted at the behest of a hidden hand. This hidden hand, alleges the petitioner was none other than the hand of the coterie of persons whose evil designs of conferring illegal benefit upon the contractor was frustrated by the petitioner.
34. ACR for the period 1.4.1999 till 31.3.2000 which ought to have been completed by 15.5.2000 was written by the Reporting Officer i.e. CMD on 18.12.2000. Adverse entries were made in the ACR. These adverse entries were communicated to the petitioner on 18.1.2001.
35. Petitioner alleges that pertaining to the adverse entry for the period ending 31.3.1998 he submitted a representation on 29.11.1999. Representation was disposed of on 28.2.2001, whereas in terms of the guidelines dated 25.4.1986 the same was required to be disposed of within six weeks. Petitioner made a representation against the adverse entry recorded in the ACR for the year 1998-99 on 30.12.1999. It should have been disposed of by 10.2.2000, but was disposed of on 28.2.2001. Petitioner made a represenation against the adverse entries recorded for the ACR for the year 1999-2000 on 13.3.2001. Representation should have been disposed of by 24.4.2001. It was actually disposed of on 21.4.2003.
36. Adverse entry communicated to the petitioner for the ACR pertaining to the year 1997-98 reads as under :-
"The appraisee joined as Director (Electrical) on 28.8.97 and was given additional responsibility of the work of Director (Civil) with effect from 1.1.98, in the hope that this step would further motivate him to enhance his performance. However, in E&M works with reference to E&M Revised Budget of Rs.277 crores the expenditure incurred was only Rs.223 crores-a shortfall of Rs.54 crores. As is well known most of the budgetted expenditure occurs in the second half of financial year and Director (Elect) - the appraiseee - had full seven months to perform. As such his performance is rated as very poor.
Besides the appraisee lacks discipline, and the team building quality which is so essential to carry out the works and meet the targets. He believes in finding faults with his team members without any guidance or advise for possible solutions which strongly demotivates them. He also has a tendency to give misleading and false information, lacks vision, and is a poor decision maker. His relationship with colleagues is non existent.
37. The representation against the said adverse entry was disposed of with the same being partially accepted. Following adverse remarks (bold letters) were expunged :-
"The appraisee joined as Director(Electrical) on 28.8.97 and was given an additional responsibility of the work of Director (Civil) with effect from 1.1.98, in the hope that this step would further motivate him to enhance his performance. However"
the word "very" in the sentence "As such his performance is rated as very poor."
"Besides the appraisee lacks discipline, and the team building quality which is so essential to carry out the works and meet the targets."
"Without any guidance or advise for possible solutions which strongly demotivates them" in the sentence "He believes in finding faults with his team members without any guidance or advise for possible solutions which strongly demotivates them."
"He also has a tendency to give misleading and false information, lacks vision and is a poor decision maker."
"His relationship with colleagues is non existent."
"Overall not proved himself to be fit as a Director leave alone being capable of being CEO."
38. Thus the adverse remarks which remained in the ACR were:
a. As such his performance is rated as poor.
b. He believes in finding fault with his team members.
39. On 28.5.2001 petitioner sought a review of the decision communicated to him on 28.2.2001, partially expunging the adverse remarks. Said review was not decided.
40. For the year 1998-99 adverse remarks in the ACR communicated to the petitioner vide letter dated 5.10.1999 read as under :-
"In addition to his duties as Dir.(Electr) he was also looking after the works of Dir(Civil) including entire Designs & Contracts with DRB w.e.f.. 1.1.98. Against the BE for Rs.1054 crores and RBE of Rs.1018 crores actual expenditure for 1998-99 has been Rs.900 crores - a shortfall of Rs.118 crores. This is Rs.257 crores less than the projected figure of Rs.1157 crores mentioned in the PIB note. The shortfall in Electro Mech. Packages has been of Rs.82 crores w.r.t.. BE and Rs.46 crores w.r.t. RBE. In a recent review of the Contracts Deptt. by Dir.(Pers & Contracts) it emerged that there is inordinate delay in award of Auxilliary packages in Electro-Mech. Area which may have a very serious ramifications on the Project completion schedule (copy of review enclosed) Contracting systems earlier approved have been arbitrarily changed without even informing the Compent Authority (i.e. CMD). D(E) is not a team man and does not possess team building attributes, and is unable to motivate, believing more in fault finding than managing diverse views and looking ahead with possible solutions. He is a poor delegator of responsibilities and is very short of leadership qualities. He is unable of any strategic vision lacking the ability to look differently at issues and coverting them into objectives and goals. Lacs the capacity of taking calculated risks and taking bold and timely decisions. Even though his communication skills are pretty good, there was hardly and contribution from him in the preparation of the most important document, the PIB note for revised cost and schedule. The tendency to delay decisions and avoid responsibilities and lack of commitment for maintaining schedules could prove too damaging for the project. He even recommended termination of contract of one of the major civil contractor of international repute without consulting the fellow Directors & even the CMD - which could totally jeopardise the Project. Besides reluctance to follow instructions which results in indiscipline, giving misleading information, lack of vision and maturity does not contribute effectively in his carrying out his functional duties. Mishandling of the issue of use of 'flyash' in concrete lining of Head Race Tunnel caused much confusion and embarrassment to the Corpn. As such I feel and have serious and grave doubts about his capabilities to handle his responsibilities as a Director, leave alone CEO of any Corporation. The additional charge of Director (Civil) and Contracts Deptt. has therefore had to be withdrawn from him to avoid further damage to the progress of the project.
During the period under report, the handling of the various contractual and civil construction issues left much to be desired ....................his inability to act as a team member. Is not suitable for the post of CEO/Functional Director.
He has been found wanting in many areas of his work and tends to take a line out of synchronization with the team."
41. Petitioner, as noted above made a representation against the same on 30.12.1999. Part of the adverse remarks were expunged as communicated to the petitioner under cover of letter dated 28.2.2001. Following was expunged :-
"Contracting system earlier approved have been arbirarily changed without even informing the Competent Authority (i.e. CMD)."
The words "is a poor delegator of responsibilities and" in the sentence "He is poor delegator of responsibilities and is very short of leadership qualities."
"Lacks the capacity of taking calculated risks and taking bold and timely decisions."
The words "giving misleading information" in the sentence "Besides reluctance to follow instructions which results in indiscipline, giving misleading, lack of vision and maturity does not contribute effectively in his carrying out his financial duties."
"Misleading of the issue of use of `fly ash' in concrete lining of Head Race Tunnel caused much confusion and embarrassment to the Corpn."
42. Thus, substantial part of the adverse entry remained against the petitioner.
43. Petitioner made an application seeking review of the decision communicated to him vide letter dated 28.2.2001 under cover of his letter dated 28.5.2001. The review remained pending.
44. Adverse remarks communicated to the petitioner for the year 1999-2000, communicated under cover of letter dated 18.1.2001 read as under:-
"Director (Electrical) was divested of his additional responsibilities of Director (Civil) and Contracts Department w.e.f. 21.4.99 primarily due to his non-performing attitude.
Shri Verma played a destructive role in five BOD meetings (77th held on 30.3.99, 78th held on 28.4.99, 79th held on 2.7.99, 80th held on 22.7.99 and 81st held on 24.8.99, giving dissent notes/letters on one issue or the other. He was also responsible for writing directly to Dy. Secretary, CVC, enclosing his note of dissident in 79th BOD meeting against the absorption of Shri Ranjodh Singh as ED/NJPC - without having exhausted all the channels (for sorting the issue) available to him.
He had also mishandled the issue of "fly ash" satisfactorily, making it unnecessarily controversial.
It is also apparent that the appraisee joined hands with the outsiders against the interest of the Corporation which is very serious issue.
Even in financial year 1999-2000 targets for ECB (mainly E&M packages) as per RBE have not been achieved (as detailed below). What is more painful that against this shortfall substantial expenditure to E&M contractors could have been made, had certain contractual issues were taken care of/sorted out e.g., release of funds to M/s. Alstom had their storage problem been resolved. For 1999-2000, against BE of Rs.128.00 crore and RBE of Rs.120.00 crore actual expenditure is Rs.103.76 crore.
He is not a team man, as also felt by other team members and has disorganized patten of behavior not caring for Corporation's interest.
As such not fit/suitable to be a Director."
45. Petitioner made a representation on 13.3.2001. Partial success came to be met. Part of the adverse remarks were expunged. Same was communicated to the petitioner under cover of letter dated 21.4.2003. Following was expunged :-
"Shri Verma played a destructive role in five BOD meetings (77th held on 30.3.99, 78th held on 28.4.99, 79th held on 2.7.99, 80th held on 22.7.99 and 81st held on 24.8.99), giving dissent notes/letters on one issue or the other."
"It is also apparent that the appraisee joined hands with the outsiders against the interest of the Corporation which is a very serious issue."
"Even in fin. yr. 99-2000 targets for ECB (mainly E&M package) as per RBE have not been achieved (as detailed below). What is more painful that against this shortfall substantial expenditure to E&M contractors could have been made, had certain Contractual issues were taken care of/sorted out e.g., release of duns to M/s. Alstom had their storage problem been resolved. For 99-2000, against BE of Rs.128.00 Cr and RBE of Rs.120.00 Cr actual expenditure is Rs.103.76 Cr."
46. Thus substantial part of the adverse entry got expunged.
47. Rather than going by the pleadings of the respondent in their counter affidavit, I felt it desirable that original record be produced for perusal of the Court because ACRs for the years 1997-98 and 1998-99 which were initiated by the CMD as the Reporting Officer were prima facie contrary to what he had communicated under cover of his letter dated 5.3.1999 recommending confirmation of probation of the petitioner. Record shows that on 19.8.1998 a letter was written by the Ministry of Power to Shri Arun Gupta, CMD of NJCP that since the petitioner would be completing the first year of service on 27.8.1998, as per the instructions of PESB, special appraisal report of the petitioner be sent at the earliest. Reminder was sent, on 22.9.1998 to send the special appraisal report. None being sent, on 26.10.1998 another reminder was sent to the CMD requesting that the special appraisal report be sent on urgent basis. On 5.1.1999, Ministry of Power sent a reminder to CMD pointing out that earlier communications on the issue remain unresponded to. It was requested that the special appraisal of the petitioner pertaining to the first year of his performance be sent at the earliest.
48. Record shows that communications which were received from the Ministy of Power were marked to the petitioner. As explained by Shri Mukul Rohtagi, learned ASG, these were marked to the petitioner to enable him to submit a note of his achievements, which note was required for review of his performance. In other words, a kind of self-appraisal was sought from the petitioner. None being forthcoming from the side of the petitioner, on 15.1.1999, CMD wrote to the petitioner pointing out that he was not complying with the request of sending a note regarding his performance. Attention of the petitioner was drawn to the urgency of the matter with a request that needful be done expeditiously. On 28.1.1999, Ministry of Power sent another reminder to the CMD to send the first year appraisal of the petitioner. On 5.2.1999, CMD wrote to petitioner as under:
"Dear Shri Verma, You would recall that I have been receiving communication from time to time for the past six months from the Ministry of Power regarding review of the performance on completion of your first year of service as Director (Electrical) in NJPC. Despite repeated reminders from the Ministry of Power, forwarded to you, and my personal requests, the note on your achievements during the first year of service as Director (E) is yet to be submitted. Needless to say it is becoming embarrassing for me not being able to respond to the Ministry of Power.
It is, therefore, once again requested that you may please put up the above note positively by 12.2.1999 failing which I shall be left with no alternative but to send my observations/ comments to the Ministry on your performance unilaterally.
With best wishes, Yours sincerely, SD/- (ARUN GUPTA)"
49. File shows that on 10.2.1999 petitioner sent the note pertaining to his achievements for the first year of his service. On 5.3.1999 the CMD wrote a letter to the Ministry of Power, as noted above, to the effect that petitioner's performance had been very good and he recommended petitioner's probation to be cleared.
50. On receipt of the letter dated 5.3.1999, Ministry of Power wrote back to the CMD intimating that the appraisal had to be in the format prescribed. Following was written by the Ministry to the CMD:-
"Sub:-Review of performance of Shri A.K. Verma, Director (Technical), on completion of first year of service.
Sir, I am directed to refer to your letter No.NJPC/CMD/Confd. dated the 5th March, 1999, on the subject mentioned above and to say that the Public Enterprises Selection Board have prescribed the format for writing the Special Performance Reports of the Board level appointees in the CPSUs. A copy of the performa together with instructions for the filling up of the same has been circulated separately. I am to request that the special performance report in respect of Shri A.K. Verma, Director (T), may please be furnished to this Ministry on an urgent basis so that further action in the matter may be taken.
Yours faithfully, (M.L. Sharma) Under Secretary to the Govt. of India"
51. On 9.4.1999 the CMD wrote back to the Ministry of Power informing him that appraisal in the prescribed format would be sent shortly and in the meantime, letter dated 5.3.1999 be returned. On 1.7.1999 the Ministry of Power wrote to the CMD, reminding him that the special appraisal report pertaining to the petitioner be sent on urgent basis as it had been to be placed before the PESB. Needful was done by the CMD on 6.7.1999. In these special appraisal report which was sent as per the performa prescribed, adverse comments were made against the petitioner to the effect that he was not a team man, did not possess team building attributes, is unable to motivate, believes in finding faults than managing diverse views and looking ahead with possible solutions. He is a poor delegator of responsibilities and very short of leadership qualities. Petitioner was labelled as a person without strategic vision, lacking ability to look differently at issues and converting them into objectives and goals. It was communicated that the petitioner has a tendency to delay decisions and avoid responsibility with lack of commitment. Petitioner was attributed as lacking in collegiate functioning.
52. Noting the apparent contradiction in what the CMD had recommended under cover of his letter dated 5.3.1999 and the rating of the petitioner in the special appraisal report, noting that the two were so mutually contradictory that they could not be reconciled, on 21.7.1999 the Ministry of Power wrote to the CMD as under :-
"To Shri Arun Gupta, Chairman & Managing Director, Nathpa Jhakri Power Corporation, New Shimla-171001 Sir, I am directed to refer to your letter No.NJPC/CMD/Conf., dated the 5.3.1999 recommending the clearance of probation of Shri A.K. Verma, Director (Electrical) in view his very good performance. However, Special Performance Report on PESB format furnished to the Ministry on 7.5.1999, there appears to be contradition with regard to the performance of Shri Varma. I am therefore directed to request you to indicate the reasons for variations in these two reports on the performance of Shri Varma in a short period of about two months.
Yours faithfully, Sd/-
(SAILESH) Director"
53. In response, the CMD wrote a letter to the Ministry on 26.7.1999. CMD wrote as under :-
"The Director (Hydro) Ministry of Power, Shram Shakti Bhawan, New Delhi.
Dear Sir, This is with reference to your letter No.13/13/97-Hydel-II, dated 21.7.1999, regarding clearance of probation of Shri A.K. Verma, Director (Electrical), NJPC.
Shri Verma joined NJPC as Director (Electrical) on 28.8.97. As he completed one year as Director in August, 1998, his probation report should have been submitted by me soon thereafter. However, as I was not satisfied with his performance and at the same time was reluctant to cause harm to the officer, I felt it prudent to wait for sometime. Meanwhile, I verbally (at times in the presence of other Directors), and also in writing advised Shri Verma from time to time, regarding the shortcomings in his performance, with a hope that there will be improvement and also with a view of motivating him and retaining him as an effective member of my senior team. This was also the reason for mentioning his performance as very good and recommending the clearance of his probation vide my letter dated 5.3.99 addressed to Secretary (Hydro). As a matter of fact I had also shown my letter referred above to Shri Verma, hoping that he would now be motivated to improve his performance and at the same time shall feel more a part of the team. Moreover, to be very frank I was also hesitant in spoiling the career of such a senior level officer.
My hopes were however, belied as not only there was no improvement in Shri Verma's performance but on the contrary, after his perusal of the clearance letter, he become more belligerent, defiant indisciplined and non-cooperative. He started putting the spanner in smooth functioning of the Corporation causing incalculable harm and also become a party to conspiracies against the interest of the Corporation and the Project by aligning himself with the outsiders. I then realised that it was a mistake on my part that instead of sending my recommendation on basis of objective assessment of Shri Verma's performance, I had recommended his probation clearance in the vain hope that he will improve. I regret that my recommendation did not represent the correct appraisal as it should have.
Due to the circumstances explained above, I would request, that my assessment of performance of Shri Verma furnished vide my letter dated 7.5.99 be taken cognisance of ignoring the earlier one submitted vide my letter dated 5.3.99 - and PESB be asked to review his appointment.
Thanking you, Yours faithfully, Sd/-
(ARUN GUPTA) Chairman & Managing Director"
54. Record would reveal that since nearly two years had gone by and special appraisal had to be done at the end of one year, matter was dropped at that. It was not processed for taking a decision whether the petitioner should or should not be continued beyond a period of one year. By default, petitioner's tenure came to be recognised as that of five years.
55. In the meantime, from time to time, on the various dates noted above ACRs for the years 1997-98, 1998-99 and 1999-2000 were written. ACR for the year 2001-02 was also written.
56. Challenge to the adverse entries in the ACRs for the years 1997-98, 1998-99 and 1999-2000 during arguments was on the following grounds :-
(i) Letter dated 5.3.1999 was written by the CMD bonafide and it reflected the true views of the CMD. By August, 1998 the issue of fly-ash being used by the contractor in cement and excess payment being made to him which was objected to by the petitioner has resulted in positions being taken. Petitioner wanted recoveries to be effected and the CMD Along with the Director (Finance) opposed the same. Therefore, there was malice and bias against the petitioner when these ACRs were written.
(ii) Letter written by the petitioner to the CVC on the issue of fly-ash was held against him by the CMD as not only bringing disrepute to the organisation but of lacking in collegiate functioning. There was nothing wrong in writing directly to the CVC because the CVC took cognizance of the irregularity and directed that a Committee be constituted. CVC had issued guidelines on 18.11.1998 on creating a culture of honesty. As per said guidelines dated 18.11.1998 CVC had written:-
"many organisations have a reputation for corruption. The junior employees and officers who join the organisation hopefully may not be so corruption minded as those who had already been a part of corrupt system. In order to ensure that a culture of honesty is encouraged and the junior officers do not have the excuse that because their seniors are corrupt, that they have also to adopt the corrupt practices, it is decided with immediate effect that that junior employes who initiate any proposal relating to vigilence matters which is likely to relsult in a refence to the CVC can sent a copy directly to the CVC by name."
Thus, adverse entries in the ACRs relating to the petitioner's sending a direct complaint to the CVC were contrary to the circular issued by the CVC.
(iii) There was undue delay in recording the ACRs. Everything was done belatedly to cause injury to the petitioner. The CMD wanted to keep the sword hanging over the head of the petitioner in the matter of writing ACRs with the object of making the petitioner comply with the dictates of the CMD.
(iv) There was a contradiction in the stand of UOI and NJPC as to what caused delay in recording the A.C.R.
(v) Refering to the representations made by the petitioner in respect of the adverse entry recorded in the ACRs for the year 1997-98, 1998-99 and 1999-2000, counsel contended that in light of the information given by the petitioner in his representations, the adverse entry had to be quashed.
57. Further events which transpired during the pendency of WP(C) No. 6542, 6543 and 6544 of 2002 which led to the filing of WP(C). 6575/2003 and WP(C). 7508/2002 be noted.
58. 5 year term of the petitioner came to an end in September 2002. As per Government of India Guidelines noted in paras 12 and 13 above, matter had to be considered for further retention or discontinuation. Matter had to be placed before the PESB for its recommendations and thereafter final decision had to be taken by the Cabinet Committee on Appointments. Since the three writ petitions filed by the petitioner were pending and issue whether adverse entry in the 3 ACR's were to be quashed or not was pending adjudication, petitioner questioned the initiation of the process to consider question of his continuation. Petitioner filed an application being CM No. 11160/2002 in WP(C) No. 6542/2002 praying that PESB be restrained from considering the case of the petitioner for grant of extension. On 11.10.2002, this court restrained PESB from considering the grant of extension to the petitioner. With the result that petitioner went on compulsary wait. He did not work but got pay. Petitioner thereafter filed CM No. 3269/2003 in WP(C) No. 6542/2002. Petitioner alleged that Sh.S.S.Sharma Special Secretary (Power) had conducted an enquiry and had submitted a report to the Ministry recommending that the adverse entries be expunged. Petitioner prayed that all record pertaining to his ACR's be summoned and report of Sh.S.S.Sharma be also summoned to decide the three writ petitions.
59. Writ petitions got adjourned from time to time. Interim stay granted on 11.10.2002 continued. U.O.I. filed CM No. 2216/2003 in WP(C) No. 6542/2002 seeking early hearing or alternatively for vacation of the order dated 11.10.2002. It was stated therein that it was imperative for the PESB, and the ministry to have the joint appraisal. Interim order was not vacated. Writ petition was also not heard.
60. On 24.9.2003 petitioner was served with the following order:-
"The services of Shri A.K.Verma as Director (Electrical) are no longer required in Satluj Jal Vidyut Nigam Ltd. (SJVN). Since it is a case of tenure appointment, which came to an end by efflux of time on 27.8.2002, the Government of India has decided not to extend the period of appointment of Shri A.K.Verma as Director (Electrical), SJVN beyond 27.8.2002. The period of 'compulsory wait' from 28.8.2002 till the date of issue of this Order shall be treated as "the period spent on duty" for the purpose of pay and allowances only.
2. This issues with the approval of Competent Authority."
61. Petitioner challenged the order aforesaid by filing WP(C) No. 6575/2003. Challenge was predicated, inter alia, on the grounds:
(i) ACR's which were under challenge in WP(C) No. 6542-44/2002 could not be considered while deciding on the petitioner's continuation.
(ii) Without joint appraisal by PESB and without PESB making its recommendations, ACC could not decide the matter.
(iii) ACC decision had over reached the order dated 11.10.2002 passed by this court.
(iv) Report of Sh. S.S.Sharma Special Secretary (Power) was not considered.
62. Term of Sh.Arun Gupta as CMD having come to an end, U.O.I. commenced the process of selection of a person to be appointed as CMD of the company. Sh.V.N.Apparao, as per the petitioner, was selected. Petitioner challenged his appointment by filing WP(C) No. 7508/2002. Ground of challenge being:
(i) Petitioner was senior.
(ii) Decision was tainted as petitioners ACR's which were under challenge were considered and this vitiated the selection process.
63. In light of the, rather long and complex, factual background noted above and the various guidelines issued on the subject, in a nutshell, grievance of the petitioner pertaining to all 5 writ petitions may be stated as under:-
(i) Guidelines pertaining to the time within which ACR's have to be recorded and adverse entry communicated have been violated.
(ii) Guidelines pertaining to the time within which the representation has to be decided has been violated.
(iii) Adverse entries are mala-fide and need to be quashed.
(iv) There is no basis for the adverse entries. C.V.C. Guidelines pertaining to sending complaints to C.V.C. have been ignored.
(v) Adverse entries in the ACR's have to be quashed.
(vi) Petitioners appraisal for continuation beyond 5 years had to await the decision in WP(C). 6542-44/2002.
(vii) Without PESB appraisal, ACC could not take a decision. Since vide order dated 10.11.2002 PESB was restrained from taking any decision, ACC could not have decided the matter.
(viii) Petitioners assessment for being appointed as CMD was vitiated due to consideration of the ACR's containing adverse entries against him.
64. Admittedly, there exists no statutory rules pertaining to recording of ACR's for top and senior level posts in Public Sector Enterprises. Guidelines dated 21.1.1983 noted in para 10 above have been framed. They require, for board level posts, initiation of the ACR by the CMD. It has to be sent to the secretary of the administrative ministry for counter signatures. Thereafter, it has to be sent to the minister concerned for his observations. This process has to be completed within 45 days of the expiry of each financial year. If their be any adverse entry, procedure as to what next has to be done is laid down under guidelines dated 25.4.1985 noted in para 11 above. Guidelines require that within a month, the adverse entry be communicated to the officer. The officer has been given a right to make a representation within 6 weeks or such extended time as may be granted, if sought. If received, the representation requires to be decided within 6 weeks.
65. Issue of first year ending review for consideration for extension need not be decided as, by default, petitioner continued to work for the entire 5 year duration.
66. The Constitution Bench of the Supreme Court in the decision reported as Jayantilal Amratlal Shodhan Vs. P.N.Rana & Ors per majority held:-
"17. ....... This is not to say that every order issued by an executive authority has the force of law. If the order is purely administrative, or is not issued in exercise of any statutory authority it may not have the force of law. But where a general order is issued even by an executive authority which confers power exercisable under a statute, and which thereby in substance modifies or adds to the statute, such conferment of powers must be regarded as having the force of law."
67. Counsel for the petitioner relied upon 1987 (2) SCC 118 Brij Mohan Chopra Vs. State of Punjab to contend that every guideline has the force of law. Observations in para 6 of the judgment were relied upon. Case was one of the premature retirement. Rule 3 of the Punjab Civil Services (Premature Retirement) Rules 1975 was the source of power to effect premature retirement. Guidelines issued were for guidance of the appropriate authority exercising power under Rule 3. Noting aforesaid, it was observed that since guidelines issued related to exercise of statutory power, they had force of law.
68. A few other judgment were relied upon. I need not deal with them as they related to guidelines pertaining to exercise of statutory power.
69. Instant guidelines are not issued for exercise of statutory power. Appointment at board level in public sector enterprises are made in exercise of executive power of the union. No law regulates the same. They are for guidance of the government. Dealing with these very guidelines, a learned single judge of this court S.K.Mahajan, J. in decision reported as 2003 (v) A.D. Delhi 364 A.N. Gupta V. PESB & Ors. held:-
"13. While there cannot be any dispute about the proposition that the executive instructions do not have a force of law and it would not lie in the mouth of the State to say that it was not necessary for them to follow the same, however, a slight deviation or infraction of such guidelines would not given any right to the petitioner to challenge the order of termination only on the ground that the same has been passed in violation of the guidelines. Unless the order is actuated with mala fide or is made in violation of the statutory provisions, the same cannot be set aside only on the ground that the guidelines were not strictly followed by the respondents."
70. While holding so, S.K.Mahajan, J. relied upon the decision of the Supreme Court reported as 1993 (II) L.L.J. 626 UOI Vs. S.L. Abbas wherein guidelines issued by the government pertaining to transfer were contended by the employee to be creating a legally enforceable right. It was held:-
"7. ...... While ordering the transfer, there is no doubt, the authority must keep in mind the guidelines issued by the government on the subject. ..... The said guidelines however do not confer upon the government employee a legally enforceable right."
71. Assuming that the guidelines create an enforceable right in the petitioner, question would be, are the guidelines mandatory? If yes, what legal consequences flow by not adhering to the time frame?
72. The aim, object and purpose of communicating adverse remarks is to give an opportunity to the officer concerned to improve his performance. In said context it can be compared to an advice. Purpose is lost if there is a delayed communication.
73. In State of Haryana Vs. P.C. Wadhwa the Supreme Court in the context of All India Services (Confidential Rolls) Rules 1970 held that the time frame provided in the rules is directory, but cautioned against inordinate delay.
74. Record pertaining to the petitioner and in particular the ACRs noted in paras 48 to 51 above would reveal that for the first year end appraisal, petitioner did not furnish his notes which were in the nature of a self-appraisal. Special appraisal, therefore, got delayed by nearly a year. Petitioner who was repeatedly requested to furnish his self-appraisal since August, 1998 did the needful only on 10.2.1999. Further, Reporting Officer for the years 1997-98, 1998-99 and 1999-2000 was Shri Arun Gupta, CMD of the Company. Reviewing Authority for the year 1997-98 was Shri E.A.S. Sharma, Secretary (Power). For the year 1998-99 the reviewing authority was Shri V.K. Pandit, Secretary (Power). ACR for the year 1999-2000 was not signed by the reviewing authority as, when the same reached the Ministry, Secretary (Power) had demitted office and no incumbent had taken charge. The ACR had to be counter-signed in token of acceptance by the Minister-in-Charge of the Ministry of Power. In July, 1999 ACR for the year 1998-99, which as noted above was written prior to the ACR for the year 1997-98 had reach the Ministry and was signed by the Minister in token of acceptance on 28.7.1999. ACR for the years 1997-98 and 1999-2000 had not been counter-signed by the Minister. It was stated at the Bar that in September, 1999 the Minister of Power had demitted office. The new Minister Shri Rangarajan Kumaramanglam had died in the year 2000 and there was no regular Minister of Power when the ACR for the year 1999-2000 reach the Ministry. Prima facie, petitioner is responsible for the delay in recording his ACRs for the year 1997-98 and 1998-99.
75. Time period for recording ACR's and communicating adverse entry is laid down in guidelines. Whether an enforceable right is created is debatable. Time schedule cannot be said to be mandatory. It is directory. Keeping in view the fact that petitioner himself contributed to the delay, in my opinion there is substantial compliance with the guidelines.
76. Review filed by the petitioner against the decisions deciding petitioners' representation against adverse ACRs were stated not to be decided because of the fact that only one representation against the adverse remark is permissible in terms of the OM No.21011-1/77-ESTT. dated 30.1.1978 and OM No.51/14/60-ESTT(A) dated 31.10.1961.
77. Relying upon the judgment of the Supreme Court reported as Nandganj Sihori Sugar Co. Vs. Badri Nath Dixit. Shri Mukul Rohtagi, learned ASG contended that no person has a right to be appointed as a Director of a public sector enterprise. Every appointment is contractual, limited for 5 years. Tenure expires by efflux of time. Petitioner's tenure of 5 years came to an end in September 2002 and therefore the whole issue had become infructuous. What purpose would be served if the adverse entry in the ACR's were quashed.
78. De-hors the guidelines, every citizen, by virtue of Article 16 of the Constitution of India has a fundamental right of equality of opportunity in matter relating to employment or appointment to any office under the State. What hold good against the State must hold good against its instrumentalities. Every citizen, subject to eligibility as per the prescribed qualifications, has a fundamental right of equality of opportunity to seek employment in a public sector enterprises. The necessary concomitant of this right must include the right to be fairly considered. This would mean that pure and unadulterated material must be placed before the decision making authority. Petitioner's right to pursue the writ petitions therefore survives.
79. To quote Robbie Burn's:
'O would some power the giftie gi'e us, To see ourselves as others see us, It would from many a blunder free us, And foolish notion.'
80. In a small organization, a single persons leadership personally drives the organization. But in larger organizations, each Manager must play the leadership role. Synergetic linkages with the other employees reinforce the organizational growth. Young managers who grow to the top, transform from followers to leaders. They need to firstly understand and then play the crucial role of a leader. Many a time the individual tends to remain focused on growing technically rather than growing as a leader. Needless to say, this tends to create a challenge for the organization.
81. Management development is a key function in every large organization, which employee has grown to assume management responsibility has to be identified. What better method can one have other than performance appraisals.
82. Who controls whom? This is not an easy question to answer. There is a great degree of unhappiness all around with performance appraisals. Rarely does one comes across a person who accepts what he is rated as. With so much unhappiness, but one cannot do away with appraisal mechanism. Howsoever weak it may be, whatever be its faults and limitations, in the absence of a better alternative (which at least I cannot think of) one has to live with the system.
83. Complaint of the subordinate is that his boss rates his performance without really knowing what he is doing or the constraint under which he is working. Other complaint is that different bosses rate differently.
84. The boss of every employee is normally in a good position to rate the employee. This is because he is likely to be more knowledgeable and experienced and secondly has the opportunity to observe the performance of his subordinate, continuously through various transactions.
85. Analysing data for appraisal requires a thorough job analysis and assessment. Many a factor influences the decision. Books and books have been written on Performance and Management system. A Judge would have little, rather no expertise on the subject. Except for limited field covering malice, which is easy to allege but difficult to sustain, courts cannot sit on judgment of experts who have written the ACR's.
86. The appraisal performance gets accentuated where higher is the post which has to be manned. A person may be an excellent worker, his knowledge may be of the highest order, but he lack collegiate functioning. Is he fit to be at the board level? A person may have great leadership qualities but he develops cold feet when hard decisions have to be made. Is he fit to be at the board level? Questions may be multiplied. The answer becomes more and more difficult.
87. Petitioner alleges mala-fide against the CMD, Shri Arun Gupta. Facts pleaded to prove malice is the stand taken by the petitioner pertaining to fly ash being used by the contractor instead of cement and consequently excess payment being made to the contractor. Facts brought on record by petitioner as noted in paras 17 to 23 above would reveal that by January,1999, on this issue, his difference of opinion with the CMD had surfaced, yet on 5.3.1999 the CMD wrote favorable qua the petitioner recommending his continuation. Ministry wanted the recommendation as per proforma to enable PESB to appraise the petitioner.
88. ACR proforma and the ACR's of the petitioner which were produced for perusal of the court revealed that not only specific comments had to be recorded but even marks on a rating 0-10 had to be indicated. While filling the ACR proforma, the CMD had filled each column. When called upon to explain the contradiction in what he had conveyed on 5.3.1999 and the special appraisal, CMD in his letter dated 26.7.1999, noted in para 53 above gave his explanation. It was accepted by the ministry. It cannot therefore be said that because of the difference of opinion between the petitioner and the CMD, the latter bore ill will qua the petitioner. If there was any ill will, the CMD would not have written the letter dated 5.3.1999.
89. I have prefaced by judgment in para 2 above by posing the question whether it would be a wise policy to seek adjudication of service disputes and allied matters affecting top level appointments in public sector through medium of court where a judge has inherent limitations or is it desirable to seek redressal within the inbuilt processes of redressal.
90. To my mind, petitioner has been hasty in rushing to the court and seeking a forum of redressal without exhausting the alternative and a better forum. Counsel for the petitioner, apart from challenging the ACR's on ground of malice had relied upon his representations against the adverse entries to bring home the point that there was no basis for said adverse entries to be recorded.
91. What is bias? In common English parlance it means and implies - predisposition or prejudice. How is it established? Direct evidence is seldom forthcoming. Surmise and conjecture has to be excluded. Circumstances speak for themselves. If, on a given set of facts, a person arrives at a conclusion which no reasonable person would arrive at, it would show predisposition or in other words bias.
92. Government of India's instructions dated 12.12.1986 would show that a body of persons constituting PESB would decide on the matter whether a Director whose term has expired should or should not be continued. Individuals on PESB are experts and have held position of eminence in the field of industry, government etc. This body of person is best suited to decide on the grievance of the petitioner. As per the guidelines dated 21.11.1996, noted in para 13 above, while carrying out the joint appraisal the PESB has the standard practice of inviting the concerned Chief Executive/Director of the PSU. Thus, the incumbent is given the opportunity to meet the Board and explain his/her stand before recommendations are made by the PESB. In other words, the individual is, once again, assessed by the PESB. When appraisal for continuation commenced, petitioner was called by the Board. Petitioner got a stay. Had he appeared at the appraisal, petitioner could have justified to the board what was sought to be justified before me. He could have shown to the board that on the material, no reasonable person could have recorded the adverse entry in the ACR's. The board had the expertise to decide the issue. Decision qua bias of the CMD was inbuilt in the recommendatory process of the board.
93. A better and an effective forum created where qualified persons could have better decided the issue has been rendered nugatory by the petitioner. A short cut need not necessary be the best cut.
94. The result of the petitioners short cut? A shot circuit. Defending the decision of ACC and its right to decide on the issue, Shri Mukul Rohtagi, learned ASG argued that under the scheme of the Constitution and allocation of Business Rules, ACC had to decide. Role of PESB was merely that of a recommendatory body. It was not even an advisory body. Government of India had taken an administrative decision which resulted in the guidelines being issued that it would take the aid of a body (PESB) for its own benefit while taking the decision. ACC was not bound by the recommendations of PESB argued Shri Mukul Rohtagi. Therefore, it hardly mattered whether ACC had or not the recommendations of PESB.
95. Before proceeding ahead, pertinent observations of the Supreme Court in the decision reported as O.P.Bhandari Vs. ITDC be noted:-
"As the occasion so demands, we feel constrained to place in focus and highlight an important dimension of the matter. The impugned regulation is extremely wide in its coverage in the sense that it embraces the 'blue collar' workmen, the 'white collar' employees, as also the 'gold collar' (managerial cadre) employees of the Undertaking. In so far as the 'blue collar' and 'white collar' employees are concerned, the quashing does not post any problem. In so far as the 'gold collar' (managerial cadre) employees are concerned, the consequence of quashing of the regulation calls for some reflection. In the private sector, the managerial cadre of employees is altogether excluded from the purview of the Industrial Disputes Act and similar labour legislations. The private sector can cut the dead wood and can get rid of a managerial cadre employee in case he is considered to be wanting in performance or in integrity. Not so the public sector under a rule similar to the impugned rule. Public sector undertakings may under the circumstances be exposed to irreversible damage at the hands of a 'gold collar' employee (belonging to a high managerial cadre) on account of the faulty policy decisions or on account of lack of efficiency or probity of such an employee. The very existence of the undertaking may be endangered beyond recall. Neither the capitalist world nor the communist world (where an employee has to face a death sentence if a charge of corruption is established) feels handicapped or helpless and countenances such a situation. Not being able to perform as per expectation or failure to rise to the expectations or failure to measure up to the demands of the office is not misconduct. Such an employee cannot thus be replaced at all. If this situation were to be tolerated by an undertaking merely because it belongs to the public sector, it would be most unfortunate not only for the undertaking but also for the Nation. The public sector is perched on the commanding heights of the National Economy. Failure of the public sector might well wreck the National Economy. On the other hand the success of the public sector means prosperity for the collective community (and not for an individual Industrial House). The profits it makes in one unit can enable it to run a losing unit, as also to develop or expand the existing units, and start new units, so as to generate more employment and produce more goods and services for the community. The public sector need not therefore be encumbered with unnecessary shackles or made lame. It is wondered whether such a situation can be remedied by enacting a regulation permitting the termination of the employment of employee belonging to higher managerial cadre, if the undertaking has reason to believe, that his performance is unsatisfactory or inadequate, or there is a bona fide suspicion about his integrity, these being factors which cannot be called into aid to subject him to a disciplinary proceeding. If termination is made, under such a rule or regulation, perhaps it may not attract the vice of arbitrariness or discrimination condemned by Arts. 14 and 16(1) of the Constitution of India, inasmuch as the factor operating in the case of such an employee will place him in a class by himself and the classification would have sufficient nexus with the object sought to be achieved. Of course it is for the concerned authorities to tackle the sensitive problem after due deliberation. We need say no more."
96. No statutory rule governs appointment or continuation at board level appointment in a public sector enterprise. Appointment is contractual for term of 5 years. No statutory rules provides, but Article 16 of the Constitution guarantees equality of opportunity for appointment under the state an instrumentality of the state. Right to be considered for appointment would include the right of continuation or reappointment. Right of the petitioner is family amorphous.
97. Board level appointments ensure till the age of 58 years. Petitioner was eligible for being appointed at the board level and got 1 term. He was entitled to be considered for continuation as a Director on the Board and even as CMD. Right to be considered is not restricted to NJPC renamed SJVN.
98. Gamut of the law, the facts in dispute, the right of the petitioner, howsoever amorphous, the guidelines of the government, petitioner by rushing to the court and short circuiting the process causing self inflicted injury, PESB being a better forum to decide on the material whether adverse entry in the ACR's was justified (indirectly decided on malice as well); what should be the fate of the present petitions.
99. Since plea of malice supported by external evidence has not ben accepted by this court and this court lacking expertise to decide, whether on material on record contained in the representations of the petitioner against the adverse entries in the ACR's are said entries justified, said issue remaining undecided and PESB having not considered the matter, on the facts and circumstances of the case the writ petitions are liable to be disposed of with a direction to the UOI to review the matter.
100. WP(C) 6542-44/2002 and WP(C) 6575/2003 are disposed off with the direction that matter be placed before PESB for its recommendations pertaining to continuation of the petitioner as a Director on the board of SJVN. All material be placed before the PESB which would grant personal hearing to the petitioner, as per the guideline dated 21.11.1996. PESB would be entitled to summon any record relevant for its decision, which decision would include decision whether on material on record and facts, adverse entries in the ACR's of the petitioner for the year 1997-98 to 1999-2000 are justified. Based on the recommendations of the PESB, ACC would proceed to decide whether its decision needs to be reviewed. (The direction is issued keeping in view that during arguments it was admitted that a post of Director (Electrical) is yet to be filled up).
101. Since appointment as the CMD of a PSU is based on comparative merits and suitability of candidates appointment of respondent No.4 as CMD of SJVN is not quashed. WP(C) No. 7508/2002 is disposed of with a direction that if PESB recommends favorably qua the petitioner, UOI shall consider the candidature of the petitioner, to the post of CMD of any other PSU.
No costs.