Srinagar: Jammu and Kashmir High Court dismissed a plea by Pervaiz Ahmad Negroo, challenging his dismissal as Chairman-cum-Managing Director of the Board of Directors of the Bank last year.
The decision followed submission by the government that his appointment was contractual and that after the advertisement, the Additional Secretary Finance Department, vide a communication on 15 May 2020 addressed to the Secretary of the Bank that Zubair Iqbal, Senior Vice President of HDFC Bank, has been appointed as a Government nominee Director on the Board of the Bank for a period of three years or till further orders, whichever be earlier.
Consequent thereto, the government said that the Board may appoint/elect him as the Managing Director of the Bank. The Additional Secretary Finance Department, J&K by another communication addressed to the Company Secretary of the Bank conveyed to the Bank that the Government, in exercise of the powers under Article 69(i) of the Articles of Association of the Bank, had decided that R. K. Chibber, shall be a Non-Executive Director on the Board of the Bank for a period of three years or till further orders, whichever be earlier and, consequent thereto, the Board may appoint or elect him as the Chairman of the Board of the Bank.
The Company Secretary of the Bank addressed communication dated 17 May .2020 to the National Stock Exchange and the BSE Ltd. informing them about the approval of the Board to the appointment of Zubair Iqbal as Managing Director of the Bank subject to the approval of the RBI, and of R. K. Chibber as the Non-Executive Chairman of the Bank for a period of three years, both subject to the approval of and to be effective from the date of approval of their appointment by the RBI, including approval for the related amendments to the Bank’s Articles of Association.
Negroo had challenged a communication (no.FD/Bkg/21/2019) on June 8 last year addressed by the Additional Secretary to the Government, Finance Department of the erstwhile State, to the Company Secretary J&K Bank Limited, conveying the decisions of the Government that he shall cease to be the Chairman-cum-Managing Director of the Board of Directors of the Bank. By same communication, the government had nominated R. K. Chibber as Director on the Board and his appointment as the interim Chairman-cum-Managing Director of the Board and Bank.
Negroo had claimed that the communications, orders, actions of the government are arbitrary, illegal and in utter disregard of the Banking Regulation Act, Articles of Association of the Bank and the Service Manual of the Bank.
Negroo submitted that termination of the tenure post of Chairman and CEO required the mandatory prior approval of the RBI in terms of Section 35B of the BR Act and that its provisions have an overriding effect over the Articles of Association of any Banking Company or any resolution passed by any Banking Company.
“….the nomination of the petitioner (Negroo) as Director on the Board and his appointment as Chairman-cum-Chief Executive Officer of the Bank was contractual in nature and not governed by any Statute or the service conditions ordinarily applicable to the employees of the Bank,” a bench of Justice Ali Mohammad Magrey said after hearing both sides. “In view of the matter, this petition, insofar as it challenges communication no.FD/Bkg/21/2019 dated 08.06.2019 addressed by the Additional Secretary to the Government, Finance Department, of the erstwhile State of Jammu & Kashmir, to the Company Secretary, J&K Bank Limited, conveying the decisions of the Government taken by it in exercise of the powers under Article 69(iii) of Articles of Association of the Bank, that the petitioner shall cease to be Director on the Board of Directors of the Bank and, consequently, be no longer the Chairman of the Board of Directors of the Bank, is held to be not maintainable. The remedy lies in the civil court,” the court said.
One thing has to be borne in mind that neither the position of Director, nor of the Chairman/CEO or the Managing Director are promotional posts in the service of the Bank, the court said.
“So, nomination of the petitioner (Negroo) as Government Director on the Board or his appointment as Chairman/CEO of the Board of the Bank is not an elevation in the sense of promotion as construed in ordinary service parlance,” the court said and dismissed the petition.
“This petition is dismissed in limine alongwith all connected CMs as not maintainable before this Court, leaving the petitioner free to approach the civil court for seeking enforcement of his contractual relationship and/or redressal of his contractual dispute(s) with the Bank,” the court said.