Karnataka HC quashes appointment of Director (Technical) in Bescom

A view of Karnataka High Court in Bangalore.

A view of Karnataka High Court in Bangalore.  

The government order was issued in July 2019 based on the then CM’s approval

The Karnataka High Court has quashed a Government Order appointing B.K. Udayakumar as nominated Director (Technical) of Bangalore Electricity Supply Company Ltd. (Bescom) on July 22, 2019 based on the approval of the then Chief Minister. The order was issued when the Congress-JD(S) government was facing a no-confidence motion.

The court has held that approval of the then Chief Minister to nominate Mr. Udayakumar to the board of Bescom “is illegal as the nomination is not supported by any valid reasons” as per the parameters laid down in the Supreme Court’s verdict on the government’s pleasure to nominate persons to various boards and corporations.

Also, the court found that Mr. Udayakumar taking charge on July 23, 2019 without having a Director Identification Number (DIN) and sans approval of his appointment as a director by the Bescom’s board was contrary to provisions of the Companies Act.

Justice G. Narendar passed the order while allowing a petition, filed by G. Ashok Kumar who was holding the post of Director (Technical) since September 2018, questioning the Government Order. The petitioner was shifted to Karnataka Vidyuth Karkhane (KAVIKA) as Managing Director.

It was argued on behalf of the petitioner that “the then government was on its last legs having lost its majority and while functioning as a minority government proceeded to indulge in mass transfers for extraneous reasons and that the order appointing Mr. Udayakumar is also one such order and stands tainted...”

Pointing out that provisions of the Companies Act state that no person can be appointed as a director of a company unless he has been allotted a DIN, and directors can be appointed only by passing of a resolution by the board of the respective company, the court said that these conditions applies to Bescom as it was incorporated under this Act.

As Bescom’s Articles of Association (AoA), which empowers the government to nominate and remove directors to its board, is also very clear and specific that AoA is subject to provisions of the Companies Act, the court said that Mr. Udayakumar could not have taken charge sans approval of the government’s nomination by the board and sans obtaining a DIN.

As the board approved Mr. Udayakumar’s appointment on August 7, 2019, his taking over the post on July 23, 2019 was illegal, the court said while also pointing out that no document was produced to show that a DIN was allotted to him prior to his appointment. Any order of nomination/appointment by the government of a person as a director of Bescom would crystallise and become effective only on passing of a resolution by Bescom’s board, the court said.

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Printable version | Feb 23, 2020 3:21:44 PM |

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