Rashid Paul

HC dismisses Nengroo’s plea against his removal as JK Bank chairman and CEO

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Srinagar: The J&K High Court on Wednesday dismissed a petition by ex-Chairman and Chief Executive Officer (CEO) of the J&K Bank, Parvez Ahmad Nengroo, challenging his removal from the posts and nominating R. K. Chibber in his place.

The Anti-Corruption Bureau (ACB), Srinagar had on 8th of June 2019, after receiving a complaint alleging backdoor appointments of Banking Attendants/Assistant Banking Associates in the J&K Bank registered an FIR against Nengroo and some other officers of the bank.

Subsequently the Finance Department, issued a communication FD/Bkg/21/2019  dated 08.06.2019 to the Company Secretary of the bank, conveying the government decisions to end Nengroo’s appointment  as the Director on the Board of Directors of the J&K Bank.

The letter finished Nengroo as Chairman-cum-Managing Director of the Board; and nominated R. K. Chibber as the Director on the Board and appointed him as the interim Chairman-cum-Managing Director of the J&K Bank.

Petitioner Nengroo challenged the communication conveying the decisions of the government taken in exercise of the powers under Article 69(iii) of Articles of Association of the J&K Bank.

He also prayed for pension benefits for being the Chairman and CEO the J&K Bank.

Justice Ali Mohammad Magrey dismissed the petition by Nengroo “in line along with all connected CMs as not maintainable before his court”.

He, however, left the petitioner free to approach the civil court for seeking enforcement of his contractual relationship and redressal of his contractual dispute(s) with the bank.

The court held that Jammu and Kashmir Bank Limited is a Public Sector Undertaking.

“Clause 1 of the Articles of Association of the Bank states that it is a Government company within the meaning of Section 2(45) of the Companies Act, 2013 and it is an instrumentality of the State. The Union Territory of Jammu and Kashmir is its major shareholder, holding 68.18 percent of shares in the Bank. In these circumstances, the Bank is under the control of the Government of the Union Territory,” it said.

It referred to the erstwhile State Administrative Council vide its decision no.148/20/2018 dated 22.11.2018 deciding that the J&K Bank shall apply the provisions of the J&K RTI Act, 2009.

The State Administrative Council had also made the J&K Bank accountable to the State Legislature.

The court referred to the Article 69(i) of the Articles of Association of the Bank under Chapter X with which provided that no director other than a government director shall be elected as Chairman of the Board.

“Clause (iii) of Article 69 further provides that Government Directors will continue in their offices so long as their appointment is not cancelled by the Government. Article 75 under Chapter XIII, captioned ‘Rotation of Directors’ provides that all the Directors shall retire by rotation except Government Directors who will continue in their offices so long their appointment is not cancelled by the Government,” the court said.

It said “the nomination of the petitioner 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”.

It cited a Bombay High Court case –Chanda Deepak Kochhar v ICICI Bank Limited — which held that contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance and declaration.

Justice Magray said that Mandamus is limited to enforcement of public duty.

“The petition, challenging communication no.FD/Bkg/21/2019 dated 08.06.2019 by the Finance Department is held to be not maintainable. The remedy lies in the civil court,” he said.

However he held Nengroo’s plea maintainable for pensionary benefits.

The court on the other hand recorded its finding that the petitioner is deemed to have retired from the service of the bank with effect from 06.10.2016, meaning,  his tenure as being the Chairman & CEO of the J&K Bank is not governed by the service rules of the bank.

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