1. In this writ petition filed under Article 226 of the Constitution of India, a writ in the nature of quo-warranto is sought by the Petitioner qua the appointment of Respondent No. 3 as Chairman, National Bank for Agriculture and Rural Development (NABARD). The Petitioner''s contention is that Respondent No. 3 is holding this Office consequent upon his appointment to the aforesaid Post, which is in violation of specific statutory provisions. Challenge has also been thrown to the appointment on the ground that Respondent No. 3 does not possess requisite qualifications as were prescribed in the Advertisement issued for selection to the said Post.
2. For the view that we propose to take, we are not entering into any debate or controversy about the qualification aspect of the challenge. We are confining ourselves only to the statutory aspect of the challenge. It may be mentioned here that the statutory aspect of the challenge is based upon and linked with the issue as to whether Reserve Bank of India (RBI) was consulted before the appointment of Respondent No. 3, keeping in view the statutory requirement that consultation with RBI is mandatory.
3. Before, however, we proceed to determine the aforesaid aspect, we would like to deal with the preliminary objection raised by the learned Senior Counsel for the Respondents.
4. Mr. Ashok Nigam, learned Addl. Solicitor General of India, appearing for the Respondents, raised a preliminary objection about the maintainability of this Writ Petition in this Court on the ground that no cause of action or any part of it accrued to the Petitioner within the territorial limits of this Court as, according to Mr. Nigam, entire cause of action occurred, if at all, outside the territorial limits of this Court. Mr. Nigam contended that the selection process took place either at Mumbai, or in Delhi and the Head Quarter of NABARD also is at Mumbai, where Respondent No. 3 was appointed. According to him, this Court has no territorial jurisdiction to deal with this case.
5. NABARD is the creation of Statute, its Chairman being its Executive Head. NABARD, as an Institution, was created u/s 3 of National Bank for Agriculture and Rural Development Act, 1981 (''1981 Act'' for short). This Act has all India applicability and, as per Section 3 itself, NABARD, as an Institution, has its operations spanning in the entire country. As far as the State of Uttarakhand is concerned, it is the undisputed case of the parties that NABARD has its Branch in the State of Uttarakhand (at Dehradun), where also the Petitioner is serving as its Deputy General Manager. Insofar as the issuance of a writ of quo-warranto is concerned, with respect to an Office which has all India operations, it can be said that part of cause of action has accrued in any such part of the country where the operational activities of NABARD are going on by virtue of the fact that it has its Branch there. We are, therefore, in disagreement with the submission made by Mr. Nigam and hold that this Court has territorial jurisdiction to deal with this case.
6. Coming to the main issue about the statutory violation with respect to the appointment of Respondent No. 3, we notice that Sections 6 & 7 of 1981 Act relate and apply to the appointment of the Chairman, NABARD. Sub-section (2) of Section 6 reads thus:
(2) The Chairman and other directors, excluding the directors referred to in Clause (f), shall be appointed by the Central Government in consultation with the Reserve Bank:
Provided that no such consultation shall be necessary in the case of directors appointed under Clause (d) of Sub-section (1).
7. A plain reading of Sub-section (2) (supra) leaves us in no manner of doubt that consultation with the Reserve Bank, insofar as the appointment of the Chairman is concerned, is a mandatory and binding requirement of law. In this case, we have to find out whether RBI was consulted before or with respect to the appointment of Respondent No. 3 as Chairman, NABARD.
8. A brief sequence of events leading to the appointment of Respondent No. 3 as Chairman has to be noticed with a view to appreciate the aforesaid aspect. Government of India, in the Ministry of Finance, Department of Economic Affairs (Banking Division), vide their letter dated 11th June, 2007, informed RBI that the term of Sri Y.S.P. Thorat, the then Chairman, NABARD, was coming to an end on 30th November, 2007 and accordingly requested the RBI to advertise the Post of Chairman, NABARD and to forward a separate list of total applications received, along with short-listed candidates, latest by 31st July, 2007 as a part of the consultation process envisaged under Sub-section (2) of Section 6 of 1981 Act. Accordingly, RBI issued Advertisements in different Newspapers. In response to the Advertisements, 120 Applications were received by the RBI. A Committee comprising of three Chief General Managers of RBI was constituted to screen these applications. Ultimately, out of the aforesaid 120 Applications, five names were short-listed based on the attributes required for the Post in Paragraph (1) of the Advertisements issued. RBI forwarded the Select List of five candidates to the Central Government. It is the contention of the Central Government in the counter affidavit filed on its behalf by Sri Samir Kumar Sinha, Director in the Ministry of Finance, Department of Financial Services, that the Applications received from the RBI could not throw up suitable candidates for the post of Chairman, NABARD and the Sub-Committee of Appointments Board shortlisted initial five candidates, one of whom was not found fulfilling the criteria on further scrutiny. It accordingly decided to go ahead with available four candidates found nearest to the requirement parameters and interacted with them on 19th September, 2007. However, after assessing the background, vision and dynamism displayed by these candidates, the Subcommittee observed that none of them possessed the leadership qualities and perspective meriting appointment as Chairman, NABARD. The Sub-Committee, therefore, decided not to recommend any of the candidates suggested by the RBI for appointment to the post of Chairman, NABARD. Here comes an important development.
9. Appointment Board and Search Committee thereafter decided to confine the selection process within the network of IAS Officers only. It initially short-listed seven IAS Officers of different batches belonging to different State Cadres. How and in what manner did the Search Committee obtain the names of these seven IAS Officers, has not been disclosed in the counter affidavits filed. Were the names obtained after any Advertisement or through communications sent to the State Governments, has also not been disclosed. Its has not been at all disclosed as to what methodology was adopted by the Search Committee in obtaining these seven names. Be that as it may, from out of these seven names, the Search Committee recommended the name of Respondent No. 3 for appointment as Chairman, NABARD and, based upon this recommendation of the Search Committee, the Central Government issued the Appointment Order.
10. It is the undisputed case of the Respondents before us that after the Appointments Board rejected the Select List sent by the RBI, and thereafter during any stage of the proceedings of the Search Committee leading to the selection and appointment of Respondent No. 3, the RBI was not consulted. It is the undisputed case of the Respondents before us that, in any event, RBI was not consulted with respect to any stage of the selection or appointment of Respondent No. 3 as Chairman, NABARD. However, Mr. Nigam''s contention is that even in the absence of a formal consultation with the RBI, in the present case, consultation with RBI should be deemed to have taken place in view of two facts. According to Mr. Nigam, first fact is that Sri V. Leeladhar, Deputy Governor, RBI, was the Member of the Search Committee as well as the Member of the Sub-Committee of the Appointments Board. Because of his being a Member of the Search Committee and the Sub-Committee of the Appointments Board, his being associated in the process of selection of Respondent No. 3 should be deemed as a consultation with RBI. He buttressed this argument with a reference to Regulation 16 of the Reserve Bank of India General Regulations, 1949, Sub-regulation (1) thereof being relevant is reproduced hereunder. It reads thus:
16. Powers on behalf of the Bank by whom to be exercised.-(1) Subject to the provisions of the Act, any rules made by the Central Board in regard to expenditure to be incurred by or on behalf of the Bank and any directions, which may be given by the Governor either generally or in any particular case in regard to the conduct of the business of the Bank, the Deputy Governors and Executive Directors are hereby Severally empowered to exercise any or all the powers and do any or all acts and things, which may be exercised or clone by the Bank.
11. Mr. Nigam''s contention is that under Sub-regulation (1) of Regulation 16 (supra), since the Deputy Governor of RBI is empowered to exercise all the powers of the Bank, his presence in the meetings of the Search Committee and the Sub-committee of the Appointments Board should be treated as consultation with the RBI.
12. We do not agree with the aforesaid submission of Mr. Nigam for two reasons; firstly, Mr. V. Leeladhar, even though was the Deputy Governor, RBI and may be actually representing the RBI in the Search Committee and the Sub-committee of the Appointments Board, his presence by itself cannot amount to consultation with the RBI. Secondly, Regulation 16 (supra) has no applicability to the appointment and selection of a person because it operates in an entirely different field. Our considered opinion is that during the stage of selection or, in any event, after Respondent No. 3''s name was finalized by the Search Committee, before his appointment could take place, consultation with RBI, as an Institution being mandatory u/s 6(2) of 1981 Act, should have taken place. Since this did not happen, according to us, prima facie, the appointment of Respondent No. 3 is in violation of Section 6(2) (supra).
13. RBI is Respondent No. 2 in this writ petition. It has filed its own, separate counter affidavit in answer to the Writ Petition. In Paras 6 & 7 of the counter affidavit filed on behalf of RBI, facts have been stated with respect to the RBI having undertaken the selection process initially at the request of the Central Government, it having received 120 Applications and, ultimately, it forwarding a Select List of five candidates. Thereafter, in Para 8 of the counter affidavit, the following statement of fact has been made:
8. That the Reserve Bank of India as such has thereafter not taken any action in the matter and had no further role further proceeding of the appointment of Chairman of NABARD by the Government of India. In the circumstances, this Respondent is not making any submission on the averments in the petition on any other matters. Under the circumstances it is prayed that the Hon''ble Court may be pleased to dismiss the writ petition with costs as against the Respondent No. 2.
14. The aforesaid statement in Para 8 of the counter affidavit of Respondent No. 2, RBI, fortifies our stand that RBI was not consulted by the Central Government with respect to the selection or appointment of Respondent No. 3.
15. The Writ Petition is admitted to hearing. Insofar as the grant of interim relief is concerned, based on the aforesaid discussion, we, prima facie, are of the opinion that the appointment of Respondent No. 3, having been made in violation of statutory provisions, he cannot be allowed to continue functioning as Chairman, NABARD. We accordingly, by an interim order, restrain Respondent No. 3 from functioning as Chairman, NABARD.
16. However, with a view to enable the Respondents to challenge this order in the Hon''ble SC, we hereby direct that this interim direction shall not operate for a period of six weeks from today.
