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CASE NO.: Writ Petition (civil)  79 of 1997

PETITIONER: Suresh Chandra Sharma

RESPONDENT: Chairman, UPSEB & Ors.

DATE OF JUDGMENT: 24/02/2005

BENCH: N. Santosh Hegde, B.N. Srikrishna & P.K. Balasubramanyan

JUDGMENT: J U D G M E N T

I.A. Nos. 23, 26, 29, 31-34 & 36 IN

O R D E R

       By an order made on 13th January, 1998, a High Powered Committee  came to be appointed to carry out investigations into five areas, as indicated  in the order. The High Powered Committee was initially headed by Shri S.  Venkatnarayanan (IAS) Retd., Former Chairman, National Power Finance  Corporation, who was substituted later on by Shri P.K. Kaul, former Cabinet  Secretary of the Government of India.  The High Powered Committee  (hereinafter referred to as the "Kaul Committee"), with the expert advice and  assistance of M/s Central Power Research Institute, Bangalore and Indian  Institute of Management, Lucknow, made an indepth investigation into the  areas of reference and produced a Report in two volumes.

       One of the issues on which the Kaul Committee had adversely  commented is that transfers and postings of officers and staff  are not made  in the State Electricity Board in a transparent and accountable manner.   Although, guidelines for transfer policy of officers of the State Government  (see at Page 495 Volume IA of the Paper Book), are supposed to be the  transfer policy of such officers of the Board also, they have been observed in  breach.   The State Government has power under the Electricity Act to issue  directives in the nature of policy directives,  but with Board’s Chairman and  top Executive heads packed by political boses, the State Government  appears to be exercising unbridled power of interference in the day to day  working of the Electricity Board. This interference in transfers and postings  with political patronage has totally destroyed the autonomous nature of the  Electricity Board, which has been identified as a serious malaise affecting  the functioning of the Electricity Board.

       The original Electricity Board has now been split into U.P. Power  Corporation Limited (for distribution and Transmission), with five  subsidiary distribution companies, namely, Kanpur Electric Supply  Company Limited (KESCO), Purvanchal Vidyut Vitaran Nigam Limited,  Varanasi, Madyanchal Vidyut Vitaran Nigam Limited, Lucknow,  Paschimanchal Vidyut Vitaran Nigam Limited, Meerut and Dakshinanchal  Vidyut Vitaran Nigam Limited, Agra.  Thermal generation is entrusted to  U.P. Rajya Vidyut Utpadan Nigam Limited and Hydro generation to U.P. Jal  Vidyut Nigam Limited. All these companies are Government companies,  though under the provisions of the Electricity Act, yet independent bodies  subject only to the directives of the State Government only on matters of  general policy.

       That there has been large scale interference with the autonomous  functioning of the Electricity Board (now transformed into eight  

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autonomous Corporations), is evident from the highly critical report made by  Kaul Committee, whose findings are as under: "a)     The State Electricity Board is functioning as an extension  of the State Government.

b)      The Government of UP and individual UP politicians  have long regarded the UPSEB as a social service  agency, not a commercial enterprise.

c)      Although the UPSEB is, on paper, an independent entity,  its management serves at the pleasure of Government of  UP and changes frequently.

d)      The GOUP officially imposes noncommercial constraints  on UPSEB pricing and personnel policies.

e)      While individual politicians interfere unofficially in  personnel, operations, collections, procurement and  more.

f)      Employee morale and productivity are low due to lack of  accountability and incentives.

g)      Corruption is generally accepted to be serious at all  levels."

(See: Kaul Committee Report Volume 1 Page 70)

       Learned amicus curiae took us to the several paragraphs of the Kaul  Committee’s Report which highlighted the deplorable state of affairs found  by it.

       When we queried the learned counsel appearing for the State of U.P.  and the learned counsel representing the electricity Corporations as to under  what authority there was governmental interference with the day to day  affairs of the Corporations in the matters like transfers and postings of  officers and staff, neither of them was in a position to contest the situation  that no minister or Government officer had any role to play in the  transfers/postings of officers and staff of such Corporations.

       Learned amicus curiae suggested that as the transfer season is round  the corner, it is necessary to pre-empt another round of transfers/postings in  the manner and for the reasons as highlighted by the Kaul Committee report.  He submitted that one way to ensure transparency in the matter of  postings/transfers of officers of these Corporations would be to appoint an  independent monitoring committee consisting of persons with impeccable  reputation and proven administrative ability, which would look into each and  every case of posting/transfer and ensure that  they are totally free from  political interference.  

       We have heard the learned counsel for the State of U.P. and the  Corporations. We are satisfied that the suggestion made by the amicus curiae  has merit and needs to be accepted.  That there is imperative necessity to act  urgently, is born out by the facts.  Considering that the transfers are likely to  be made in a couple of months, we think that urgent steps are needed to be  taken. We, therefore, direct as follows:

1.      No Minister of the State of U.P., nor any Government officer  shall interfere with the transfers/postings of the officers in any  of the Corporations named above.

2.      All postings/transfers of the officers/staff of the aforesaid  Corporations shall be monitored by an independent committee  consisting of the following persons:

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(i)   Shri S. Venkatnarayanan, (IAS) Retd. Former Chairman,  National Power Finance Corporation, as Chairman;  (ii) A member of the U.P.S.C. to be nominated by the Chairman  of the U.P.S.C.;  (iii) A nominee of the Chairman of the Central Electricity  Authority.;  (iv) A nominee of the Comptroller and Auditor General; and  (v) A nominee of the Central Vigilance Commission.

3.      All proposals for transfers/postings of officers and staff of the  aforesaid Corporation should, before finalization, be placed  before the independent committee which shall examine and  approve the transfers/postings on merits and in the light of the  guidelines for transfer policy of officers. (see at Page 495 of   Volume IA of the Paper Book).

4.      No transfer/posting which is disapproved by the said  Committee shall be made by the Board of Directors of any of  the aforesaid eight Corporations.

5.      The Committee shall make a report to this Court containing its  observations with regard to the transfers/postings of officers  and staff, if any, made for the year 2005, after all such cases  have been considered and decisions thereupon taken.

       The Chairman, Union Public Service Commission, the Chairman,  Central Electric Authority, the Comptroller and Auditor General and the  Central Vigilance Commission shall appoint one nominee each to be a  member of the Independent Committee referred to in paragraph 2 of this  order. The said nominations shall be made within a period of 3 weeks of  receipt of a copy of this order.

The Chairman of the said independent Committee shall be entitled to   remuneration of Rs. 3,000/- per sitting, while each of the members shall be  entitled to remuneration of Rs. 2,500/- per sitting.  The remuneration  payable to the Chairman and the members of the said Committee as well as  the expenditure incurred by the Committee in the discharge of its functions  shall be payable in equal proportion by the abovesaid eight Corporations and  the State of U.P.. The U.P. Power Corporation Limited shall, in the first  instance, defray the expenses of the said Committee and pay the  remuneration fixed per sitting and shall be entitled to recover the  proportionate shares from the other Corporations as well as the State of U.P.

The Registrar General is directed to forthwith forward a copy of this  order to Shri S. Venkatnarayanan, (IAS) Retd. Former Chairman, National  Power Finance Corporation, the Chairman, U.P.S.C., the Comptroller     and  Auditor General and to Central Vigilance Commission, for information and  immediate action.