P.K. Biswas vs Union Of India (Uoi) And Ors.
2006 Latest Caselaw 2015 Del

JUDGMENT

Manju Goel, J.

1. Rule. With the consent of counsel for the parties, the writ petition is taken up for final disposal.

2. The petitioner and respondent No. 3 were both working as Executive Directors with the Reserve Bank of India (in short the "RBI"), under the provisions of Section 8(1)(a) of the Reserve Bank of India Act, 1934. The petitioner claims that he was senior to respondent No. 3, having been appointed a month earlier than her. He is challenging the appointment of respondent No. 3 as Deputy Governor and his non-selection for the post.

3. The provisions regarding Deputy Governor appear in Section 8(1)(a) and Section 8(4) of the RBI Act, which are as under:

8. Composition of the Central Board, and term of office of Directors.

(1) The Central Board shall consist of the following Directors, namely

(a) a Governor and not more than four Deputy Governors to be appointed by the Central Government;

(b) ...

(c) ...

(d) ...

(2) ...

(3) ...

(4)The Governor and a Deputy Governor shall hold office for such term not exceeding five years as the Central Government may fix when appointing them, and shall be eligible for re-appointment.

A Director nominated under Clause (c) of Sub-section (1) shall hold office for a period of four years and thereafter until his successor shall have been nominated.

A Director nominated under Clause (d) of Sub-section (1) shall hold office during the pleasure of the Central Government.

4. The provision quoted above does not limit the selection of the Deputy Governor from any of the officers of the RBI. Nor does the provision require a fixed number of Deputy Governors to be appointed. Nor is any procedure for the appointment of the Deputy Governor of RBI provided anywhere in the RBI Act.

5. Admittedly the post of Deputy Governor is not a post of promotion from the post of Executive Director. The Governor is not even required to consider one of the Executive Directors to be nominated for the post of Deputy Governor. As such, no right is shown which may exist for the petitioner to be considered for the post of Deputy Governor. The petitioner, however, challenges his own non-selection for the post on the ground that rules of natural justice have been violated in ignoring him for the appointment and that the system of selection lacks transparency. It is contended on behalf of the petitioner that the practice in the past has been to take the senior-most Executive Director for the post of Deputy Governor of the Bank except on two occasions when a junior Executive Director was selected in preference to a senior one. Two names have been disclosed in the affidavit of the respondent No. 2/RBI. It is contended that there is no system of performance appraisal for the Executive Directors and there is nothing from which it could be ascertained that respondent No. 3 made a better choice compared to the petitioner. The petitioner was never informed whether he was considered for the appointment to the post of Deputy Governor and whether there was anything adverse in his performance justifying the selection of respondent No. 3 in preference to the petitioner. The petitioner, accordingly, claims that the appointment of respondent No. 3 is liable to be quashed. He prays for quashing the Notification F. No. 7/2/2003-BO-I dated 10.11.2005 appointing respondent No. 3 as the Deputy Governor of the RBI. His further prayers are for a quo warranto asking respondent No. 3 to justify her title to the office, a mandamus directing respondent No. 1 to consider the petitioner for appointment and a mandamus directing the respondents to lay down the guidelines for appointment of the Governor and the Deputy Governors of the RBI.

6. The writ petition is hotly contested by respondents No. 1 & 2. Respondent No. 1, Union of India, has contended, inter alia, that the post of Deputy Governor is not a promotional post and the petition deserves to be dismissed on this short ground. It is further contended that the legislative intent was to give freedom to the Central Government in the matter of selection of the persons to be nominated and appointed to the post of Deputy Governor. It is then contended that as per practice so far followed, the Governor of the RBI recommends a person after considering a person having an established track record of performance in the area of Finance/Economics, that the proposal to appoint a Deputy Governor may be moved either by the Governor or by the Ministry of Finance and that informal consultations are held between the Governor and the Finance Secretary and/or Finance Minister before the name is recommended to the Appointment Committee of the Cabinet. Respondent No. 1 has also disclosed reason for the non-appointment of the petitioner for the post. The Central Government, it is stated, took note of the fact that the Governor in his communication to the Department of Economic Affairs proposing the respondent No. 3 for the post mentioned that the petitioner had inter-personal problems in the recent years and that his public relations skill was wanting in some ways. The reason for preferring respondent No. 3 has also been disclosed in this counter. It is stated that she had an established track record of performance in the area of Finance/Economics and that she had been heading sensitive departments like Public Debt Management and External Investments and Operations. Further her handling of critical area of regulation and supervision of banks, her being a member of international working groups and her providing consultancy services on financial markets to other countries, made her suitable to the post.

7. Respondent No. 2, namely RBI, in its counter affidavit opposed the petition on the same lines as is done by respondent No. 1. It is further disclosed that recommendations for the post of Deputy Governor are made keeping in view the factors like expertise required at the time having regard to the areas of expertise and background of the existing incumbents and as required for discharging the functions of Deputy Governor in the light of the emerging challenges, the changing functions of the Bank and other factors of importance to the Bank. It is further disclosed that in the last 25 years 24 Deputy Governors have been appointed out of which only 11 were taken from the Executive Directors of the RBI while the rest were taken from the fields/streams such as Economics, IASs, Bankers, Members of Planning Commission, Government of India Ministries and Institutions etc. It is further contended by the respondent No. 2 that the Executive Director directly works under the Deputy Governor and in his absence reports to the Governor and, therefore, Governor is fully aware of the functioning and performance of the Executive Directors and, therefore, even without a formal performance appraisal report, the Governor is fully informed about the suitability of the existing Executive Directors for the post of Deputy Governors. At the time of argument, Mr. T.R. Andhyarujina, learned senior counsel appearing for respondent No. 2, further disclosed that the petitioner's name did come up for consideration and for the reasons disclosed in the counter affidavit of respondent No. 1, the Governor preferred to nominate respondent No. 3 for the post. A copy of the letter written by the Governor to the Secretary, Department of Economic Affairs dated 27.8.2005 was shown to the Court which has been kept on the record.

8. It may be noted here that there is no allegation of malafides on the part of any of the two respondents. The ground for challenge is violation of the principles of natural justice. The main attack is on the absence of a performance appraisal system. It is contended that since there is no system of performance appraisal for the Executive Directors, there was no way by which the Governor could have nominated the name of respondent No. 3 and, therefore, her appointment to that post was arbitrary and biased. This plea of the petitioner, however, holds no water. As disclosed by the respondents and not controverter by the petitioner, the Executive Directors report to the Deputy Governors and to the Governor and, therefore, even without a formal appraisal report or any document of that sort being available on record, the Governor cannot be said to be totally unaware of the performance of Executive Directors and their comparative efficiencies. The Executive Directors are the highest ranking officers of the RBI. There is no further promotion from this post. Accordingly, there is no system of maintaining performance appraisal for the Executive Directors. The Governor of the RBI who sees the performance of Executive Directors in the usual course of business does not need any further information in the form of performance appraisal report for recommending a name of one of the Executive Directors for the post of Deputy Governor.

9. The greatest weakness of the petitioner's case is that the post of Deputy Governor is not a post of promotion from the post of Executive Director and, therefore, the petitioner has no right to be considered for the post of Deputy Governor. Mr. Bishwajit Bhattacharya, learned Counsel appearing for the petitioner has cited the cases of Badrinath v. Government of Tamil Nadu and Ors. ; R.B. Desai and Anr. v. S.K. Khanolker and Ors. ; and B.V. Sivaiah and Ors. v. K. Addanki Babu and Ors. in support of his case. All the three judgments relate to promotion in service. Since the petitioner's case is not one of non-promotion, these three judgments cannot come to the rescue of the petitioner. Petitioner's case, thus, lacks any merit and, therefore, deserves to be dismissed.

10. Mr. Bhattacharya then submits that for future it will be appropriate to lay down the eligibility conditions for appointment to the post of Deputy Governor and that further transparency should be provided to the system of appointment of Deputy Governors. It appears that the present practice has served the system well. This, Mr. Bhattacharya says, is the first occasion when the appointment of a Deputy Governor has been challenged in Court. There is nothing apparently wrong with the present practice. As mentioned earlier, the Governor/the Ministry of Finance is entitled to nominate a person from amongst a wide range of people coming from various walks of life like those in the field of Economics, Banking and Administration etc. The petitioner does not show that any need for laying down the eligibility conditions has ever been felt in the past. The Legislature itself has preferred to leave such a wide choice for the selection of a person for the post of Deputy Governor. The two factors together suggest that there is no need, at least for the present, to lay down any eligibility criteria for the post of Deputy Governor.

11. The writ petition and CM 2240/2006 are accordingly dismissed, leaving the parties to bear their own costs.