' UMAR ATA BANDIAL, C.J.---This petition is filed to challenge the advertisement dated 17-9-2011 ("Advertisement") issued by the Federal Government for recruitment of Chief Executive Officers ("CEOs") in the two advertised power distribution companies, namely, Lahore Electric Supply Company ("LESCO") and Faisalabad Electric Supply Company ("FESCO"). One ground of challenge originally taken by the petitioners was that the Pakistan WAPDA Service of Electrical Engineers Rules, 1965 ("WAPDA Service Rules") require the said post to be filled by promotion; therefore outsiders cannot compete for appointment thereto. Hence, said posts can be filled only by in-house employees of the concerned distribution company ("DISCO") or otherwise from amongst the employees of all DISCOs in the national grid.
2. At the outset of the proceedings, it was rightly pointed out by the learned counsel for the respondents Nos.1 and 2, that assuming the WAPDA Service Rules govern appointment to the post in question, then according to the said Rules, inter alia, the post of CEO can be filled either by promotion or initial recruitment. Therefore, the method of initial recruitment adopted in the present case making outside candidates eligible for appointment is lawful. Another objection by the petitioners to the age limit of 55 years fixed in the impugned advertisement as condition for appointment to the post was cured by the Federal Government's agreement to relax the said age limit of candidates to 58 years. This was done to entertain more in-house employees of DISCOs to compete for appointment to the said post.
3. As such the two aforementioned short objections by the petitioners to the impugned recruitment process stood resolved at the outset in these proceedings. However, one substantive question that was raised and survives for adjudication by the Court is whether the Federal Government had any authority to initiate and to finalize the appointment process of CEOs of DISCCs?
4. The learned counsel for the parties, namely, Khawaja Haris Ahmed, Advocate along with Syeda Maqsooma Zahra Bukhari, Advocate for the petitioner, Syed Naeem Bukhari, Advocate along with Mr. Afzal Bhatti, Advocate for the Federal Government, Mr. Munawar-us-Salam, Advocate along with Mr. Usman Sahi, Advocate for LESCO and Mr. Shaukat Umar Pirzada, Advocate for PEPCO have assisted the Court ably by analyzing factual and legal material collected from different sources.
The Court has weighed the submissions made with deliberation and care and considered the materials furnished carefully.
5. It is common ground that DISCOs are not government departments. These are duly incorporated companies managed under the Companies Ordinance, 1984 ("Ordinance") by their respective Board of Directors ("Board") appointed by the Federal Government. The LESCO and FESCO are public limited companies wholly owned by the Federal Government. These companies were incorporated in the implementation of a strategic plan approved by the Cabinet Committee on Privatization. The said strategic plan for restructuring of WAPDA was endorsed by the Council of Common Interests ("CCI") in 1993. The Federal Government then proceeded to delineate the criteria for restructuring WAPDA under the said plan. However, for several years thereafter execution of the strategic plan by the Federal Government fell victim to executive inertia. The respondent LESCO and FESCO were ultimately incorporated in the year 1998 in consequence of a Cabinet Division summary dated 17-6-1998 containing recommendations by Economic Coordination Committee ("ECC") of the Cabinet that had been duly approved by the Federal Cabinet. After much delay in the year 2007 the Prime Minister approved the appointment of an independent Chairman of the Pakistan Electric Power Company (Pvt.) Ltd. ("PEPCO"), a company established for implementing the strategic plan.
6. The strategic plan envisaged WAPDA to retain its present water wing; but its power wing was charted to be restructured into independent generation, transmission and distribution companies.
The restructured corporatized entities of WAPDA power wing were placed under PEPCO's oversight.
In turn PEPCO was proposed as attorney of the Federal Government for exercising the government's voting rights arising from its entire shareholding in the restructured independent generation, transmission and distribution companies established under the strategic plan.
7. The Board of Directors of PEPCO and of the other restructured companies established under the strategic plan were meant to be independent in the exercise of their management powers given by the Ordinance. This included their service structures being separated from WAPDA. The constitutive documents of the DISCOs conferred their managements with the power to appoint employees and to fix their terms and conditions of service without reference or recourse to the Federal Government. As the attorney of the predominant shareholder of the power sector companies i,e, the Federal Government, PEPCO possessed extensive powers under the Ordinance.
Through its right to make appointments to the Boards of Directors of the power sector companies, the PEPCO had the authority and was entrusted the responsibility to organize the conversion of such entities into lawfully structured independent and efficient operating power utility companies.
8. Notwithstanding executive approval of the strategic plan, the Federal Government did not, however, loosen its grip on the affairs of the restructured power sector companies incorporated under the plan. This was caused by the Federal Government's failure to recognize that its legal rights as the principal shareholder of power sector companies did not permit direct control of management of such companies. Therefore, the PEPCO has not performed its independent role envisaged in the strategic' plan. Quite apart from imprudent appointments to the Boards of the power sector companies, the Federal Government continued to control the appointments of their chief executives and other officers whilst also determining the terms and conditions of their service.
As a result, the management autonomy and operational efficiency of such power sector companies that was envisaged in the strategic plan have not been achieved. As one indication, it may be noted that in the year 2000 the power wing of WAPDA recorded a profit of Rs,17.0 billion, which result has, after incorporation of the power sector companies, been converted to a cumulative loss of Rs,800.0 billion in the year 2012. The astonishing collapse of the power sector entities after their corporatization is one economic consequence of a poorly implemented strategic plan marred by executive control and interference with the management of the newly formed companies.
9. Under the Ordinance, the Federal Government could as the principal shareholder of a public sector companies exert influence on management through its nominated Directors. However, typically in one case the Federal Government thrust a CEO on the Board of a DISCO that retaliated with equal whim. These events and the applicable legal parameters are recounted in the judgment by this Court dated 21-6-2011 passed in Writ Petition No,12272 of 2011 titled Muhammad Ihjas Sheikh v. PEPCO etc. In that case the Board of Directors of Gujranwala Electric Power Company Ltd.
("GEPCO"), a public sector power distribution company unilaterally passed a resolution dated 13-6- 2011 to appoint the CEO of GEPCO after overruling the order dated 1-6-2011 passed by PEPCO which appointed a different person to that post. Whilst considering the purport of the Board of Directors of GEPCO to assert its independence this Court observed as follows:-- "Rather than exercising their authority with deliberation and in accordance with relevant criteria, the Board has in the appointment of CEO of GEPCO acted whimsically to deny the Federal Government or PEPCO, as the sole shareholder of GEPCO, its role to nominate persons for the Board's consideration for appointment as CEO. In the circumstances of the present case, it would have been prudent for the Board to invite from its principal shareholder and its members or an expert committee, their recommendations about suitable professional candidates for appointment as CEO of GEPCO. This was not done and the Board preferred to act summarily to appoint respondent No,3 as CEO for a term of three months whereas the Companies Ordinance, 1984 contemplates appointment of a CEO of a company for a term of three years. Almost as an admission of its own doubt in the matter the Board made the said appointment conditional upon yet another successor CEO being appointed sooner by the Board.
' The circumstances show that the Board of Directors, GEPCO acted both irrelevantly and rashly in making the impugned appointment of CEO. In relation to the affairs of GEPCO, a public authority, such action reflects arbitrariness which is not countenanced by the law. Reliance is placed on Chairman, Regional Transport Authority, Rawalpindi v. Pakistan Mutual Insurance Companu Limited, Rawalpindi (PLD 1991 SC 14) and Aman Ullah Khan and others v. The Federal Government of Pakistan through Secretaru, Ministry of Finance, Islamabad and others (PLD 1990 SC 1092)
' Resultantly, learned counsel for the petitioner presses for restoration of appointment of the petitioner as CEO, GEPCO. However, such relief would tantamount to bypassing the Board and ignoring the view of the main shareholder of GEPCO namely the Federal Government or its representative PEPCO. The appropriate course is for the Board to invite recommendations of the authorities concerned with and experts in the power sector for names of competent professionals for appointment as CEO of GEPCO. Such appointment must thereafter be made bu the Board by application of its mind to valid and relevant criteria and in accordance with law." (emphasis added)
10. On the other hand, rather than acting through the Boards, the Federal Government has exaggerated its role in the affairs of DISCOs. Adverse consequences have followed the Federal Government's direct interference with the management of the public sector power companies through ad hoc measures taken from time to time on fleeting considerations. In the present context, LESCO and FESCO have suffered for inconsistency in or non-enforcement of government's policies including the provision of certainty of tenure to their employees. Common place delinquency by consumers like theft of electricity and default in payment of power bills have in many cases gone unattended or unpunished. Presently, on account of weak management the power sector companies including LESCO and FESCO have resorted to assistance by the National Accountability Bureau for recovering their overdues from defaulting consumers and to police and FIA for punishing the consumers committing theft of electricity.
11.In the foregoing background the petitioners' challenge to the Federal Government's acts to control the affairs of the public sector companies, has substance. Their plea that the autonomy of management of the power sector companies, presently LESCO and FESCO must be ensured as envisaged in the original strategic plan, which has executive endorsement by ECC and the Federal Cabinet and backing of CCI approval quite apart from sanction under the Ordinance.
12. There is no doubt that compliance with duties imposed by the Ordinance and other corporate governance legislation would foster management independence and accountability and therefore bring efficiency and transparency in the affairs of such DISCOs. This observation stands reinforced by a recent regulatory framework enforced by the Securities and Exchange Commission of Pakistan ("SECP") to control governmental involvement in the management of public sector companies. The Public Sector Companies (Corporate Governance) Rules, 2013 ("Rules") are tailored for regulating governance of companies that are directly or indirectly controlled by the Government or any instrumentality, agency or statutory body thereof. As such DISCOs fall squarely within the ambit of these Rules.
13. The Federal Government was asked to state its position whether it opposed the relevance and application of the Rules to the affairs of DISCOs. During arguments, the learned counsel for the Federal Government has admitted that the said Rules are applicable to DISCOs. However, he submitted that potentially the appointment mechanism prescribed in the Rules conflicts with governmental discretion conferred by the Ordinance. Before considering the said reservation, it is appropriate firstly to examine how and in what respects the Rules impact the management structure of DISCOs and whether these Rules are compatible in their entirety with the provisions of the Ordinance.
14. Rule 3 deals with the composition of the Board of public sector companies. It envisages executive and non-executive directors, including independent directors having requisite range of skills, competence, knowledge, experience and credentials. As a group, the Board is intended to possess expertise in the core business of the company and yet at its policy making level to enjoy diverse skills that are relevant and beneficial for the operation of large companies.
15. After a period of two years, the Rules envisage "independent directors" in a Board to be in majority. An independent director is defined in Rule 2(d) to mean a non-executive director who is not in the service of Pakistan or of any statutory body controlled by the Government and who does not have any connection or other relationship with a public sector company, its associated companies or directors. He must be a person who can reasonably be perceived as being able to exercise independent judgment without being subservient to any form of conflict of interest. His 3 years tenure in office under Rule 5(1) is secure unless he commits misconduct or has failed to perform his duties.
16. The authority of the Board extends to several matters specified in Rule 7(2). On the presently relevant subject of appointment of CEOs, under Rule 5(2) the Board has the authority to "evaluate the candidates based on the fit and proper criteria and guidelines" specified in the Annexure to.
The Rules. The fit and proper criteria are reproduced below:-- "For the purpose of determining as to whether a person proposed to be appointed as Director is a fit and proper person', the Commission shall take into account any consideration as it deems fit, including but not limited to the following criteria, namely: ' The person proposed for the said position -
(a) is at least graduate;
(b) is a reputed businessman or a recognized professional with relevant sectoral experience;
(c) has financial integrity;
(d) has no convictions or civil liabilities;
(e) is known to have competence; U) has good reputation and character;
(f) has the traits of efficiency and honesty;
(g) does not suffer from any disqualification to act as a director stipulated in the Ordinance;
(h) has not been subject to an order passed by the Commission cancelling the certificate of registration granted to the person individually or collectively with others on the ground of its indulging in insider trading, fraudulent and unfair trade practices or market manipulation, illegal banking, forex or deposit taking business;
(i) has not been subject to an order passed by the Commission or any other regulatory authority withdrawing or refusing to grant any license of approval to him which has a bearing on the capital market;
(k) is not a stock broker or agent of a broker; and
(l) does not suffer from a conflict of interest; this includes political office holders in a legislative role." (emphasis added)
' The aforesaid criteria of fit and proper person that impose personal, professional and moral standards of merit are applicable under Rule 3(7) to nominations of persons for election as Board members and under Rule 5(2) to the evaluation of candidates for the post of chief executive by the Board. After such evaluation the Board must under Rule 5(2) recommend at least three persons to the Federal Government for appointment as chief executive of a public sector company. The nominee concurred by the Federal Government is then to be appointed by the Board as chief executive of the concerned public sector company. Bare reading of the Rules leaves the distinct impression that management in public sector companies is intended to be appointed and retained on fair considerations of merit and transparency. Therefore, the Rules purport to promote both efficiency and stability of management in public sector companies.
17. Before proceeding further, it would be useful to consider the potential conflict between the Rules and the provisions of the Ordinance highlighted by learned counsel for the Federal Government.
The second proviso to section 183 of the Ordinance permits a director nominated by the Government or authority to remain in office "during the pleasure" of the nominating government or authority. However, Rule 5(1) gives a Director, who is appointed under the Rules, a term of 3 years unless he is removed for misconduct. As a result, it is objected that subordinate legislation by the Rules fetters the statutory discretion of removal of Board members or Chief Executive of public sector companies.
18. At the outset, it must be acknowledged that efficiency of management of a service industry is directly linked with the competence and independence of its management. It must also be noted that a power utility company is not merely any ordinary business for profit but the provider of an essential service to different strata of society in accordance with governmental policy objectives.
Thirdly, as a company incorporated under law, DISCOs must be organized and run in accordance with the provisions of the Ordinance and subordinate legislation framed thereunder.
19. Whereas the objection raised may have apparent force, however, in the context of appointments to senior posts in public sector entities, the law has moved ahead by requiring a transparent, meritorious and competitive process of selection for senior management posts of, inter cilia, public F sector companies. That requirement of law is spelled out in a series of judgments of the Hon'ble Supreme Court including Muhammad Yasin v. Federation of Pakistan through Secretaru, Establishment Division, Islamabad and others (PLD 2012 SC 132) in the following terms:-- "30. It is to be noted that even where appointments are to be made in the exercise of discretionary powers, it has become well settled that such powers are to be employed in a reasonable manner and the exercise of such powers can be judicially reviewed".
' The above view has also been expressed in Corruption in Hail Arrangements case (PLD 2011 SC 963) as follows:-- "38. The discretionary powers vesting in an authority are to be exercised judiciously and in reasonable manner. In the case of Tariq Aziz-ud-Din: in re (2010 SCMR 1301), it has been held that the authorities cannot be allowed to exercise discretion at their whims, sweet will or in an arbitrary manner; rather they are bound to act fairly, evenly and justly. Reference may also be made to the cases of Abid Hussain v. PIAC [2005 PLC (C.S.) 1117], Abu Bakar Siddique v. Collector of Customs (2006 SCMR 705), Walay at Ali v. PIAC (1995 SCMR 650). It is an unwritten rule of the law, constitutional and administrative, that whenever a decision-making function is entrusted to the subjective satisfaction of a statutory functionary, there is an implicit obligation to apply his mind to pertinent and proximate matters only, eschewing the irrelevant and the remote. [Smt. Shalini Soni v. Union of India ((1980) 4 SCC 544)]. "
20. Under Article 189 of the Constitution, the aforesaid principles of law laid down by the Hon'ble Supreme Court constitute a binding rule for all executive and judicial authorities in the country.
These principles require a fair, transparent, merit based and competitive procedure of selection to be incorporated into the method for making appointments to senior posts in public sector entities.
The said binding rules of law laid down by the Hon'ble Supreme Court do not fetter but ensure discretion to be exercised fairly by the government and in the present case the Board of a public sector company. The 'at pleasure' discretion of government conferred by Section 183 of the Ordinance is merely regulated under the principles established by the Hon'ble Supreme Court. The Rules also promote the very same norms settled by the Hon'ble Supreme Court. A closer look at the discourse on the doctrine of pleasure would facilitate our understanding.
21. Section 183 of the Ordinance concerns the appointment of directors representing special interests, including directors nominated by Government on the Board of a company. The second proviso to section 183 ibid envisages such a director to "hold office during the pleasure of the corporation, company, government or authority which nominates him". The 'doctrine of pleasure' was interpreted by the Hon'ble Supreme Court in Muhammad Yasin v. Federation of Pakistan through Secretian, Establishment Division, Islamabad and others (PLD 2012 SC 132) as follows:-- "28. The Executive's ability to make appointments to key positions of authority, and to dispense with the incumbents therein, needs to be examined in historical context as this will facilitate our understanding of the constitutional principle of separation of powers and the importance of judicial review in ensuring adherence to such separation. On account of our colonial legacy and its attendant pattern of governance, this examination takes us back to the pre-independence dispensation and to the British constitutional scheme. That was a time when almost all important State functionaries including not just the Prime Minister and the Cabinet but also judges and civil servants, were appointed and removed by the British monarch in his absolute unfettered discretion. It is for this reason they were said to "hold office during the King's pleasure". While this vestige of an absolute monarchy receded in Britain on account of emerging democratic conventions, in the colonies it survived. Even after several years of independence, this practice continued, as was manifested by the imperious dissolution of the Constituent Assembly in 1954, by the representative of the British Crown.
29. Much has changed since then. Pakistan now has a democratic Constitution which provides for the government of laws and not of men. It is for this reason that in our Constitution there remain few positions where the incumbents "hold office during the pleasure" of someone else based on broad discretion. In its undiluted form this convention exists only in Article 100(2), Article 101(3) and Article 140(3) which relate to the appointments of a Governor, the Attorney General and the Advocates General respectively.
30. It is to be noted that even where appointments are to be made in the exercise of discretionary powers, it has become well settled that such powers are to be employed in a reasonable manner and the exercise of such powers can be judicially reviewed".
22. Thus the doctrine of pleasure cannot now be interpreted to confer a power of appointment that is exercisable by government arbitrarily or whimsically. In one sense the judgment in Muhammad Yasin's case has protected the Rules that specify carefully the criteria of transparency and merit for appointment to senior management posts in public sector companies.
23.Under the Rules the same reasons hold good to justify the transparent, meritorious and competitive process for appointment of both the chief executive in a public sector company as its directors. Consequently, an identical process has been devised in the Rules for both positions. To lend credibility to the process of appointment of Chief Executive, it is fundamental firstly that directors of a public sector company are appointed through strict application of the criteria of a fit and proper person laid down in the Rules. This is because the Board is the body that recommends candidates for appointment as Chief Executive. Secondly, that appointments of directors and of Chief Executive made with the approval of the Federal Government must be given security of tenure as envisaged by Rule 5(1) ibid except in the case of misconduct or non-performance. This will bring stability in the management structure of public sector companies.
24. The foregoing view is fortified by a recent judgment of the Hon'ble Supreme Court given in Khawaia Muhammad Asif v. Federation of Pakistan and others (2013 SCM R 1205) which is reproduced below:-- "During hearing of the case, it has been pointed out to petitioner Khawaja Muhammad Asif that although he being an elected Member of the Parliament had raised questions touching upon the transparence in the appointment of the heads of the autonomous, semiautonomous bodies, corporations, regulatory authorities, etc., but in his own capacity as public representative, he had also to ensure that all the appointments in such like bodies as well as the appointments on contract basis must be made in a transparent manner. In some of the countries, effective steps have been taken to stop such colossal loss of the national resources by day-to-day measures to improve the professional quality and political neutrality of appointments to public bodies/ regulatory authorities by ensuring that selection in such bodies is based on merit, fairness and openness. It may not be out of context to note that in UK an independent Commissioner is available to regulate, monitor, report and advice the public appointments, the performance etc. All the government departments while making such appointments are bound to follow the code of practice which has been issued bu such Commissioner. Similarly, in Canada all appointments for Chief Executives, Directors and Chairpersons of public sector corporations are subject to strict merit-based system. It may be noted that elected government has to heavily rely upon public bodies to implement their policies and the object essentially cannot be achieved if honest and competent persons are not holding such public offices. While making such appointments, following parameters are to be considered:-
(1) Integrity: ' Holders of public office should not place themselves under any financial or other obligation to outside individuals or organizations that might seek to influence them in the performance of their official duties.
(2) Objectivity: ' In carrying out public business, including making public appointments, awarding contracts, or recommending individuals for rewards and benefits, holders of public office should make choice solely on merit.
(2) Accountability: ' Holders of public office are accountable for their decisions and actions to the public and must submit themselves to whatever scrutiny is appropriate to their office.
(2) Openness: ' Holders of public office should be as open as possible about all the decisions and actions that they take. They should give reasons for their decisions and restrict information only when the wider public interest clearly demands.
(2) Honesty: ' Holders of public office have a duty to declare any private interests relating to their public duties and to take steps to resolve any conflicts arising in a way that protects the public interest.
(2) Leadership: ' Holders of public office should promote and support these principles by leadership and example.
' Be that as it may, in order to ensure the enforcement of the fundamental right enshrined in Article 9 of the Constitution and considering it to be a question of public importance, a Commission headed Lou and comprising two other competent and independent members having impeccable integrity, may be the Federal Ombudsman or Chairman NAB or a Member of Civil Society having exceptional ability and integrity, is required to be constituted by the Federal Government through open merit based process having fixed tenure of four years to ensure appointments in statutory bodies, autonomous bodies, semi-autonomous bodies, regulation authorities to ensure appointment of all the . Government controlled corporations, autonomous and semi-autonomous bodies, etc. The Commission should be mandated to ensure that all public appointments are mode solely on merit.
' The Code of Practice should provide foundations for transparent merit-based public appointments. All public appointments must be governed by the overriding principle of selection based on merit, out of individuals who through abilities, experience and qualities have a proven record that they best match the need of the public body in question. No public appointments must take place without first being recommended by the Commission. The appointments procedures should be subjected to the principle of proportionality, that is, what is appropriate for the nature of the post and the size and weight of its responsibilities. Those, selected must be committed to the principles and values of public service and perform their duties with highest level of integrity. The information provided about the potential appointees must be made public.
The Commission may from time to time conduct an inquiry into the policies and procedures followed by an appointing authority in relation to any appointment. He may also issue a statement or publish a report commenting publicly on any breach or anticipate. d breach of the Code. The appointment of the successful candidate must be publicized." (emphasis supplied)
25. The crucial point settled by the Hon'ble Supreme Court in the aforementioned Kh. Muhammad Asifs case is that responsibility for evaluating and recommending candidates for appointment to senior public posts inter alia, in government controlled corporations, must vest in an independent authority constituted by the Federal Government, i,e,, the Commission. The relevant appointments ought to be made by the Federal Government from amongst recommendees of the Commission.
26. Returning to the matter in issue, namely, the appointment of CEO, LESCO and FESCO, it is noted that recent developments in the law on the subject has structured the power of the Federal Government. Therefore, the impugned advertisement assuming exclusive power of appointment by the Federal Government is issued in excess of lawful authority. Under the Rules, the successful candidate for Chief Executive must fulfil the standards of the 'fit and proper person' given in the Annexure to the Rules. It is equally important that his assessors, namely, the members of the Board of Directors also meet the said standards. It is then that the selection process for a Chief Executive may achieve the fairness and transparency mandated in Kh. Muhammad Asif's case ibid.
27. Learned counsel have assisted the Court on whether the Rules can function in conformity with the principles enunciated in the Kh.Muhammad Asifs case. The Rules visualize that the Board of a public sector company should evaluate and recommend three persons qualifying on the criteria of "fit and proper person" laid down in the Annexure to the Rules. This recommendation is made to the Federal Government for its concurrence to appoint any one of the recommendees to the post in question. On the other hand, Kh. Muhammad Asif's case confers an independent Commission with authority to recommend candidates for appointment to senior posts in government controlled entities. The discretion of the Federal Government in such matters is confined to giving its concurrence to the recommendations made by the Commission. The Kh. Muhammad Asif's judgment contemplates that the Federal Government shall formulate a Code of Practice which "should provide foundation for transparent merit based public appointments." The said Code is meant to supply detail to the over-arching principles laid down in the judgment. This may include both substantive and procedural specifications of the selection process. To the extent that the Rules provide details that are consistent with the principles laid down in the judgment these (Rules) may be treated as a Code of Practice for public 'sector companies. Additional qualifications and safeguards may be included by the Federal Government to cater appointments in public sector power companies. However, the point of importance in the said judgment is that recommendations to the government for appointments must emanate from an independent source or body. Such . Recommendations must be framed on merit in a transparent manner. These goals are also shared by the. Rules which may, as observed above, be treated as the Code of Practice envisaged by the Hon'ble Supreme Court. As such the constitution of an independent Board of Directors can substitute the independent Commission envisaged in the Kh. Muhammad Asif's judgment if the criteria of selection laid down in the judgment are read into the fit and proper test prescribed in the Rules. This is apart from specialized qualifications of skill and experience for appointees in the power sector being added by the Federal Government to the fit and proper test prescribed in the Rules. This is because the Rules are generic and not industry specific. The Federal Government shall attend the said aspect. As the Kh. Muhammad Asir s judgment lays down substantive and not procedural requirements of law, therefore, subject to foregoing addition being read into and made in the appointment criteria and procedure, the Rules adhere the principles enunciated in the judgment. Most respectfully therefore two sets of recommendations one made under the Rules and another made by an independent Commission would lead to time consuming duplication. That ought to be avoided to save time and resource. Accordingly, the recommendations made under the Rules should suffice.
28. Appointment of independent managements of public sector power companies by governmental endorsement of recommendation made on the criteria of merit and transparency is also a legal norm in other jurisdictions. Section 14 of the Western Australia Electricity Corporation Act 2005 provides for appointment of a chief executive of an electricity corporation by the board of such corporation. However, section 14(5) thereof makes it incumbent on the board to obtain concurrence of the Minister before exercising its power of appointment under section 14(2). The same rule is adopted in a Canadian jurisdiction for which reference may be made to Hydro- Quebec Act. Under section 11.6 of the said Act, a chief executive officer of an electricity company is to be appointed on the recommendation of its board of directors. However, the board can make such appointment "in keeping with parameters set by the Government." Accordingly, the scheme of the Rules to obtain governmental input pursuant to regulatory criteria for appointment of the chief executives of, inter alia, public utility companies is consistent with the legal process for appointment of managements of public sector power companies in other jurisdiction. The universality of the principles embedding transparency and merit in the appointment of top management of public utilities gives further credibility to the appointment criteria adopted in the Rules.
29. The outcome of the foregoing discussion is that public sector power companies must be managed and run by professional, competent and meritorious chief executives who are guided by and accountable to independent boards of directors whose members possess similar or better credentials. Autonomy in managing the operations of public sector power companies is safeguarded by the law. Such independence is also necessary for the productivity and profitability of their operations. However, the desired autonomy in the present case of LESCO and FESCO cannot be achieved unless their Board of Directors and chief executive officers are appointed by the Federal Government under the recognized criteria laid down in the Rules. The implementation of fit and proper person test given in the Annexure to the Rules for evaluating candidates for appointment as directors and chief executives of public sector companies would bring merit and dynamism to the senior management positions in such companies.
30., In the light of the law applicable to the present dispute, the impugned process of selection of chief executives of the respondent DISCOs by the Federal Government directly without recommendation by their Boards is improper. As laid down in the Rules and also spelled out in Kh.
Muhammad Asirs case by the Hon'ble Supreme Court, such appointments must be made on the basis of the relevant criteria of merit through a fair and transparent procedure. It is, however, noted that both the Rules and the aforesaid judgment came into the field after the impugned process of recruitment was initiated by the Federal Government. Developments in the law occurring during the present litigation have rendered the said selection process deficient and unlawful. It must be restarted in accordance with parameters laid down in the Rules as modified for the purposes mentioned above.
31. The new process shall commence with the reconstitution of the boards of directors of both LESCO and FESCO which were established prior to the enforcement of the Rules without reference to any settled criteria of merit. Any recommendation made by the existing Boards for appointment of chief executive officer of the respondent companies is open to objection if the incumbent directors fail to meet the safeguards and tests laid down in the Rules. Accordingly, the appropriate course is in the first instance for the boards of directors of the said DISCOs to be reviewed and where necessary to be reconstituted according to the criteria of transparency and merit laid down in the Rules. The scrutinized if so reconstituted Boards shall commence proceedings for appointment of chief executive officers of their companies. This is to be done in the manner contemplated in the Rules duly supplemented by additional qualifications of candidates in terms of their personal credentials, skill and experience specified by the Federal Government on the touchstone of merit and transparency to cater the needs of public sector power companies.
32. This petition is disposed of, with the foregoing directions and observations.