SAHIBZADA ASADULLAH, J.- Through this single judgment, we intend to decide the instant constitutional petition as well as the connected petitions bearing No. 237-P of 2023, titled Safdar Shabbir Awan versus Government of Khyber Pakhtunkhwa & others, and 1054-P of 2023, titled Shahid Iqbal Khattak versus Government of Khyber Pakhtunkhwa & others, as common question of law and fact is involved in all the petitions. The petitioner, Javed Iqbal, aggrieved from the acts/actions of the respondents has invoked the jurisdiction of this Court under Article, 199 of the Constitution of Islamic Republic of Pakistan, 1973, for issuance of the desired writ, with the following prayers: - i. The impugned acts and subsequent steps for removal of the petitioner as CEO KPEZDMC, are illegal, smacked with mala-fide, without any mandate so available to respondents No.1 and 2, who have thus acted without justification, unreasonably, unlawfully and without lawful authority thus be put at naught. ii. In alternate, any act done or arises out of the impugned act including but not limited to any notification of removal and all steps subsequent thereto be declared as illegal, unlawful and without lawful authority and be put at naught.
2. Relevant facts leading to filing the instant writ petition are that Khyber Pakhtunkhwa Economic Zone(s) Development & Management Company, (the company) floated advertisement for filling up the vacancy of Chief Executive Officer (the CEO). The petitioner applied for appointment against the vacant position, and after undergoing through the requisite process of recruitment, was appointed as the CEO of the company, for a period of three years, vide the notification dated 18th March, 2020. On August 17, 2022, 22nd meeting of the Human Resources Committee was held, wherein, recommendation was made to the Board of Directors, KP-EZDMC, for extension of tenure of CEO / petitioner, in light of SECP, Public Sector Companies (Appointment of Chief Executive)
Guidelines, 2015, and under Article 62(a) of the Articles of Association of KP-EZDMC. Thereafter on 25th August, 2022, Board of Directors meeting was held, wherein the board agreed and unanimously recommended the tenure extension of the CEO, and approved to move summary to the Provincial Government through Secretary IC&TE, Department for extension in the service tenure of the petitioner / CEO, KP-EZDMC for a term of another three years, starting from 20th March, 2023 to 19th March, 2026, and the Provincial Cabinet in its 84th meeting held on December 13, 2022, under Agenda Item No.11, approved the re-appointment of the Incumbent CEO, KPEZDMC for a period of 03 years w.e.f. 19th March, 2023 to 19th March, 2026. It is averred that after the General Election, 2024, a new political regime / set up in the province came into power, and in the 12th Provincial Cabinet meeting held on 29th August, 2024, the petitioner was removed from the post of the CEO KP-EZDMC, hence, having no adequate and alternate remedy, the petitioner approached to this Court through the instant writ petition.
3. In the connected writ petitions mentioned above, the petitioners have impugned the notification dated 29.01.2024, whereby the private respondent / Javed Iqbal was appointed as CEO, KP-EZDMC, for another term of three years.
4. Comments were called for from respondents No.1 and 2, which they filed and opposed issuance of the desired writ.
5. The learned counsel for the petitioner vehemently argued that petitioner was legally and validly appointed as the CEO, KP-EZDMC, upon the recommendation of the BOD, and as such his removal from that position is contrary to the Constitution and is illegal, unlawful, without lawful authority and thus of no legal effect. That the impugned act is in total disregard of the provisions of Companies Act, 2017, Corporate Governance Rules, 2013, besides, the terms and conditions of contract / agreement, so made between him and the respondents. That position of the CEO, KPEZDMC was filled after due process, and the criteria for removal thereof has not been adopted, and the acts of the respondents offend Article 4, 8, 9, 18 & 25 of the Constitution of the Islamic Republic of Pakistan, 1973. That petitioner has unblemished track record and that the impugned act of the respondents is politically motivated, and that the respondents have got no authority and mandate to interfere in the internal affairs of a public limited company, including the removal of the CEO, KPEZDMC. That the impugned act is illegal, as unilateral steps were taken, which had affected the petitioner's rights, and that removal of the CEO, without the approval of BoD is not sustainable. Contrarily, the learned Addl. AGs assisted by learned counsel for KP-EZDMC, submitted that neither section 187 of the Companies Act, 2017, Public Sector Companies (Corporate Governance) Rules, 2013, nor the Public Sector Companies (Appointment of Chief Executive)
Guidelines, 2015, provide extension in tenure of the Chief Executive Officer of the Company, rather subsection (2) of section 187 of the Act, 2017, only provides that on expiry of term of the office under section 186 or sub-section (1) of section 187, a Chief Executive shall be eligible for re-appointment, whereas the HR Committee in its meeting held on August 17, 2022, recommended the tenure extension for another period of three years; that the Board of Directors in its 44th Meeting dated 25.08.2022, agreed with the recommendation of HR Committee, and moved summary to the Provincial Government through Secretary IC&TE, Department for extension in the tenure of the CEO / petitioner. It was further argued that though the notification contains re-appointment, but the same cannot be termed as re-appointment, as codal / legal formalities provided by law / rules, on the subject have not been complied with, and through the impugned notification dated September 02, 2024, the petitioner was rightly terminated. It was further contended that appointment of the petitioner as CEO was purely on contract for a period of three years, and that termination of contract under no circumstances offend the constitutional rights of the petitioner. Lastly argued that the Government under sub-section (2) of section 190 of the Act, 2017, has the right / authority to remove the Chief Executive Officer, where more than seventy-five percent of the voting rights are held by the Government, rather the Government has the maximum shares and as such was competent to do away with the extension of the petitioner.
6. Heard. Record perused.
7. The Government of Khyber Pakhtunkhwa incorporated the Khyber Pakhtunkhwa Economic Zones and Industrial Estates Development and Management Company ("the company"), under section 42 of the Companies Ordinance, 1984 (now repealed). As per Memorandum of Association of the company, the share capital of the company; (i) Authorized Capital Rs. 500.00 Million; (ii) Initial Paid-up Capital Rs. 100.00 Million, while object of the company inter-alia, organized and established for orderly, planned and rapid industrialization of Khyber Pakhtunkhwa, headed by a Chairman from private sector, a Board of Directors and General Body as per Articles of Association, all to be nominated by Government of the Khyber Pakhtunkhwa. In the wake of resignation of Mr. Saeed Ahmad, the then CEO, KP-EZDMC, an advertisement was published for filling up the vacant position of the Chief Executive Officer (CEO) KP-EZDMC, owned by the Government of Khyber Pakhtunkhwa. The petitioner amongst other candidates applied for appointment to the subject post, and after going through the laid down criteria, he secured meritorious position, and accordingly, the Board of Directors, vide minutes of its 34th meeting held on 10.02.2020, made recommendations to the Provincial Cabinet for approval, which was approved, and vide notification dated 18th March, 2020, the petitioner was appointed as the Chief Executive Officer, CEO (KP-EZDMC) for a period of three years. The petitioner assumed charge of the post and performed his duties in line with the KPIs assigned to him by the Board of Directors at the time of joining. It was on August 17, 2022, when Human Resources Committee (HR Committee) meeting was held, where under agenda item No.5 i.e. progress review of Chief Executive Officer (CEO), KP- EZDMC, the petitioner presented progress review in line with the KPIs assigned to him by the Board of Directors (BoD). The committee appreciated the efforts made by the petitioner during his tenure, and expressed complete satisfaction on his performance, and accordingly unanimously resolved with recommendation to the Board of Directors that the service tenure of petitioner shall be extended for another term of three years, in light of SECP, Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015, and Article 62(a) of the Articles of Association of KP-EZDMC.
62(a) of the Articles of Association says that "where the CEO shall be a contractual employee to be hired for a period of three years' renewable terms with the approval of Government".
8. The Board of Directors in its 44th meeting held on August 25, 2022, agreed with the recommendation of the HR Committee, and approved to move summary to the Provincial Government through Secretary IC&TE, Department, Peshawar for extension in the tenure of the CEO KP-EZDMC / petitioner for a term of another three years starting from 20th March, 2023 to 19th March, 2026. In the 84th Provincial Cabinet meeting held on December 13th 2022, the Cabinet approved the re-appointment of the incumbent CEO, KP-EZDMC / petitioner for a period of three years w.e.f March 19th 2023 to March 18th 2026. It is pertinent to mention that the Provincial Cabinet vide its decision dated 23.01.2024, endorsed the earlier cabinet decision dated 23.12.2022, and through the notification dated 29.01.2024, the petitioner was re-appointed as Chief Executive Officer (CEO), (KP-EZDMC). However, after the Election 2024, the Secretary Industries, Commerce & Technical Education Department, Peshawar, moved summary to the Cabinet for removal of the Chief Executive Officer (CEO) KP-EZDMC, on the ground that re-appointment was made without fulfilment of the codal formalities, as envisaged in the Companies Act, 2017, Corporate Governance Rules, 2013, Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015, and that per section 190(2) Companies Act, 2017, the Government or an Authority or a person authorized by it shall have the power to remove the Chief Executive of the company where more than 75% of the voting rights are held by the Government. Since, the KP-EZDMC is a public sector company having 100% shareholding as well as voting power vested in the Government of Khyber Pakhtunkhwa, therefore, the Cabinet may like to accord approval of; a). Contract appointment of Mr. Javed Iqbal, CEO, KP may be terminated with immediate effect; b). Mr. Adil Salahuddin (Chief Commercial Officer) KP-EZDMC may be declared as officiating CEO, till further orders. c). Industries Department may be allowed to initiate the process for selection / appointment of a full-time CEO as per the laid down criteria.
The Provincial Cabinet approved the summary in toto and through the impugned notification dated Peshawar September 02, 2024, the contract appointment of petitioner as Chief Executive Officer, Khyber Pakhtunkhwa Economic Zones Development and Management Company (KP- EZDMC), was terminated with immediate effect.
9. Before going to other aspects of the case, we would like to have a look on section 187 of the Companies Act, 2017, and other relevant provisions of law, which deals with appointment of subsequent Chief Executive Officer.
Section 187. -- (1) Within fourteen days from the date of election of directors under section 159 or the office of the Chief Executive falling vacant, as the case may be, the board shall appoint any persons, including an elected director, to be the chief executive, but such appointment shall not be for a period exceeding three years from the date of appointment.
Provided that the chief executive appointed against a casual vacancy shall hold office till the directors elected in the next election appoint a chief executive.
(2) On the expiry of his term of office under section 186 or sub-section (1) of this section, a chief executive shall be eligible for reappointment.
(3) The chief executive retiring under section 186 or this section shall continue to perform his function until his successor is appointed, unless non-appointment of his successor is due to any fault on his part or his office is expressly terminated.
(4) Notwithstanding anything contained in this section, the Government shall have the power to nominate chief executive of a company where majority of directors is nominated by the Government, in such manner as may be specified.
Likewise, rule 5.2 of the Public Sector Companies (Corporate Governance) Rules, 2013, provides criteria, which reads as under: - "The Board shall evaluate the candidates based on the fit and proper criteria and the guidelines specified by the Commission for appointment to the position of the chief executive and recommend at least three candidates to the Government for its concurrence for appointment of one of them as chief executive of the Public Sector Company, except where the chief executive is nominated by the Government. On receiving concurrence or nomination of the Government, as the case may be, the Board shall appoint the chief executive in accordance with the provisions of the Act. The Board shall be responsible for development and succession planning of the chief executive."
Similarly, the Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015, in its short title application and commencement clause 1(3) states that "these shall come into force at once, and would also be applicable on the re-appointment made after this date.". Clause 2(i) further provides that every public sector company shall appoint its chief executive in accordance with the procedures specified in the guidelines. The guidelines also provide that principles of transparency, merit and equal opportunities shall be followed while making appointment to the position of the chief executive and the appointment can only be made through an open advertisement. Under Schedule 1 para 2(1) the guidelines require that "The Board shall initiate the appointment process, at least three months before the term of the incumbent chief executive is going to expire, by issuing a public advertisement in the print media, inviting applications for appointment against the vacant position.
In addition to above, the Provincial Government Policy Framework Guidelines on matters regarding Chief Executive Officer of Public Sector Companies and Autonomous Bodies, section 5 whereof deals with CEO appointment process, which specify the key requirements covering under clause 5.1) Setting profile of the CEO (Qualification & Experience etc; 5.2) Candidate evaluation criteria; 5.3) Advertisement for the position; 5.4) Application submission; 5.5) Candidates shortlisting; 5.6)
Interview; 5.7) CEO on deputation; 5.8) Recommendation from the Board; and 5.9) Appointment of Chief Executive. It is pertinent to mention that the Policy Framework specifically states that currently serving CEOs shall not be affected by the guidelines presented in this policy framework for their current tenure. However, the process of re-appointment shall be followed as per the guidelines of the policy framework.
Article 62 (a) of the Company's Articles of Association, dealing with the appointment of CEO provides that The CEO shall be a contractual employee to be hired for a period of three years' renewable. He shall be duly selected through an open competitive selection process by the BoD from private sector having engineering / management qualification and experience of at least 15 years managing industrial projects, and appointed as such in accordance with terms and conditions of his appointment to be determined by the BOD."
10. Admittedly, the Khyber Pakhtunkhwa, Economic Zones Development and Management Company, is a Public Sector Company, where 100% shareholding and voting powers are held by the Government of Khyber Pakhtunkhwa. As per Memorandum of Association, the company would be headed by a Chairman from private sector, a Board of Directors, and General Body as per Articles of Association, all to be nominated by Government of the Khyber Pakhtunkhwa, so the company is exclusively owned by the Government of Khyber Pakhtunkhwa. For the appointment of the CEO there is all clarity and as such the initial appointment to the post was made after all the codal formalities were observed, but whether for the removal of the petitioner, the requisite formalities were taken into consideration. Before, we answer the competence of the respondents to remove the petitioner, we deem it essential to look for the competency of the respondents and search, that which section of the Act i.e. 2017 would authorize the Provincial Government to remove and that under what circumstances. Before we walk towards the relevant law on the subject, we want to know that whether the extension in tenure was a onetime facility or that in case of his removal, the petitioner was then competent to hold the post till the appointment and till the arrival of the new incumbent.
11. The moot question for determination is that wherefrom the post of the Chief Executive Officer
(CEO) has its origin, whether it is the creation of the Act, 2017 or that of the Articles of Association, for this particular purpose, we visited the Act and found it a Statutory creation, such creation finds mention in Section 186 which reads as follows: - (1 Every company shall have a chief executive appointed in the manner provided in this section and section 187.
(2 The name of first chief executive shall be determined by the subscribers of the memorandum and his particulars specified under section 197 shall be submitted along with the documents for the incorporation of the company.
(3 The first chief executive shall, unless he earlier resigns or otherwise ceases to hold office, hold office up to the first annual general meeting of the company or, if a shorter period is fixed by the subscribers at the time of his appointment, for such period.
(4 Notwithstanding anything contained in this section, the Government shall have the power to nominate chief executive of a public sector company in such manner as may be specified.
12. It is clear than crystal that the post of Chief Executive Officer is the creation of the Statute and he is to be appointed in no other manner, but the one provided in Section 186 of the Act. As the post is the creation of the Statute, so it resolves the controversy regarding the jurisdiction of the Court and we hold that this Court has jurisdiction in the matter. It needs clarification that once the post falls vacant whether on retirement, removal or expiry of the term of office, how the same is to be filled.
The situation is governed by Section 187 of the Act. On one hand it lays open that how subsequent appointment to the post is to be made and the very section in its Sub-Section (3) has also explained that who will hold the post till the appointment of subsequent Chief Executive Officer.
Section 187 is couched in unambiguous language, it does not say of extension, but it says of appointment. We are to see that whether in case of subsequent appointment the Statute would permit to condonation of the required formalities, we are confident in holding that Statute never permitted such relaxation, rather the same formalities, to be more specific the codal formalities shall be observed, as was needed for his first appointment. Under the law, the officer who was holding the post, is blessed with two kind of statutory benefits, (1) he would be eligible for re- appointment, (2) he will hold the post till arrival and appointment of subsequent Chief Executive Officer. Section 187 has removed the ambiguity which reads as follows: - Section 187. -- (1)
(2) On the expiry of his term of office under section 186 or sub-section (1) of this section, a chief executive shall be eligible for reappointment.
(3) The chief executive retiring under section 186 or this section shall continue to perform his function until his successor is appointed, unless non-appointment of his successor is due to any fault on his part or his office is expressly terminated.
13. The law is clear and so is its intention. We noticed that in his extension the required formalities were willfully ignored. Though instead of using the specific term "extension" the term re- appointment is used, but that alone will not serve the purpose. If we accept that the petitioner was re-appointed then the submissions would be, that the law permits and so the petitioner deserves to be treated in accordance with law, but it must be born in mind, that the petitioner is heavily burdened with the liability to convince, that in case of re-appointment the requirements under section 186 of the Act, would not apply, and if it was the extension of his tenure, then the petitioner must convince that the law permits the same.
14. Taking it as reappointment, we are lurking no doubt in mind that in case of re-appointment the petitioner must pass through the same ordeals as he passed through when he was appointed against the post for the first time. We despite efforts failed to find such exemption. Two statutory benefits are available to the petitioner, one his eligibility for re-appointment and the other, to hold the post till the subsequent Chief Executive Officer fills the vacancy. We hold that in case of re- appointment the post is to be advertised for open competition and thereafter best amongst the best is to be appointed. Whether in case of his re-appointment such formalities were observed, definitely not. If the petitioner struggles to convince that he was re-appointed, then clearly his appointment is against the law and under no circumstances is justified. As discussed earlier for such appointment the requirements find mention in section 187 of the Act. When the law requires that a particular thing should be done in a particular manner, it must be done in that manner and not otherwise. Reliance is placed on 2024 SCM R 770
15. We are to determine that whether extension in tenure could be granted and under what law. As the case of petitioner was processed much earlier, it routed through the Human Resources Committee, when a meeting was held on 17th August, 2022, recommendation was made to the Board of Directors, KP-EZDMC, for extension of tenure of CEO/petitioner, in light of SECP, Public Sector Companies (Appointment as Chief Executive) Guidelines, 2015, and under Article 62 (a) of the Articles of Association of KP-EZDMC, then through Board of Directors Summary to the provincial Govt: through Secretary IC&TE Department for extension in the tenure and finally the matter was placed before the Cabinet in its 84th meeting held on 13th December, 2022, under Agenda item No.11, approved his re-appointment for a period of three years with effect from 19th March, 2023 to 19th March, 2026. The entire procedure was carried out for extension, but while issuing the notification instead, re-appointment is used, but that alone will not serve the purpose, as reliance was made on 62 (a) of the Articles of Association, so the intention is clear that it was not re- appointment, but extension of his tenure. The petitioner was benefited through clause 62(a) of the Articles of Associations, but we are to know that when the Act is silent regarding the extension, whether the Articles of Associations would enable such extension. We cannot subscribe to the submission of learned counsel representing the petitioner, as it was for the petitioner to convince that not the Act but the Articles of Associations would govern the subject.
16. As the post is the creation of Statute, and as for appointment and removal of the Chief Executive Officer, the procedure is given in Section 186 and 187 of the Act, so we despite efforts find nothing that would either govern or explain such extension, in the tenure of the Chief Executive Officer.
When the Act is silent regarding this particular aspect, then barrowing the same from the Articles of Associations would amount to subjugate the Act, that too; to the Articles of Associations. It was the parliament that passed the law, whereas the Articles of Associations is to regulate the internal relationship of the share holders and also the affairs of the company, it would cater for the circumstances left untouched by the legislature, but under no circumstances it would control the law in the field, if we allow, then it would greatly disturb the scheme of things and would create a chaos. As the Act, has taken care of the like circumstances, and as the legislature applied wisdom, while legislating, so it is the Act, passed by the parliament that would prevail and not the Article of Associations. On one hand the concept of extension is alien to the Act, whereas in case of reappointment the law was not taken into consideration. No opportunity was given to the deserving and so the petitioner was reappointed with no one to compete. The procedure adopted for the reappointment tells of the arbitrariness of the then government and such approach was never welcomed by the superior courts. We are benefited from the judgment reported PLD 2013 SC 195.
One of the implications of this concept, highlighted in the case-law considered below, is that the matter of tenure, appointment, posting, transfer and promotion of civil servants cannot be dealt with in an arbitrary manner; it can only be sustained when it is in accordance with the law.
17. We do not question the competency of the petitioner to work against the post, rather we disturbed, from the procedure adopted, for his reappointment. True that the petitioner worked against the post, but we cannot extend him such benefits, as no valuable rights were accrued to him, because his very reappointment was in utter disregard of law. True that the petitioner was appointed by the competent authority, but we are confident in holding that his reappointment was against the law, so the same authority removed him from the post though belatedly, but competently. Wisdom is derived from the judgment reported as 2005 SCMR 1814, wherein it was held as under: - Where the person against whom an adverse order is made has acted illegally and in violation of law for obtaining illegal gains and benefits through an order obtained with mala fide intention, influence, pressure and ulterior motive then the authority would be competent to rescind / withdraw / cancel such order without affording an opportunity of personal hearing to the affected party---Said principle though was always deemed to be embedded in the statute and even if there was no such specific or express provision, it would be deemed to be one of the parts of the statute because no adverse action can be taken against a person without providing right of hearing to him---Principle of audi alteram partem, at the same time, could not be treated to be of universal nature because before invoking /applying the said principle one had to specify that the person against whom action was contemplated to be taken prima facie had a vested right to ,defend the action and in those cases where the claimant had no basis or entitlement in his favour he would not be entitled to protection of the principles of natural justice.
18. The cumulative effect of what has been discussed above leads this court to an irresistible conclusion that petitioner failed to make out a case for the indulgence of this Court. Hence, the instant writ petition is dismissed and so the connected petitions have lost its utility, and would not proceed for having become infructuous.