| Hdnent Sheet IN THE HIGH COURT OF SINDH, i CIRCUIT COURT, HYDERABAD CP. Ho. 1104 of 2020 Bate of Hea SK deets 18.05.2001 Petitions ‘Muhanad Sajan Pantwsar through Mr, Sajjad Ahined Chandio, Advocate Respondent 5 through Mr. ewan Ali Memon, Advocate Respondents 8&9 throu h Mr, Haroun bial Sharif, Advocate Mr. Zulliqar Ahmed Rajput, Assi General Pakistan t Attorney Mr. Allah Bachayo Soomro, AdALA.G. Sindh JUDGMENT ZULFIQAR AHMAD KHAN, J. Through instant petition, petitioner is seeking writ of quo-warranto by challenging the appointment of respondent No.8 Mr. Muhammad Imran Mian as the Chief Executive Officer of Public Sector Generation Holding Company Lin ited (GHCL) which came into being after the power wing of WAPDA was unbundled into four public sector generation companies (GENCOs) which owns and operates thermal power generation facilities throughout Pakistan. By way of background the learned counsel informed the Court that at present four such GENCO facilities are in operation throughout the country which include Jamshoro Power Company Limited (PCL) GENCO-, Central Power Generation Company Limited (CPGCL) GENCO-4I, Northern Power Generation Company Limited (NPGCL) GENCO-IIt and Lakhra Power Generation Company Limited (LPGCL) GENCO-IV out of Which GENCO-I is located in the Province of Sindh and the petitioner is Markazi Secretary General of WAPDA Employees Pegham Union Working at Jamshoro Power Company Limited (GENCO-I). Learned counsel for the petitioner submits that the said respondent was initially appointed in the year 2007 as Finance Director GENCOI in Centeal Power Generation Company Guddu, and in the year 2016 he was appointed as Chief Executive Officer of GHCL. Per learned counsel said appointment was also challenged on the 4 impex case (Mustafa Impex Karachi v, The touchstone of famous Musta ant of Pakistan - PLD 2016 SC 808) whereafter he was re pointed OLdIINICU WILT vuamSthrough Noi Bh Notification ¢ lated 04.01.2018 ° 2018 available i votre wailable at page-25 (“the imy sre Pugned '0n") after removing the Said defect. Per learned counsel mt ‘armed counsel even at th: Ne FIA started an inquiry against the en p rocurement Rules nena al Power * Thermal Power Stations of Jamshoro (GENCO-1 which Caused a huge fo: Me 1055 to the national exchequer. Counsel for the petitioner by referring to the Memorandum of Association of GHCL shows that the said Public Sector Company is inthe business of operating power plants and to make provisions of works relating to mechanical and/or electrical engineering including repair of equipment used in the field generating units and their Operations (per object clause III(2) of the Memorandum of Association) and when the position against which the said respondent was to be appointed got advertised, Pakistan Engineering Council (the respondent No.5} served GHCL with a notice dated September 1% 2016 drawing company's attention towards Section 27(5A) of Pakistan Engineering Council Act, 1975 which requires that no person, unless registered as an Engineer could hold any post in any enj gineering organization where he has to perform professional enginecring work; demanding that Chief Executive Officer of GHCL had to be a professional engineer as managing power plants was a pure engineering specialty. Earlier Pakistan Engineering Council had already sent letters to all federal ministries as early as 25" February 2015 highlighting this issue. Per learned counsel even at the time of appointment of the respondent No.8. similar letter was sent to the Minister In-charge of the Ministry of Enerey; however, none of those letters were responded. The learned counsel states, that under Pakistan Engineering Council Act, 1975 “Engineering Public Organizations” are defined to include Federal Government entities like GHCL where only professionally enrolled engineers bound, regulated and answerable for their professional conduct under the said Act are permitted to work at such positions. Counsel informs the court that past two Chief Executive Officers of GHCL were also professional engineers and by appointing the respondent No.8 who is a Chartered Accountant not only violation of the PEC Act has been committed but provisions of the Public Sector Companies (Corporate Governance} Rules 2013, which requires only “fit and proper” persons to hold such posts are also violated, 2. Comments filed by the respondent No.5 PEC support the case of the petitioner; however, with regard to requirement of PEC Act ibid counsel for respondent No.8 & 9 Mr. Haroun Gilal Sharif Advocate contends that business OCAIINICU WILT vuamSOf said re Said respondent is whilst gener: ating electricity through thermal me howeve ever, the respondent No.8 who is ans, a Chartered Accountant fi competent to moat have been Appointed as Chief Executive Officer per Schedule-iI made under Parag * Paragraph 3 of Public Sector Companies (Appointment of Chic Executive) Gui 5 ©) Guidelines, 2015 setting out criteria of “fit and proper” person for the post of Chief Executive Officers of a Public Sector Company where clause A L}e{i}(it) permits such a person to be a member of a recognized body of Professional accountants. Nonetheless, per learned counsel, the said appointment was made by the Prime Minister after approval from the Cabinet and the said respondent is running affairs of GHCL with utmost efficiency, The learned counsel further stated that other entities like KEPCO are also run by non-engineers and in today’s {ree market, public sector entities should be let to choose most suitable individuals at their sole discretion as long as those individuals are competent to run the businesses efficiently. Learned counsel by drawing Court's attention to the advertisement placed for the appointment of Chief Executive of the respondent No.9 available at page-49 dated 19.07.2016 of his comments points out that the advertisement itself prescribed qualifications to include Bachelor/Master’s Degree in Engineering, Masters in Business Management/Commerce or the applicant be a Fellow Member of ICAP/ICMAP. Learned Counsel admits that per the summary sent to the Prime Minister in October 2016 name of the respondent No.8 was on the top of the tist with two professional engineers thereunder, however per learned counsel the Prime Minister chose to nominate respondent No.8 in his own discretion. teamed Counsel contends that the said respondent has been efficiently running the affairs of GHCL and the petitioner has no locus stanci to challenge his appointment and case of quo-warranto has not been made out tHe also draws Court's attention to a wit petition filed before the Hon‘ble Islamabad High Court bearing 0.3392 of 2016 against the present respondent No on the similar grounds which was dismissed through judgment dated 27.12.2017, therefore, the issue of res judicata is also posed against the instant petition. He also challenges this pettion on territorial grounds as the respondent Nos.8 & 9 are domiciled in Islamabad. 3. tn rebuttal the learned counsel for the petitioners with regards territorial jurisdiction submitted that the respondent is directly involved in the affairs of Jamshoro Power Company Limited (JPCL) being GENO and as | OLAIIICU WILT vans4 a matter ater of fact two units of Jamshoro Power plant have heen closed on account of ill-fated decisions made by the respondent No.8 who is involved in all top-level decision making of the said company that employs hundreds of individuals domiciled within the territorial jurisdiction of this court. Per learned cour red counsel Article 199 empowers the High Court to issue writ against Y person performing, within the territorial jurisdiction of the Court, functions in connection with the affairs of the Federation. with regards operational efficiency of the respondent No, learned counsel challenged claim of the counsel for respondent that the incumbent is running affairs with utmost efficiency since two Units of Jamshoro Power plant has been shut down by orders of the said respondent causing hue and cry amongst the workers. Learned counsel further pointed out that the requirement of bei member of the Institute of Charted Accountant is not to be read in isolation of the relevant Rules which require that to be a “fit and proper” person, 2 candidate should have competence and capability demonstrated by possessing the relevant competence, experience and ability to understand the technical requirements of the business, which are lacking in the respondent No.8 4. Heard the learned counsel and perused the material at record 5, Before us is case where serious challenges are posed to the appointment of the respondent No.8 an the ground that the positon of Chief Executive Officer by the respondent No.8 2 Public Sector Company which samittedly was formed with the abject of operating power plants and to make provisions of similar works relating to mechanical and electrical engineering {or the production af electricity by thermal energy ought tobe filed by fit and proper person who has full know how of the technica capabilites ofthe plants run by the company. It's also an admitted fac that GCL was previously headed by engineers which compelled the Pakistan Engineering Council to send a notice even at the time when qualification criteria was changed to include non-engineers in the advertisement dated 19 suly 2016. 6. Would be seen from a close examination of the said advertisement that the qualification eriteriain first go requires an applicant to be Engineer ‘and thereafter MBAs or CAs. Pakistan Engineering Council through its letter dated 01.09.2016 drew attention of the head of GENCO Holding Company OCAIINICU WILT uamSHonited that the captioned adyon SHHEHE Contemplating, 1 Hake pro HPPOINLENT WE HoH enpine for the “me 101 an engineering establishment Wiolated clauwe ( Hed clause (4A) of section Mol the PLE Act, 1074, reproduced hereunder (A) No pe pro ll, os Hoe, Wal Whore he hae prt ous) ever a 4 Fo ys an on jovial engineerin, yuth, (underly iy engaization apl (y) of aus tion 2 of the PEC Act 197% defines (aay) ob “engineering work" to inter alia mean ‘management of engineering vorks in resp eet of computer engineering, environmental engineeting, chemical engineering, suuctural engineeving, ndustvlat engineering, production engineering, marine engineering and noval architecture, petroleum and gas fang, agricultural engineering, engineering, — metallurgical engin telecommunication engineering, avionics and space engineering, transportation engineering, alt-conditioning ventilation, cold storage works, system engineering, electronics, ralio and television engineering, civil engineering, electrical engineering, mechanical engineering and biomedical engineering, ete? {underlings ours). A combined reading of Section 27(54) with these definitions make it crystal clear that mechanical, petroleun/gas engineering work (which is the bread and butter of the GHCL) ought to be under the management of professional engineers, This requirement in our view is consistent with the job requirement of a CEO who needs to fully understand engineering of thermal energy generation as computed by the Carnot! efficiency equation which governs operation of a hypothetical engine at maximum theoretical efficiency. Understanding of different parameters dealing with power generated or transferred being volumetric power, heat flux, and linear power is also essential. This court is not even sure (as question posed to the learned counsel) that whether the respondent knows difference between an engine and a turbine which are two main thermal power generating equipments having pole apart efficiencies, We however are sure that these subjects do not form part of the syllabi taught in accountancy 8. Now looking at the appointment of the respondent No.8 through the lense of Public Sector Companies (Corporate Governance) Rules, 2013 made Under powers conferred by section 506(1)(b) of the Companies Ordinance ups: wow siencednect em in cin eat eticeney OCdIINICU WILT uamS6 1984 [now re o l ee ener Act, 2017 section 508(1)(c)} which rules cy and good governance in Public Sector Companies like the respondent No.9 ensuring that sound and prudent management be engaged in running day to day affairs of such companies. Rule 2(A) of these Rules requires that for the purposes of these rules, the following shall be the criteria for sound and prudent management of a Public Sector Company, which shall be bound to comply with it at all times namely (a) the business of the Public Sector Company is carried on with integrity, objectivity, due care and the professional skills appropriate to the nature and scale of its activities; b) each director and chief executive officer, Py whatever name called, of the Public Sector Company complies with the fit and proper criteria specified under these rules. Rule 3(6) requires that the g the Government and other shareholders, appointing authorities, inclu shall apply the fit and proper criteria given in the Annexure in making nominations of the persons for election as Board members under the provisions of the Ordinance. Responsibilities of Chet Executive ae described in Rule 4(3) as the chief executive is held to be responsible for the Sector Company and for its procedures in management of the Pul financial and other matters, subject to the oversight and directions of the Board, in accordance with the Ordinance and these rules. His responsibilities include implementation of strategies and policies approved by the Board, making appropriate arrangements to ensure that funds and resources are properly safeguarded and are used economically, efficiently and effectively and in accordance with all statutory obligations, Incidentally clauses (a) and (2) of Rule 14 fists role and qualification of Chet Financial Officer. These provide that (1) The chief financial officer shall be responsible for ensuring that appropriate advice is given to the Board on al financial matters, for Keeping proper financial records and accounts, and for maintaining 2" effective system of internal financial control, and (2) No person shall De appointed as the chief financial oficer of a Public Sector Company unless he sx fa) 2 member of a recognized body of professional accountants with ot least five years relevont experience, in case of Public Sector Companies having total assets of five billion rupees or more; or (b) a person holding a master degree in finance from a university recognized by the Higher Education Commission with at least ten years relevant experience, in case of other Public Sector Companies. Rule 24(1) requires that every Public Sector OCAIINICU WILT vansCompany shall publish and circulates a atalernent alanis, ant it annual eye to set out the statues ob ie compliance vaith these tales ani shall aloe We the Security. and Fechanges Comunivaion and tue reagistrar egner ee statement alongwith its annual import. Also, of relevance Mule 10 hie | Goals with Quarterly and Monthy Financial Statennients and Aenual Meee’ and requit thin one £00 hat every Puble Sector Company shall, year of account, prepare a pratt lose of first, second and third quarter OFF: and toss account for, and balance stent ay at thee end a whether audited or othervaise, for the Board's apnr’sl anual report hall be placed on the Public Sector including, annual financial statere Company's website”. mn these rules wl 9 6 it could be brought into affairs of a PSC (Public Sector Com pany) bY transparency ai reports on the company’s website these also Cate requisites of placing I the tines ane, hs seen from Rule 2A, a PSC 1) fit and proper person in be run by a sound and prudent management Raving professional skills and seate of such company’s activ appropriate to the nature strengthening the doctrine of “aight man for the right job". It is pertinent to observe that qualification requisites: and functions of Chief Executive Officer + of Chief Financial Officer ("CFO") (under ("CEO") (under Rule 4(3}) and the tule 14{1) and (2)) are distinctively different, meaning thereby 2 “fit and who could be appointed 2% CEO would nat be such 3 person proper person” of the respondent who was originally for the post of CEO (as the cm appointed as Finance Director and later 0” appointed as CEO by the jearch done by impugned notification). Also of importance that desi ico Holding Company Limited could not be court staff (IT) website of G found over the Internet, Meaning thereby gross wolation of Rule 5(4) and 10 re provided under Rule 25 to the are witnessed for which the penalti ‘extent that “Whoever fails or refuses to comply with, oF contravents any provision of these rules, or knowingly and wilfully authorises oF permits such bility under | in addition to any oth failure, refusal or contravention the Ordinance, be punishable with fine and, in the case of continuing failure, to a further fine, as provided in sub-section (2) of section 506 of the (Companies) Ordinance”, This act calls for action to be taken by the Security and Exchange Commission of Pakistan accordingly, OULAIIICU WILT vainS8 10. Now hit coming to Public Sector Companies (Appointment of Chief Executive) Guidelines, 2015 which in the view of the learned counsel for the respondent Nos. 8 & 9 enable the respondent No to hold the post of CEO, we must view these Guidelines within the parameters of the Rules, 2013 as elaborated in the foregoing paragraphs which require that only fit and proper person having professional skills appropriate with the nature and scale of such company’s activities should run the company. These Guidelines are made under Rule 5(2) which provides that "the Board shall evaluate the candidates based on the fit and proper criteria and the guidelines specified by the Commission for appointment to the postion 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 bbe, the Board shall appoint the chief executive in accordance with the provisions of the Ordinance. The Board shall also be responsible for development and succession planning of the chief executive.” OF relevance are paragraphs 2 and 3 of these Guidelines which are reproduced in the following:- >. procedure for Appointment of Chief Executive ~ (2) Every public sector company shall appoint its chief executive in accordance with the procedure specified in Schedule-! to the Guidelines (2) Every public sector company shall ensure thatthe articles of association cee impany state the terms and conditions of appointment ofits chief executive, 4 it and Proper Criteria for Chief Executive - While making appointment of die chief executive, the board shall evaluate the candidates based on the fi we proper criteria specified in Schedule! to the Guidelines. (2) The Board an eock the assistance ofits Nomination Committee (hereinafter referred Trey secommittee) to facilitate it in making appointment of the chief * scative in neeordance with rule 5 of the Rules. (3) Where, at any point of Gone, it has been found that the chief executive has failed to meet the ft and proper criteria during the term of his office, the directors or the company voy remove him before the expiration of his term of office in accordance ‘with the provisions of section 202 of the Ordinance. 11, schedule -Il of these Guidelines details out as to how fit and proper criteria for appointment as Chief Executive is to be met. Paragraph 1 provides that in order to determine whether a candidate proposed to be appointed as a chief executive is ft and proper, competence and capability of the applicant st be taken into consideration by ensuring that he/she must have the vane wiur LamSnecessary skills, experience, ability 2 efficiently and effectively. To gauge com Guidelines prescribe that relevant como: understand the techni al requirements of the business and the management process required to perform 5 10) chief executive have to be examined in the first ane competence and capability, the Guidelines authority to inter alia consider that whether the person Fs the qualification, training, skills, practical experience effectively fulfil the role and responsibilities oF the POS person has satisfactory past performance oF €*? business being conducted. To undertake ts prescribe that the applicant must possess ° graduate degree from 3 wel reputed institute or such other professional qualification rele! principle line of business of the public sector compa manufacturing, mining, science, technology agriculture, social science, or any other field commensurate to the job, oF he be a meme body of professional accountants, oF recognized professional with 2 postaraduate degree In BUSES! adm administration of finance or commerce oF 3FKESi°8 O° equiv 42, A combined reading of Public Sector Compan Governance) Rules, 2013 with Public Sector Companies (45 chief Executive) Guidelines, 2015 along with Schedule-I thereof doe any doubt in our mind that CEO of 2 public Sector Company must competence, experience, and ability [0 understar requirements of the business with appropriate qualification, trait practical experience and commensuratng qualifications. If the core & of the company relates to engineering oF pracuction he/she must 2ossess 2 graduate degree from a wellreputed institute OF such other P qualification relating to the principle Tine of Business including manufacturing, mining, science, echaolagy, 9s"cuNe soci science, or any other fields commensurate £0 his job, er it the nature of business of the company is of non-technica including finance and sccours that a Chartered Accountant or someone with Finance background cous this criteria, It is evident that to run a Public Sector Cor pany ina sound and prudent manner, a person who has qualifications commensurating to the OCdIIICU WILT vansWo core business business of the company would only turn out to be a fit and prover " rage person, Accordingly, GIICL which through its Memorandum of hesaciation is evidently a company engaged in operating power plants and to make provisions of works re hanicalfelectrical engineering 2 repairing a ‘epairing of such equipment used in the field of electric generation, we do not come to an agreement with the contention’ of the learned courae! for the respondent No. 8 & 9 that a chartered accountant is a fit and proper person to be a CEO of such a public sector cornpany. 13. With regards running, of public sector companies by fit and prone persons, the Hon'ble Supreme Court of Pakistan in the cave of Seling of Notional Assets Including PIA at Throwaviay Price (2019 SCAR 1952) while dilating on fit and proper criteria set under the Public Sector Compan es nppointment of Chief Executive) Guidelines, 2015 has held that Board of Directors of Public Sector company owed such company ard stakeholders & fiduciary duty, performance whereof was solely for best interest of such company, Such Board of Directors, being responsible for planning. succession and appointment of a Public Sector company, had to evaluate 2 potential candidate for appointment on a fit and proper eriterio, and must oct independently, transparently, totally impartially and in an unbiased manner, so os to select the best and most suitable candidate strictly 07 ment. suitability ond eligibility of «candidate was ascertained through on objective procedure and oppointment thereof needed to have ners with object of the ‘stan job. n this case where appointinent of Chief Executive Officer of Pal ion before the Hon’ble Supreme Court, the International Airline was in quest rapes court found work experience of respondent not to be of relevance (0 sinine industry. Supreme court observed that the appointment of the respondent was obitrary, Megat and unfair and was in woltion of the ow and rules applicable thereto and the said appointment was set aside with immediate effect. 14, with regards contentions of the learned counsel for the respondent No, # & 9 that selection of eespondent Ho.8 from the list of three candidates amongst which two were engineers was made by the Prime Minister, we are of the view that the proposal send to the worthy PI if would have indicated challenges to the said respondent's candidature by the Pakistan Engineering Council, and complete disclosure on the merit/demerits of each of the OCAIINICU WILT vansPrime Mini ter a5 required worthy Prima Minister ne of the respondent No.8. The hile letters were issued by the Pakistan for the post of jon of non-enginee! hese letters were answered and version of PEC ed by Hon'ble High Court at slamabad of that case are different 2s compared 10 cespondent was only appointed 0 give any findings on the eer, a5 t0 territorial jurisdiction of 1 respondent No.8 is CEO of the GHCL admitted province of Sindh being, Jamshoro are located in etuCO-t directly under our nose of which 10 determination and final orders of the said volved in «respondent Nos being fully decision mating of the said plant emploving pundreds of individuals of this Court having ample powers in the territorial jurisdiction ic of Pakistan to ve 199 of the Constitution of the Islamic Repu performing, functions in connection with the sn our territorial jurisdiction, to refrain from doing sg not germitted by law 10 do, 0710.60 anything he is required 8Y a tis regard could be taken from the dictum Iaid down in the case of Mst, Shahida Magsood ¥ 1 where the High Court of Sindh took ance of a matter under Art: 199 of the Constitution that originated i* he then was, did not find any leg2! oad. lustice Rana BhaEw g its extraordinary sdgment of the High Court © fo the case of Sandalber Enterprise risdiction, by refe (put) Lad, v. Central Board of Revenue pup 1997 SC 334, ‘and distinguishing tessa Atsagh vied, tanore v: THe COPYEME ‘poard, Karachi 1885 SCR sat of sub-clause (ai) of Article 39913) 758. Our Lordship observed that 2 Per fer to issue 2 direction to 2 person indicates that 9 High Court has pow tion with the affairs of the Federation, 2 in cone’ performing funct authority, to refrain from doing anything he fs not Province oF 2 !0¢ OCAIINICU WILT uamS12 permitted by law to a '0 oF to do anything he is required by law to do with itorial jurisdiction. Thi oe ion. This view was reaffirmed in Amin Textile Nils (P ils (Put) Utd. v. Islami ic Republic of Pakistan PLD 1998 SCMR 2389 and Anoud P Generation v vponeten Limited v. Federation of Pakistan PLD 2001 SC 340. Such objection of the learned counsel being meritless is thus overruled 16. Astorunni running of GHCL with utmost efficiency, the fact that two units of Jamshoro Power Company (GENCO-!) having being shut down, and as per the financial reports available for GENCO-I stating that financial statements of the company for the financial year 2018-19 could not be finalized by the management up till December 31, 2019", we do see it a measure of good performance, particularly when cost of electricity and the swamp of circular debt is swallowing the poor customers, running of government sector electrical power plants with utmost efficiency with individuals possessing, fas commensurating with highly technical required technical qualificat! requirement of the job cannot be ignored for a second. 17, We accordingly allow this petition, set aside the Notification dated 94.01.2018 directing the respondent No.1 to re initiate the process for appointment of new Chief Execute Officer strictly in compliance of the public Sector Companies (Corporate Governance) Rules, 2013 and the Public sector Companies (Appointment of Chief Executive) Guidelines, 2015 in the ight of the dictum Iaid down in the case of Selling of National Assets 1 Price (supra) forthwith while ensuring Including PIA at THM compliance of the Pakistan Engineering Council Act, 1975 and other and rules 1s nat left out. Hopefully this exercised would be applicable vs thirty (30) days when a compliance report Be sent t0 Addl completed Registrar of this Cou" for the attention of the Judges in chambers suDGt OCAIIICU WILT vans: