Om Prakash, J. - (1.) THE petitioner, a share holder of the U. P. Financial Corporation, respondent no. 1 has been fighting relentlessly against respondents labouring under the impression, albeit erroneous, that his legal right has been encroached by respondent no. 2, a senior bureaucrat, who is the erstwhile Managing Director of the U. P. State industrial Development Corporation Kanpur (for short, the UPSlDC) and is presently posted as Commissioner of Kanpur Division.
(2.) SECTION 4 (3) of the State Financial Corporation Act, 1951 (briefly, the Act) enumerates the parties among whom the shares of the U. P. Financial Corporation (respondent no. 1) may be distributed. The parties under clauses (a) (b) and (ba) to section 4 (3) are the State Government, the Reserve Bank of India and the Development Bank respectively. SECTION 4 (3) clauses (c) and (d) of the Act which are important for the purposes of this case, run as follows : "..................................................................................................... (c) scheduled banks, Insurance companies (including the Life Insurance Corporation of India established under section 3 of the Life Insurance Corporation Act, 1956 Act No. 31 of 1956), investment trusts, cooperative Banks, other financial institutions or such other Institutions as the Central Government may notify in this behalf in the Official Gazette and; (d) parties other than those referred to in clauses (a), (b) and (c)." Under section 4 (3) of the Act, the. State Government shall with the approval of the Central Government, determine the number of shares which may respectively be distributed among the aforesaid parties. The claim of the petitioner is that he falls under section 4 (3) (d), which is a residuary category of share holders Under section 10 of the Act pertaining to the constitution of the Board of Directors,, each category of share holders falling under section 4 (3) clauses (a), (b), (ba), (c) and (d), is represented by a fixed number of directors as specified therein. The Board of directors shall consist of four directors nominated by the State, Government, one director nominated by the Reserve Bank of India and two directors nominated by the Development Bank. Apart from the nominated directors, the Board of Directors shall consist of three directors elected by the parties referred to in clause (c) of section 4 (3) and one director elected from amongst themselves by the parties referred to in clause (d) of section 4 (3) as stated in clauses (d) of providing better understanding of the case are re-produced below :- Section 10 (d) three directors elected In the prescribed manner from among themselves by the parties referred to in clause (c) of sub-section (3) of section 4 one of whom shall be elected to represent scheduled banks, another to represent Co-operative banks and the third to represent the remaining financial institutions ; (e) one director elected in the prescribed manner from among themselves by the parties referred to in clause (d) of sub-section (3) of section 4 who are share holders of the Financial Corporation;" Respondent no. 2 being the Managing Director of the UPSIDC (respondent no 3) was earlier elected as one of the directors of the U. P. Financial Corporation (for brevity sake 'Corporation)' and his nomination was not called in question then. Pursuant to notice dated 4th July, 1991 the petitioner claims to have filed his nomination on 14-7-1991 being a share holder in the residuary category under section 4 (3) (d) of the Act for being elected as one of the directors of the Corporation. To his surprise, the petitioner discovered that respondent no. 2 also filed his nomination to be elected as one of the Directors of the Corporation from the same category representing the UPSIDC which; according to the former, is a financial institution falling under section 4 (3) (c). It is averred that nomination representing the share holders falling under section 4 (3) (c), could not have been filed by respondent no. 2 under section 4 (3) (d) but only under section 4 (3) (c). Respondent no. 2 was declared elected on 29-7-1991 for four years as one of the directors representing the UPSIDC which was treated to be a share-holder falling under section 4 (3) (d). The contention of the petitioner is that respondent no. 2 could have been elected only under section 10 (d) to represent the UPSIDC which is a financial Institution within the meaning of section 4 (3) (c) but not under section 10 (e), where under one director representing the share holders failing in the residuary category under section 4 (3) (d), could be elected.
(3.) THE nomination election of respondent no. 2 representing the UPSIDC which was treated to be a share holder under section 4 (3) (d) of the Act by respondent no. 1 was challenged by the petitioner before respondent no. 4 who by the impugned order dated 27-2-1992 (Annexure no 22 to the petition) rejected the application/objection of the petitioner challenging the nomination/election of respondent no. 2. It is this order which is sought to be quashed by the petitions. Also the petitioner claims that a writ of madamus be issued directing the respondent no. 2 not be continue to function as a director of the Corporation. THE contention of the petitioner is that he and respondent no. 2 only filed nominations from the residuary category under section 4 (3) (d) and that election of respondent no. 2 being invalid under section 10 (e) read with section 4 (3) (d), the petitioner be declared elected in place of respondent no. 2 as a director of the Board. The contention of the petitioner has been denied by respondents. It is averred In the counter-affidavit filed on behalf of the Corporation that the UPSIDO is not a financial Institution and even If that Is assumed to be so the same is not notified by the Central Government to the1 Official Gazette as envisaged by section 4 (3) (c) and, therefore, the UPSIDC still falls only under the residuary clause (d) of section 4 (3) of the Act and therefore, respondent no 2 rightly filed his nomination in that category. It is further averred that the UPSIDC being a corporate body is free to file nomination of any individual and, therefore, it was not necessary for respondent no. 2 to be a share holder himself as contended by the petitioner.;