ISLAMABAD: The Islamabad High Court (IHC) has declared illegal the federal government’s interference in the affairs of the National Transmission and Dispatch Company (NTDC).

The IHC’s Justice Athar Minallah, in a judgment issued on a petition of NTDC Board Director Babar Sattar, set aside notifications issued by the ministry of water and power suspending the NTDC chairman and a member of the board, initiation of process for the appointment of managing director and increasing the size of the board from seven to 12 members.

The petitioner had challenged the removal of the NTDC’s MD in November last year.

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However, while the matter was pending in the IHC, the government through the secretary of water and power published on Nov 3 an advertisement seeking applications for appointment as MD.

On April 15, the secretary issued an office order, expanding the board of directors by adding an ex-officio and four private members.

On Jan 30, the government suspended NTDC MD Tahir Mehmud without approval of the board of directors.

Mr Mehmud was removed after a key transmission line broke down on Jan 24 and major cities, including the federal capital, plunged into darkness for several hours.

Mr Mehmud was reinstated on April 1 but the court observed that the reinstatement was again without the board’s approval.

The petitioner contended that the power utility business and generation, transmission and distribution were the different things.

He argued that the government had no authority in relation to the NTDC affairs except in the manner provided under the Companies Ordinance 1984 and that the Corporate Governance Rules (CGR) provided the mechanism for governing a public sector company and were binding on the government.

Additional Attorney General Afnan Karim Kundi and another government counsel Ali Shah Gillani said the CGR were not mandatory. They argued that “notwithstanding the CGR being valid and subsisting, the federal government is conferred with absolute and unfettered powers under Section 183 of the Companies Ordinance to nominate or remove a member of the board of the NTDC”.

The judgment pointed out that the government owned 88 per cent of the NTDC shares and the board of directors, employees and minority shareholders were equally important stakeholders.

It said the ministry had admitted that the board comprised professional and competent directors but had not bothered to place key matters related to the functioning of the company before it.

The judgment said the ministry had no discretion, exclusive authority or right to make appointments or remove members of the board or the chief executive of the NTDC through direct intervention.

“Administration and management of the NTDC is the exclusive domain of its board of directors and the management… Any interference by the respondent (ministry of water and power) or any other public sector company in the administrative matters and management is ultra vires the Companies Ordinance 1984. Consequently, the notification dated Sept 29, 2014 for removal of chairman NTDC, advertisement dated Nov 11, 2014 seeking candidates for appointment of its managing director, the notification of April 15, 2015 purportedly expanding the board of directors… issued by the respondent without lawful authority and jurisdiction. Therefore, the same are set aside.”

The court asked the government to “strictly comply with the provisions of the Companies Ordinance 1984, the CGR and the Articles of Association of the NTDC”.

Published in Dawn, July 12th, 2015

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