High Court upholds verdict on removal of J&K Bank’s former Chairman-cum-MD

Srinagar, Nov 1: The High Court of J&K and Ladakh Wednesday upheld the decision of its single bench related to the removal of Parvez Ahmad Nengroo as Chairman and Managing Director of J&K Bank in 2019.
A division bench of Chief Justice N Kotiswar and M A Chowdhary upheld the single judge’s judgment whereby the former J&K Bank Chairman’s petition against his removal as Chairman and MD of the J&K Bank was dismissed as “not maintainable”.
In his petition before the single bench, Nengroo had challenged communication dated June 8, 2019, addressed by the Additional Secretary, Finance Department, of the erstwhile J&K State, to the Company Secretary, J&K Bank Limited, by which he had ceased to be the Chairman-cum-Managing Director of the J&K Bank.
Through the same communication, R K Chibber was appointed as the interim Chairman-cum-Managing Director of the bank.
While dismissing the petition at its threshold, the single bench had held that the nomination of Nengroo as Director on the Board and his appointment as Chairman-cum-Chief Executive Officer of the Bank was “contractual in nature and not governed by any statute or the service conditions ordinarily applicable to the employees of the bank”.
However, the court had left the petitioner free to approach the civil court to seek redressal of his contractual disputes with the bank.
The single judge had held that “contractual duties are enforceable as matters of private law by ordinary contractual remedies such as damages, injunction, specific performance, and declaration”.
It had said: “In terms of Rule and Regulation 2(k) and 2(l) of the Pension Regulations, the petitioner is deemed to have retired from the service of the bank with effect from October 6, 2016, therefore, his tenure as being the Chairman and CEO of the bank is not governed by the Service Rules of the Bank”.
Notably, the communication dated July 9, 2019, had conveyed to the petitioner that he was deemed to have retired from the service of the bank with effect from October 6, 2016.
“We are of the considered opinion that the learned Single Judge has rightly held that the appointment of the appellant and petitioner as Chairman and CEO of the J&K Bank was contractual in its nature and, as such, there being no applicability of the service law, a writ is not maintainable to the extent of determining his removal as government nominee Director, Chairman or CEO of the J&K Bank and his continuance from a career level post to board level post is not being amenable to writ jurisdiction, is not maintainable,” the division bench said and upheld the single judge’s judgment.
Nengroo had challenged the single judge’s decision on several grounds.
In his appeal Nengroo contended that he was appointed as the first qualified company secretary in J&K Bank in the year 1998 and, as such, he had to serve till his superannuation at the age of 60 years on March 31, 2024.
The appellant said that in over 20 years with the bank he held various positions and was eventually appointed as Chairman and CEO on October 6, 2016, for a tenure period of three years.
He said that the power of removal of the Chairman of a banking company was vested only in the board of directors and not the government and that even that decision of removal if taken by the board was subject to the mandatory prior approval of the Reserve Bank of India (RBI) through its Governor, under Section 35 B of the Banking Regulations Act, 1949.