LAHORE: The Lahore High Court (LHC) on Monday set aside the suspension of Sui Northern Gas Pipelines Limited (SNGPL) Chief Executive Officer (CEO) Syed Ali Javaid Hamdani by the board of governors (BoG) of the company and asked him to assume the charge of his office with full powers.

Justice Abid Hussain Chattha passed the order, allowing a writ petition of Mr Hamdani that had challenged various decisions of the SNGPL BoG taken in its 600th meeting on Feb 18, 2023, including the suspension of Mr Hamdani and appointment of an acting CEO.

In his judgment, the judge observed that the offices of the CEO, chairman and member of the board are separate and independent in terms of appointment, removal, role, powers and functions. He said all the offices are regulated by mandatory provisions of law and the same cannot be circumvented or made redundant by exercise of discretionary and general powers vested in any of such offices.

The court noted that the process of appointment and removal of the CEO is regulated by specific mandatory legal provisions, which preempt the general role of oversight, supervision and control of the board over the CEO.

Asks Hamdani to assume charge of his office

The judge observed that the incumbent CEO/the petitioner is also a director of the SNGPL and as a member of the board, he has the same powers, functions and responsibilities as any other board member. He said there is no role of the federal government in the removal of the incumbent CEO of the SNGPL as the government does not hold more than 75pc shares in the company as ordained by Section 190(2) of the Companies Act.

Therefore, Justice Chattha ruled, the incumbent CEO of the SNGPL can only be removed in accordance with the mandatory provisions of Section 190 of the Companies Act requiring three-fourth of total membership of the board being not inconsistent with Section 22 of the State-owned Enterprises (SOE) Act.

The judge observed that the board is obligated to delegate powers to the CEO to perform the statutory duty of administration and management of the company. He said such powers cannot be withdrawn but the CEO can be removed even without inquiry under Section 190 of the Companies Act.

However, he said, if the board deems appropriate, it can initiate an inquiry against the CEO before removing him from office but without seizure of his powers.

If immediate measures are required to be taken against the CEO, the only course available is to follow the procedure of removal of the CEO under Section 190 of the Companies Act, he added.

The judge concluded that there is no provision in the law for the appointment of acting CEO in the presence of an existing CEO.

“The acts of the board of SNGPL of suspending the incumbent CEO and/or withdrawing his powers, appointing the acting CEO and conferring him the powers of the CEO were unlawful, illegal and void-ab-initio,” Justice Chattha ruled.

The judge said the manner and conduct of the impugned 600th emergent meeting of the SNGPL board with less than one day notice under a vague and generalized agenda was unlawful being not held in accordance with law.

The judge directed the SNGPL board to convene a fresh meeting expeditiously in accordance with law to take stock of all events since the date of the impugned meeting of the board and necessary decisions may be taken strictly in accordance with law in the light of observations contained in the judgement.

The judge said the fresh meeting of the board shall include the specific agenda for initiation of an inquiry or removal of the CEO and the board may proceed in accordance with law.

Published in Dawn, June 27th, 2023