In a message against appointing politicians as chairpersons of government-run enterprises, the High Court of Karnataka has said that “appointing a politician would always result in compounding the miseries of the government company/public sector undertaking, its workmen and would result in detriment to the public interest”.
“The State government must appoint only qualified person having sound domain knowledge and professional excellence for the post of chairperson of any government company or public sector undertakings,” the court said.
‘Bad decision’
The decision of the government to appoint Nagarajappa, who had no professional qualifications and domain knowledge, as the chairman of State-owned Mysore Sugar Company (Mysugar), once one of the biggest sugar factories in Asia, “for political reasons was a bad decision which has resulted in whopping further losses to an extent of ₹127 crore during his tenure,” the court observed.
A Division Bench, comprising Justice D.K. Singh and Justice Venkatesh Naik T., made these observations while dismissing a petition filed in 2024 by 80-year-old Mr. Nagarajappa, who had questioned the State government’s 2014 order of asking the Upalokayukta to conduct an enquiry against him in relation to alleged illegalities, occurred during his tenure as chairman, causing a huge loss to the company.
Background of case
The government had ordered the inquiry under Section 7(2-A) of the Karnataka Lokayukta Act against the petitioner acting on a complaint filed in 2012 by the then MLA M. Srinivas on alleged misfeasance, procurement irregularities, violation of the Karnataka Transparency in Public Procurement (KTPP) Act, and financial decisions that allegedly caused losses of ₹127 crore to Mysugar during the tenure of Mr. Nagarajappa between October 2008 and December 2012.
The Bench pointed out that the Upalokayukta, who investigated each of the total 12 allegations, relying on audit reports, tender records, and company documents, found several accusations prima facie proved, including violations of tendering procedures, misuse of authority in procurement of machinery, irregularities in liquor unit operations, and permitting sale of sugar without receiving payment.
The other allegations, such as forced resignations of some employees and officers of the company, demurrage payments, and alcohol sales through intermediaries, could not be established during the inquiry, the Bench noted.
A public servant
Rejecting the petitioner’s claim that he was not a “public servant” and that the decisions were taken collectively by the Board of Directors of Mysugar, the Bench said that the chairman of a government-run company was a “public servant” under Section 2(12) of the Act, and that the government’s reference to the Upalokayukta for an inquiry was valid in law.
Noticing that the report of the Upalokayukta was only a recommendation to initiate appropriate proceedings for recovery of the losses caused by the petitioner, the Bench said, “We do not find that there is any error committed by the Upalokayukta in the report. The recommendations for taking appropriate action for recovery of the losses caused for the decisions taken by the petitioner as chairman of the company is left to the government, and the government should act upon the recommendations.”
Published – November 15, 2025 08:03 pm IST
