New IIM rules: President can now dissolve board for disobedience

The Indian Institutes of Management (Amendment) Rules, 2023, amending the IIM Rules, 2018, were enacted in July this year.

The Ministry of Education formally notified the revised rules in a gazetted notification on November 11, elucidating the terms and conditions.

Now designated as the "Visitor" of each IIM, the President of India holds complete authority to nominate the chairperson of the board of governors—the principal executive body of each IIM. Additionally, the President can appoint search panels for director appointments, make policy decisions, approve annual budgets, and determine fees.

“The Visitor shall nominate one of the names recommended by the Board and send the same to the Board for appointment of the person as Director: Provided that where the Visitor is not satisfied with the names recommended by the Board, he or she may ask the Board to make fresh recommendations,” read the notification.

Previously, a search-cum-selection committee, comprising five prominent individuals chosen from administrators, industrialists, educationists, scientists, technocrats, and management specialists, was constituted by the Board for these purposes.

Under the updated norms, the Visitor can dissolve the board at any time under three circumstances: if the board is deemed unable to discharge its functions, persistently defaults in complying with the Visitor's directions, or in the public interest.

Moreover, the Rules under the IIM Act now explicitly define the educational qualifications required for an IIM director. The stipulation is that any candidate must possess a first-class degree at both the Bachelor’s and Master’s levels, along with a PhD or an equivalent qualification. Previously, the criteria were a "distinguished academic with a PhD or equivalent," with no mention of the required division for the degrees.

This development gains significance in light of the IIM Rohtak case, where it was revealed that the incumbent director, Dheeraj Sharma, held a second-class Bachelor’s degree, contrary to the government's requirement of a first-class Bachelor’s degree when advertising the post. The Ministry of Education informed the Punjab and Haryana High Court last year that Sharma had misrepresented his educational qualifications.

Further, the Visitor will now also have the power to terminate the services of the Director.

“Notwithstanding anything contained in any of the clauses of this sub-rule, if the Visitor decides that the services of the Director may be terminated or the Director may be relieved from the services of the Institute, the Board shall be bound to follow the decision of the Visitor,” the notification stated.

According to the IIM Rules of 2018, only the board of governors had the authority to dismiss the director, requiring the support of two-thirds of the members present and voting, along with more than 50% of the total board members.