BARIUM CHEMICALS LIMITED Vs. COMPANY LAW BOARD

JUDGEMENT

(1.) -- Thepetition of Barium Chemicals Limited, a public limited company with its registered office at Ramavaram in the State of Andhara Pradesh (hereinafter called the company) and its managing director P. N. Balasubramanian residing in New Delhi (hereafter referred to as the second petitioner) is .directed against the order (Annexure 1' )pessed on 19th of May, 1965, by D. S. Dang, the seventh respondent as Secretary of the Company Law Board (the first respondent) appointing respondents 3 to 6 "as Inspectors to investigate the affairs of the company since its incorporation in 1961 and to report thereon to the Company Law Board, inter alia all irregularities and contraventions in respect of the provisions of the Companies Act, 1956, or of any other law for the time being in force the person or persons responsible for such irregularities and contraventions". The second respondent is the Finace Minister of the Central Government at whose instance, according to the petitioners, the Company Law Board had been motivated in taking the impugned action.

(2.) The petitioner-company was registered on 28th of July, 1961, with an authorized capital of one crore divided into one lakh shares of Rs. 100.00 each, the primary object being to carry on business of manufacturing all types of barium compounds. It is claimed and not seriously contested that the petitioner-company is the first of its kind in India and is indeed amongst the few world concerns carrying on the manufacture of. barium compounds. The second petitioner was appointed the Managing Director of this company on 5th of December, 1961, and his remuneration at the rate of Rs. 25.000.00 per annum was approved by the Central Government on 30th of July, 1962. The erection of the plant was undertaken by L. A. Mitchell Limited of Manchester, in pursuance of a colla boration agreement between it and the company entered on 12th of October, 1961, and duly approved by the Govt. of India on 27th of November, 1961, after which a licence for import of machinery was granted. Subsequently, the public was invited to subscribe for shares on the strength of a prospectus issued by the directors of the company on 26th of February, 1962. The issued capital of the company of 50 lakhs is stated to have been over-subscribed on 12th of March, 1962.

(3.) All did not go well between the collaborators and the company and the designing itself was declared by Lord Poole who came to India to negotiate with the company as L. A. Mitchell had in the meantime been taken over by another financial group as detective. This visit was necessitated by a notice which was sent by the company to L. A. Mitchell Limited on 2nd of April, 1955, that if the plant was not put into running order by 1st of June, 1965, some alternative arrangements would have to be made and compensation claimed for damages and loss suffered by the company. The negotiations were climaxed by a meeting of the directors of the company with Lord Poole on 10th and 11th of May, 1965, when an undertaking is said to have been given by the collaborators that the contract would be completed with necessary "alternatives and modifications in accordance with the report of M/s Humphrey Glassgow, London" and that they would "spend the additional amount of 2, 50.0001- that may be required for that purpose". It is claimed that the plant of the company is at the moment producing 25% of its installed capacity and according to the assurance of Lord Poole it would yield foll production results by April, 1966.