APPOLLO TYRES LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) The first petitioner, Appollo Tyres Limited, hereinafter referred to as the petitioner company, is the party in respect of whom the impugned order dated September 7, 1978 has been made under Section 18-A of the Industries (Development and Regulation) Act, 1951. The second petitioner is the Managing Director of the Company as also a shareholder. The third petitioner is stated to be a company which is the promoter of the petitioner company. The respondents are the Union of India, hereinafter referred to as the Government, and the gentlemen named in the impugned order of September 7, 1978 which constitute the body of persons nominated by the Government to take over the management of the petitioner company. Shri J. I.Mehta, the second respondent, has been mentioned in the impugned order as the Chairman of the body of persons mentioned in the impugned order which is to take over the management of the Company.

(2.) The impugned order was made by the Government in exercise of powers conferred by Section 18-A of the aforesaid Act. The petitioners approached this court by a petition under Article 226 of the Constitution of India challenging the taking over of the management of the company. According to the impugned order the Government exercised its power under Section 18-A of the Act after holding an investigation postulated by Section 15 of the Act. The petitioners contend, inter alia, that the said order dated September 7, 1978 is liable to be quashed, being violative of petitioner's fundamental rights guaranteed by Articles 14, 19 and 31 of the Constitution on account of the impugned order having been made in colourable exercise of the power conferred by Section 18-A of the Act, that there was no material before the Government to form the requisite opinion to either appoint a Committee of Investigation under Section 15 of the Act or to make an order under S. 18-A of the Act, that the investigation said to have been carried out by the Government under Section 15 of the Act was conducted in violation of the principles of natural justice, that the entire machinery under the Act was activated by mala fide, that the conclusion arrived at by the Government could not be arrived at either on the material before it or by any reasonable person in the circumstances of the case, that the material allegedly collected by the Investigation Committee under Section 15 of the Act must be held to be non-existent in the circumstances of the case.

(3.) The company is a public limited company and was incorporated on September 28, 1972. It was initially promoted by Rubby Rubber Works in Kerala. The original promoter was not successful in making financial arrangements and implementing the project. Petitioner No. 2 was approached to take over the project in 1974. He made financial arrangements by way of loans and underwriting the equity capital to the extent of Rs. 5.40 crores apart from contribution by the promoter himself, and his friends, nominees and associates amounting to Rs. 3.10 crores. The foundation stone of the project was laid in April, 1975, the project was completed within 18 months and trial operation started in November/December, 1976. The petitioners were able to get collaboration from one of the biggest tyre companies of the world, namely, General Tyre International Company which has collaboration throughout the world. Trial production having commenced only in November/December, 1976, it is contended, it is an anomaly to expect that in a year's time the company should have made profits. It is further contended that on the rating done by General Tyre International Company of its various collaborators throughout the world the petitioner company's plant in Kerala has been adjudged as best on various items in January, February, March and April,1978. It is further said that when the Investigation Committee under Sec. 15 of the Act issued a questionnaire the same was answered but no other opportunity was given to the petitioner company to substantiate its stand. In the petition it is said that not only the impugned order of September 7, 1978 but also the earlier order dated June 5, 1978 constituting an Investigation Committee under Section 15 of the Act be quashed and that a writ of mandamus and/or any other writ, order or direction be given directing the Government to withdraw the impugned orders.