NAVA SAMAJ LIMITED Vs. REGISTRAR OF COMPANIES

JUDGEMENT

(1.) THIS is petition under article 226 of the constitution challenging the validity of an order of the central Government dated March 24, 1962, purported to have been passed under sub - section [4] of the section [4] of section 89 of the companies Act, 1956 [1 to 1956] [hereinafter referred to as the act]. The order that was passed is annexed as document No. 7 to the petition. The substance of the order is:

(2.) THE fact lending to the filing of this petitioner are shortly as follows: The petitioners company is a joint stock company registered on May 5, 1947 under the India Companies Act, 1913 [vii of 1913]. The Memorandum of Association and the Articles of Association of the petitioner - company are annexed and document No. 2 to the petition. It appears that the authorized capital of the company is Rs. Ten lakhs divided into [a] 38,000 ordinary shares of Rs. 25/- each and [b] 25, 000 Deferred shares of Rs. 2/- each. The issued and subscribed capital of the company is Rs. 7, 88,175/- divided into 31,257 ordinary shares of Rs. 25/- each and Rs. 50,000/- divided into 25,000 deferred shares of Rs. 2/- each admittedly, the Table A in the first schedule to the Indian Companies, Act 1913, was adopted in the large way, and as regard the voting right in respect of the these shares, the result was that each holder of an ordinary of share of Rs. 25/- each holder of the deferred share of Rs. 2/- was entitled to the same voting rights, namely, one vote for the each share owned by him. The whole of the deferred share capital of Rs. 50,000/- was owned by the five person. In anticipation of the coming into the force of the companies Act 1956, the petitioners company made an application to the central Government in connection with a situation of which was likely to arise by reason of the present provisions of in section 87 to 90 of the act In Pursuance of the what transpired in the correspondences between the petitioner - company and the central Government made in connection with a situation of which was like the five shares holder being the owners of the deferred shares of the capital of Rs. 50,000/- executed a deed to trust transferring all the deferred shares to the trustees of he trust who now now these shares. The managing agency right wee also made property and subjects of matter of this trust. After the personal and subject matter of this force in April 1956 the Central Government in pursuance's of the powers reserved to it under sub - section [4] of the section 89, passed an order dated March, 30, 1957 exempting the petitioners company from the requirements of sub - section [1] [2] and [3] of section 89, in respect of the above 25,000 deferred to sharer a period of three months with the effect from the April 1, 1957. The recitals in the order refer to the application made by the petitioners - Company for exemption and also to the act that the central Government was of the opinion that he exemption was 'required in the public interest'. By a further order of exemption of also passed under subsection [4] of the section 89 of the act on July 29 ,1957 the Central Government against exemption of petitioners - company from the requirements of the sub -section [1], [2] and [3] of section 89 in respect of the above 25,000 deferred shares. There are no conditions attached to the above exemption order as regards the period or any others matter. In this order also, one of the recitals Is that the Central Government was the opinion that the exemption was 'required in the public interest'.

(3.) IT appears that in February 1960 and thereafter - representations were made to the Central Government making certain allegations of regarding the management of the company and requesting the Central Government in withdraw the exemption. In response to the correspondence addressed the petitioners - company gave detailed replies regarding all these representations and submitted the same to the central Government. Ultimately by the impugned order dated March 24, 1962, it was recited that sufficient time to consolidate its position had been given to the petitioner - Company and that the exemption of who no longer required in the public interest, and on the basis of these recitals and in purported exercise of the powers reserved to it under sub - section [4] of the section 89, the central Government of rescinded on the order of exemption dated July 29, 1957 certain correspondence and representations of behalf of the petitioners - Company were therefor addressed to the central Government details of which it is unnecessary to refer here. Having not succeeded in its representations the petitioners company ultimately filed in this petition of July 4, 1962, Challenging the validity of the above order of rescission of the exemption dated March 24, 1962.