DESIGN AUTO SYSTEM LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) THIS writ petition is directed against the Order dated 16-12-2003 (Ann. P-2) and the Summons dated 2-1-2004 (Ann. P-3 ). Order dated 16-12-2003 on behalf of the Central Government has been passed by respondent No. 2 under Section 235 (1) of the Companies Act, 1956 (hereinafter referred to as 'act') ordering investigation by respondent No. 3 into the affairs of the petitioner company. In order to carry out investigation, respondent No. 3 has issued summons to the Principal Officer of the petitioner company to produce Books of Account and other documents and papers and as well as to give evidence from 7-1-2004 to 9-1-2004.

(2.) FACTS lie in a narrow compass. Petitioner is a company registered under the provisions of the Act. It is alleged that without there being any report of the Registrar of Companies (hereinafter referred to as 'roc') the order dated 16-10-2003 P-2 has been issued which is per se illegal, without jurisdiction, and as such unsustainable in law. Alternatively, it is urged that if there is any report of Roc as contemplated under Section 234 (6) of the Act, then it has been obtained behind the petitioner's back without seeking any information or explanation and as such, it is arbitrary and deserves to be quashed by appropriate writ. It was also urged that respondent No. 3 is making roving enquiry on the strength of vague summons, which is impermissible. However, this contention was given up at the time of argument in view of annexure P-4 issued by the Investigator-respondent No. 3. It is contended that without seeking explanation or information, Roc cannot prepare report contemplated under Section 234 (6) of the Act consequently; the investigation ordered against the petitioner is bad in law. Second submission was that petitioner is entitled to have the copy of report as well as an opportunity of prior hearing and without that petitioner is handicapped and cannot effectively defend itself in the investigation. It was also contended that during investigation petitioner or its principal officer under Section 240 of the Act can be compelled to give evidence against it which is contrary to law. These are the contentions that have been advanced by Shri Vijay Asudani, learned counsel for the petitioner at the time of hearing. He also placed reliance on the following decisions in Rohtas Industries Ltd. v. S. D. Agarwal ,, AIR1969 SC 707 , [1969 ]39 Compcas781 (SC ), (1969 )1 SCC325 , [1969 ]3 SCR108 , Sri Ramdas Motor Transport Ltd. v. Tadi Adhiriayana Reddy , AIR1997 SC 2189 , [1997 ]90 Compcas383 (SC ), JT1997 (10 )SC 667 , 1997 (4 )SCALE4 , (1997 )5 SCC446 , [1997 ]3 SCR1160 and Badri Prasad Chikwa v. State of M. P. . , AIR1999 MP 38 , 1998 (2 )MPLJ361.

(3.) PER contra, Shri T. N. Singh learned counsel appearing for respondents submitted that Order dated 16-12-2003 has been passed under Section 235 (1) of the Act on the report of Roc, and Roc is not required to seek explanation or information for preparing report. According to him, under Section 234 (1) of the Act report can also be prepared on the subjective satisfaction based upon document filed under the provisions of the Act. He further contended that subjective satisfaction is not open to review. Shri Singh also submitted that before passing an order under Section 235 (1) of the Act, the respondents are not under any legal obligation to furnish the report. Investigation is purely a fact-finding enquiry and there is no Its between the respondents and the petitioner company. It is only after the Investigator submits the report the Central Government is required to forward the report under Section 241 (2) of the Act. Shri Singh in support of his contentions placed reliance on the decision of Supreme Court in Union of India v. W. N. Chadha , AIR1993 SC 1082 , 1993 Crilj859 , 1992 (3 )SCALE396 , 1993 Supp (4 )SCC260 , [1992 ]supp3 SCR594 and two decisions of Bombay and Madras High Courts in Narayanlal Bansilal v. Maneck Phirose Mistry , AIR1959 Bom 320 , (1959 )61 BOMLR220 , ILR1959 Bom 952 and Coimbatore Spg. and Wvg. Ltd. v. MS. Shrinivasan. , AIR1959 Mad 229 , (1959 )1 MLJ254.