JIYAJEERAO COTTON MILLS LTD Vs. COMPANY LAW BOARD

JUDGEMENT

(1.) BY this application under Article 226 of the Constitution of India the petitioner, M/s Jiyajeerao Cotton Mills Ltd., Gwalior (hereinafter referred to as the Company), challenges the legality of an order made by the Company Law Board (hereinafter referred to as the Board) on 7th December 1967 under section 237 (b) of the Companies Act, 1956 (hereinafter referred to as the Act), directing that the affairs of the Company be investigated by the Inspectors appointed by the order and seeks a writ of certiorari for quashing that order.

(2.) THE petitioner Company was incorporated as a Public Limited Company under the provisions of the Gwalior Companies Act in the quondam Gwalior State with the object of carrying on the business of spinning, weaving, ginning, baling and pressing of cotton, yarn, hemp, jute and other fibrous material upon its incorporation it started a Textile Mill at Gwalior of which M/s Birla Brothers Ltd. were the Managing Agents. The present business of the Company consists; inter alia, of the manufacture and production of textiles at Gwalior in Madhya Pradesh and caustic soda and soda -ash at Porbunder in Gujarat. Since 1st July 1948 M/s Birla Brothers (Gwalior) Ltd., are the Managing Agents of the Company in place and in stead of M/s Birla Brothers Ltd. The Company claims that whereas its original authorized share capital was Rs. 3,50,000, its present authorized share capital is Rs. 8,25,00,000, its reserves assets and production capacity have also increased considerably since its incorporation and it has at present 59,204 spindles and 1711 looms besides modern and well -equipped dyeing, bleaching, printing and power generating plants. The petitioner further claims that it has also set up four ginning and pressing factories -one in the Punjab, two in Madhya Pradesh and one in Rajasthan and that it has also installed a Chemical Plant at Porbunder in Gujarat. According to the petitioner, the manner in which its Managing Agents have managed and conducted its business has been under the scrutiny and consideration of the Union of India and the Board from time to time and the Board duly accorded its approval for the re -appointment of M/s Birla Brothers (Gwalior) Ltd., as the Managing Agents even though the general policy of the Union of India and of the Board was not to reappoint the Managing Agents of textile mill companies; the last order reappointing M/s Birla Brothers (Gwalior) Ltd., as Managing Agents till 31st December 1969 was passed on 15th September 1966. The petitioner claims that the reappointment of M/s Birla Brothers (Gwalior) Ltd., as Managing Agents was done only after the respondents were fully satisfied that the petitioner's business was being managed, conducted and carried on in a proper and efficient manner and that it would not be against public policy or public interest to allow M/s Birla Brothers (Gwalior) Ltd., to continue to run the petitioner's business.

(3.) ACCORDING to the petitioner, during and after the last General Elections a persistent propaganda was carried on by certain interested and politically motivated persons against the petitioner and a group described by the propagandists as "Birla Group of Textile Mills" and the petitioner and its Managing Agents were falsely and maliciously accused of indulging in monopolistic industrial activities and since then constant demands were being made by these persons to humiliate the petitioner Company and its Managing Agents on some excuse or the other. The petitioner has given a narration of the simultaneous raids that were conducted in various textile mills of "Birla Group" in India including the petitioner -Mills on 15th June 1967 by the Central Bureau of Investigation and the seizure of books, documents, papers etc., made in the raids and the proceedings that followed in this Court and in the High Court of Gujarat in which the legality of the raids and the seizures made therein was challenged. In Misc. Petition No. 415 of 1967 which was filed in this Court the order that was passed on 20th January 1968 was in the following terms: -