NEW CENTRAL JUTE MILLS CO LTD Vs. DY SECRETARY MINISTRY OF FINANCE DEPT OF REVENUE AND COMPANY LAW GOVT OF INDIA

JUDGEMENT

(1.) The appellant in this case is Messrs. New Central Jute Mills Co. Ltd. which is a public limited company incorporated under the Indian Companies Act, 1913 (hereinafter referred to as the "appellant") and is an existing company under the Companies Act, 1956 (hereinafter referred to as the "said Act") having its registered office at 11, Clive Row, Calcutta. It carries on business inter alia as manufacturers of Jute goods, chemicals and fertilizers. It owns two jute mills called Albion Jute Mills and Lothian Jute Mills situate at Budge Budge, West Bengal. It owns a factory at Varanasi known as Sahu Chemicals & Fertilizers in which soda ash and ammonium chloride are produced.

(2.) Messrs. Sahu Jain Ltd. of 11 Clive Row, Calcutta was at all material times and still are the managing agents of the appellant. The authorised capital of the appellant is rupees five crores divided into 30,00,000 ordinary shares of Rs. 10/-each and 20,00,000 preference snares of Rs. 100/- each. The paid-up capital of the appellant is Rs. 2,89,00,000/- divided into 33,000 preference shares of Rs. 100/- each fully called-up and 25,60,000 ordinary shares of Rs. 10/- each fully called-up. The capital of the appellant was increased by Rs. 42,75,000/- in 1958 and further by Rs. 42,75,000/- in 1959 and again by Rs. 85,00,000/- in 1961. These figures are mentioned to show that the appellant is a substantial company. In the petition it is stated that at all material times the business of the appellant was run on sound principles resulting in substantial profits, declaration of good dividends and provision for sufficient reserve. For example it is stated that the appellant made a net profit of Rs. 1,32,55,724/- for the year ended 31st March 1963 after meeting all expenses and interest, charges and after providing Rs. 53,55,584/- for depreciation. The appellant declared as dividend a sum of Rs. 28,60,000/- in addition to payment of interim dividend of Rs. 12,80,000/- for the year ended 31st March 1963. In other words, during the said year the appellant declared 15 % dividend on ordinary shares and 9.1% on preference shares. On or about 11th April 1963, the Central Government purported to pass an order under Sub-clauses (i) and (ii) of Clause (b) of Section 237 of the said Act. The relevant part of Section 237 of the said Act runs as follows:-- 237. Without prejudice to its powers under Section 235, the Central Government--

(3.) The demand for drastic action was sought to be made by enacting the Companies Act, 1956 which came into operation from April 1, 1956. The said Act has been amended several times. Section 209 (4) of the said Act contains provisions for inspection and Sections 235 to 251 contain provisions for investigation. I have already mentioned that on or about the 11th April, 1963 an order was passed under Sub-clauses (i) and (ii) of Clause (b) of Section 237 of the said Act upon the appellant. The relevant part of the said order runs as follows:--