T R JUNEJA Vs. RAJASTHAN STATE INDUSTRIAL

JUDGEMENT

(1.) THE dispute relates to M/s J.T. Precision Castings Pvt. Ltd. (for short, Private Company) respondent No. 2 and the petitioner, an Ex -Director of the Company has prayed that this Court may declare that the re -entry effected by the Rajasthan State Industrial and Mineral Development Corporation (for short, the Corporation), now converted into Rajasthan State Industrial Development and Investment Corporation (RIIC) O, in the factory of the Private Company is ilegal and the Corporation be ordered to hand over the possession of the factory to the Private Company and it be further ordered to pay compensation to the petitioner.

(2.) THE necessary facts for the disposal of this writ petition are these. The Corporation is a company under the Companies Act, 1956 and it was incorporated under the aforesaid Act on March 7, 1969. One of the objects of the corporation was to promote, establish and execute industries, projects or enterprises for manufacture and production of goods, plant, machinery, tools, implements, materials or substances of any decription whatsoever which in the opinion of the company are likely to promote or advance the industrial development of Rajasthan. According to the petitioner the Corporation is a public body under the control of theGovernment of Rajasthan both directly and indirectly, as not only as per the fourth annual report of the Corporation, the Government of Rajasthan made avilable to the Corporation an amount of Rs. 25 lacs towards share capital, it also to act as an agent of the Government of Rajasthan and the Government of Rajasthan has the control over the Corporation.

(3.) THE petitioner and one Jhanwarlal Jain, twho two technocrates (unemployed engineers) entered into a promotional agreement with the Corporation on April 22, 1970. Thereafter, a suplementary agreement dated August 5, 1970 was also entered into and under the said supplementary agreement dated August 5, 1970., Clause 1 of the principal agreement was omitted. Similarly, Clause 6 of the principal agreement was substituted and some other chances were also made. It will appear from a perusal of the aforesaid principal agreement and supplemtary agreement that a private limited company was to be promoted with the authorised capital of Rs. 2 lacs divided into 100 equity shares of Rs. 10/ - each and the technocrates were to invest 51% of the share capital and the Corporation was to invest not exceeding 49% of the equity share capital. The company took loans for the purchase of machinery etc. and for other working capital on hypothecation and the Corporation, if so required, was bound to guarantee the payment of the said loan. Not only this, the Corporation was required to invest the balance of funds in the form of redeemable cumulative preference shares carrying 9 1/2% repayable within a period of 12 to 15 years and the security of this loan shall be a second charge on all the assets of the company. All rights and privileges were to cease to have any effect as and when the redeemable cumulative preference shares are fully redeemed or the loan is repaid in full or the liability of the corporation as a guarantee is waived by the financer. There were to be five directors out of which the Corporation had a right to appoint 3 Directors and one of them was to be the Chairman of the Board of Directors, who was to be nominated by the Corporation and who was not to be the subject to retirement by rotation. It was not necessary that the Directors should hold any qualification share. The Articles of Association of the Private Company were to be so formed as to give the above rights to the Corporatio.