Judgment

HEGDE, J. (For himself and Sikri J.):- The only question that arises for decision in these appeals by special leave, is whether the order made by the Central Government in No. 2(4)CL.I/63, Government of India, Ministry of Commerce and Industry Department of Company Law Administration on April 11, 1968 is liable to be struck down as not having been made in accordance with law.

2. The appellant in these appeals is a company incorporated under the Indian Companies Act 1913 having its registered office at Dalmia Nagar, Shahbad District Bihar State. It is manufacturing paper, cement, sugar, vanaspati and other articles. Its authorised capital is rupees 15 crores and the paid up capital little more than six crores. It was incorporated in the year 1933.

The impugned order reads:

"No. 2(4)-CL. 1/63 Government of India, Ministry of Commerce and Industry, Department of Company Law Administration.

ORDER

Whereas the Central Government is of the opinion that there are circumstances suggesting that the business of Rohtas Industries Limited a company having its registered office at Dalmianagar, Bihar hereinafter referred to as the said company) is being conducted with intent to defraud its creditors, members or other persons and the persons concerned in the management of its affairs have in connection therewith been guilty of fraud, misfeasance, or other misconduct towards the said company or its members.

And whereas the Central Government consider it desirable that an Inspector should be appointed to investigate the affairs of the said Company and to report thereon.

Now, therefore, in exercise of the several powers conferred by sub-clauses (1) and (ii) of Clause (b) of Section 237 of the Companies Act, 1956 (Act I of 1956) the Central Government hereby appoint Shri Prakash Chopra of Messrs. S. P. Chopra ad Co. Chartered Accountants, 31, Conaught Place, New Delhi as Inspector to investigate the affairs of the said company for the period 1st April, 1958, to date and should the Inspector so consider it necessary also for the period prior to f1st April, 1958, and to report thereon to the Central Government pointing out inter alia all irregularities and contraventions in respect of the provisions of the Companies Act, 1956 or of the Indian Companies Act 1913 or of any other law for the time being in force and person or persons who are responsible for such irregularities and contraventions.

2. The Inspector shall complete the investigation and submit six copies of his report to the Central Government not later than four months from the date of issue of this order unless time in that behalf is extended by the Central Government.

3. A separate order will issue will regard to the remuneration and other incidental expenses of the Inspector.

This Eleventh day of April, 1963.

By order and in the name of the

President of India

Sd/- D. S. DANG,

Deputy Secretary to the

Government of India."

3. The time granted to the Inspector has been repeatedly extended. For one reason or the other the investigation directed is still in its initial stage. The various extensions given for completing the investigation are also challenged in some of the appeals. But that contention was not debated before us. Hence it is not necessary to consider that question

4. The contention of the appellant is that the Central Government had no material before it from which it could have come to the conclusion that the business of the appellant company is being conducted with intent to defraud its creditors, members or other persons or the persons concerned in the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the said company or its members.

5. In response to the rule issued by the Patna High Court Shri Rabindra Chandra Dutt, the then Secretary to the Government of India Ministry of Finance, Department of Company Affairs and Insurance and Chairman, Company Law Board, New Delhi filed an affidavit in opposition on behal