Judgment

DESAI, J. :- In this group of writ petitions under Art. 32 and appeals by special leave under Art. 136 of the Constitution, constitutional validity of Rule 3A of the Companies (Acceptance of Deposits) Rules, 1975 (Deposits Rules for short) introduced by Companies (Acceptance of Deposits) Amendment Rules, 1978 which became operative from April 1, 1978 and incidentally of Section 58A of the Companies Act, 1956 (Act for short) inserted by Companies (Amendment) Act, 1974 which came into force on February 1, 1975 is challenged. The challenge proceeds on diverse grounds which may be briefly summarised.

2. At the very outset, it must be noticed that the factual matrix has little or practically no relevance in this case.

3. The contention put in the forefront was that in the absence of guidelines both S. 58A and the R. 3A of the Deposits Rules enacted in exercise of the power conferred by S. 58A confer arbitrary and uncanalised powers and hence are violative of Art. 14. Contravention of Art. 14 was canvassed for the additional reason that the power to exempt from the application of the rule confers wide discretion so that it can be used arbitrarily to pick and choose with the result