JUDGMENT

TULZAPURKAR, J. :— This appeal by special leave raises the question whether on the facts and in the circumstances of the case the recommendation of a statutory body (Specified Authority under Section 72-A of the Income-tax Act, 1961) and the Central Governments decision based on it - a matter of subjective satisfaction - were open to judicial review and whether the High Court was justified in interfering with the same ?

2. The facts giving rise to the aforesaid question may he stated : Mahindra and Mahindra Limited (for short M and M) was incorporated under he Indian Companies Act 1913 and is thus duly registered under the Companies Act. 1956 : its share capital has been widely held. the principal shareholders being the public financial institutions to the extent of about 40 per cent of its equity share capital; it is engaged in the manufacture inter alia of jeeps and other motor vehicles on a large scale.

3. M/s. International Tractor Company of India Limited (for short ITCI) was incorporated on April 13, 1963 under the Companies Act, 1956 as a public company and was carrying on the business of manufacture and safe of agricultural tractors and implements which are an essential commodity under the Essential Commodities Act, 1955. Though it commenced production within three years of its incorporation, ITCI incurred a loss of Rs. 253 lacs in the year 1974-75: with the financial assistance received from M and M, ITCI was able to improve its operating picture and its working results for the year 1975-76 showed a profit of Rs. 70 lacs (Rs. 208 lacs according to the Central Government but that was without providing for depreciation to the extent of Rs. 138 lacs). but again in the Financial year 1976-77 (ending October 31, 1977) for various reasons its working was not satisfactory and it made a huge loss to the tune of Rs. 433 lacs. Cheques issued by ITCI bounced. suppliers had stopped the supplies of raw materials to it and financial institutions were not willing to help it any more. During the period of 13 months. (1-10-1976 to 31-10-1977) its production had declined to 2004 tractor units as against the licensed and installed capacity of 10,000 tractor units and on a turnover of Rs. 9.94 crores it had incurred an operational loss of Rs. 4.33 crores and it had received several notices threatening legal actions including winding up proceedings. As at 31st of Oct. 1977 the accumulated losses were to the tune of Rs. 555 lacs and the excess of liabilities (including loans) over the assets (share capital Rs. 306.99 lacs plus free reserves Rs. 184,95 lacs = Rs. 491.94 lacs) was to the tune of Rs. 63 lacs and odd. In short as at the close of the financial year ending 31st of October, 1977 ITCI was commercially insolvent.

4. In October 1976 a proposal for amalgamating ITCI with M and M was considered by the Boards of Directors of the two companies since it was felt that it would be advantageous to both if their operations could be rationalised for better and more efficient utilisation of their existing capacities and facilities and by two resolutions dated 4-10-1976 passed by the Boards of Directors of both the Companies the proposal was approved and a Scheme of Amalgamation effective from 1-11-1977 was prepared and finalised. As both the companies were undertakings to which Part A of Chapter III of Monopolies and Restrictive Trade Practices Act, 1969 (for short MRTP Act) was applicable, M and M made an application on October 30, 1976 under Section 23 (2) of the Act seeking approval of the Central Government to the scheme of Amalgamation. At the hearing given by the Central Government under the MRTP Act it was brought to the notice of the Central Government - and this is so mentioned in the Approval Order - that ITCI was not doing well for want of sufficient working capital, that the production by ITCI had declined and if that state of affairs continued for another two to three years it would lead to the closure of its entire undertak