JUDGMENT

RAY, J. :— One Mr. Haresh Jagtiani, a practising advocate of the High Court of Bombay and a policy-holder under the Life Insurance Corporation of India and also holder of units issued by the Unit Trust of India and Mr. Shamit Majumdar, a holder of shares and debentures of Larsen and Toubro Ltd. filed a Writ Petition being No. 2595 of 1989 in the High Court of Judicature at Bombay against the Union of India and others including the financial institutions questioning the legality and validity of the consent given. by the Controller of Capital Issues for the proposed issue of convertible secured debentures aggregating Rs. 820 crores by Larsen and Toubro Limited insofar as the said issue seeks to offer such convertible debentures to persons other than the existing shareholders and members and the employees of Larsen and Toubro Limited and praying for quashing the same as well as for a declaration that the transfer of 39 lakh shares of Larsen & Toubro Ltd. held by Unit Trust of India, Life Insurance Corporation of India, General Insurance Company and its subsidiaries to Trishna Investment & Leasing Ltd. through the instrumentality of BOB Fiscal Services Ltd. is arbitrary, illegal, mala fide and a fraud on the statutory powers of the respondents and is clearly ultra vires of Articles 14 and 39(b) and (c) of the Constitution on the allegations that in or around the middle of the year 1988 the respondents entered into a secret agreement by which a large chunk of the equity shares of Larsen & Toubro Ltd., the largest engineering company in India, would stand surreptitiously divested by the respondents in favour of the Ambani Group, the third largest monopoly house in India. This divestment was achieved not directly but, indirectly and with a motive to conceal the real nature of the deal by interpolating BOB Fiscal Services Ltd. (a wholly owned subsidiary of Bank of Baroda) as the conduit for the transfer of shares from the public financial institutions to the satellite companies of the Ambani Group.

2. The petitioners also alleged in the petition that pursuant to this secret agreement, the following events took place in quick succession

In or around August 1988, four satellite companies of Reliance Group, namely Skylab Detergents Limited, Oskar Chemicals Private Limited, Maxwell Dyes and Chemicals Private Limited and Pro -lab Synthetics Private Limited, gave a total deposit of Rs. 30 crores to an investment company associated with Ambanis who, in turn, deposited this amount with BOB Fiscal Services Ltd., a wholly owned subsidiary of Bank of Baroda, a nationalised bank.

BOB Fiscal Services Ltd., which had been formed only three months earlier acquired either immediately before the above deposit, or immediately subsequent thereto, 33 lakh equity shares of Larsen & Toubro from UTI, LIC, GIC and its subsidiaries. Later, in January, 1989 it acquired a further 6 lakh shares from the LIC.

Within weeks after the deposit by the four companies mentioned above, Trishna Investments and Leasing Limited, another satellite company of the Ambani Group, paid the requisite amounts for the acquisition of the said 33 lakh shares in Larsen & Toubro from BOB Fiscal Services Ltd. to the latter through a stock broking firm and immediately thereafter the money advanced by the above four companies was returned by BOB Fiscal Services Ltd. through the investment company associated with Ambanis, which was earlier used as a conduit for making the deposit from the four satellite companies of Reliance Group.

The deposit by the four companies was made immediately after the divestment of the shares by the respondents was okayed by the highest level in the Government and the deposit was returned immediately after the Ambani Group was able to divert moneys taken by them in the name of Reliance Petro-chemicals Ltd. by the issue of convertible debentures of the order of Rs. 594 crores.

The said 33 lakh shares were registered in the name of BOB Fiscal Services Ltd. in th