BIFR did not have the power to restrain the company from changing its board of directors because its powers were limited to determining whether a company was sick and suggesting measures for its revival.

( 1 ) THE question involved in this writ petition is, whether the Board for Industrial and Financial Reconstruction constituted under section 4 of the Sick Industrial Companies (Special Provisions) Act, 1985 (hereinafter referred to as "the Act"), has the power to restrain the company from effecting any change in the composition of the board of directors including top managerial personnel pending decision on the question of rehabilitation of the company? The facts, in brief, are as follows :

( 2 ) THE petitioner is one of the promoters of the second respondent-company, namely, Delta Paper Mills Limited. The company was incorporated in the year 1975 as a public limited company under the Companies Act. Mr. Bh. Vijayakumar Raju, was the managing director from 1975 till 10/05/1985, and Mr. P. V. Narasimha Raju, was the managing director of the second respondent-company between May, 1985, and September, 1991. Mr. Bh. Vijayakumar Raju, became the managing director from 28/09/1991, and continued till his death on 20/11/1994. There was no managing director for the respondent-company on the date of filing of the writ petition. The total number of directors is eight out of which six were nominated by the financial institutions and Mr. P. V. Narasimha Raju, was appointed by the shareholders and Smt. Bh. K. K. Kasturi, wife of the late Sri Vijayakumar Raju, was appointed on 27/11/1994, by the board of directors as an additional director.

( 3 ) THE second respondent-company incurred losses and after the death of Mr. Vijayakumar Raju, there was total chaos in the management of the company which resulted in mismanagement and also pilferage of funds. On account of the accumulated losses of the company, the company has been declared a sick industrial company by the Board for industrial and Financial Reconstruction under section 15 of the Act. The first respondent initiated further proceedings under section 17 (2) of the Act. On 30/10/1990, the first respondent directed the second respondent to make its net worth positive under section 17 (2) of the Act. However, the second respondent could not improve its position even after following the condition laid down by the first respondent and consequently the matter of rehabilitating the second respondent is again before the first respondent. Since the package paid under section 17 (2) did not work out the first respondent has decided to take action under section 17 (3) of the Act and directed the operating agency to prepare the scheme of rehabilitation by its order dated 23/02/1995. Since the second respondent was functioning without any managing director a section of the shareholders representing more than 10 per cent. of the paid-up capital of the company have lodged a requisition on 1/02/1995, before the second respondent requesting to convene an extraordinary general body meeting of the shareholders for the purpose of appointment of Sri P. V. Narasimha Raju, as managing director of the company. On receiving the requisition the second respondent-company had issued a notice on 15/02/1995, convening the extraordinary general body meeting on 16/03/1995. The notice was sent to all the shareholders of the company. However, some of the directors filed civil suits in O. S. Nos. 56 and 62 of 1995, before the Principal District Munsiff, Bhimavaram, seeking injunction restraining the holding of the meeting. Against the orders of the Principal District Munsiff, C. R. P. Nos. 772 and 773 of 1995, were file under article 227 of the Constitution of India and the suits were stayed. However, the first respondent on 14/03/1995, directed the company secretary of the second respondent not to conduct the meeting on 16/03/1995, and threatened the directors with the imprisonment if its orders are violated. Therefore, on 16/03/1995, the meeting was not held. The petitioner and the other shareholders came to know of the order passed by the first respondent on 16/03/1995 at 10. 45 a. m. through the notic