SALIL K. ROY CHOWDHURY, J.

( 1 ) THIS is an application under Section 633 (2) of the Companies Act, 1956, for an order excusing and relieving the petitioner of the negligence, defaults and non-compliance with the directions contained in Section 58a of the Companies Act, 1956, and Companies (Acceptance of Deposits) Rules, 1975, and from all liabilities thereunder and for consequential reliefs.

( 2 ) THE petitioners presented this application on the 26th of July, 1977. On that date an order for maintaining status quo in the meantime was passed and subsequently directions for filing affidavits were given which were extended from time to time and, thereafter, the matter was adjourned from time to time and ultimately, appeared in the list for hearing.

( 3 ) THE petitioners are the directors of the company, East India Hotels Ltd. , which was incorporated as a public limited company and having its registered office at No. 4, Mango Lane, Calcutta. The authorised capital of the company is Rs. 10 crores, the issued capital is Rs. 8,65,79,340 and the subscribed capital is Rs. 4,57,429. 23 in cumulative preference shares, redeemable cumulative preference shares, ' A ' redeemable cumulative preference shares and equity shares as stated in para. 4 of the petition. The objects of the company, as from the name, it appears are, inter alia, to own and operate hotels and provide services in the field of hotel management. The company owns and operates at present a chain of luxury hotels throughout India and also in foreign countries and amongst those are Oberoi Sheraton in Bombay, Oberoi Inter Continental in New Delhi, Oberoi Grand in Calcutta and Oberoi Palace in Sri Nagar. It is stated that these hotels have not only helped in providing the base for the growth of tourism industry in the country and in creating a valuable source of earning foreign exchange but these have also carved out in the realm of international hotel and tourism industry a special place for the country, as possessing technical know-how and expertise in the field of hotel management. It is also stated that the company entered into foreign collaboration with the world famous international group of hotels for its hotel in New Delhi and with another world famous group of hotels, being the Sheraton group of hotels, for its Bombay unit not so much to supplement its own expertise in the field of hotel management but to obtain funds in the foreign currencies which were critically needed for the import of capital goods for the construction of those two hotels and also to avail of global reservation and membership facilities offered by those two groups for attracting greater number of tourists in India. It is alleged that in order to provide for funds for its said five star deluxe luxury hotels it had to project its funds based on factors of costs then applicable. It also projected for finance to the extent of about Rs. 6,50,00,000 and accepted a contribution of Rs. 2 crores from the shareholders through fresh capital and from U. S. A. I. D. (Long Term Loan) of Rs. 4,50,00,000. The cost ultimately swelled to Rs. 12 crores on account of diverse factors including increase in number of rooms, change in design, increase in the costs of construction and material, labour, equipment and furniture and fittings as there was delay in receiving the funds and in the meantime the company had to obtain short-term deposits. The first deposit of about Rs. 31,00,000 were accepted by the company in 1965 from the public to meet the overrun costs of Oberoi Inter-Continental. In the years 1966-67 in order to meet the costs and expenses of renovation of the company's Oberoi Grand Hotel at Calcutta and other hotels, the company had also to accept term deposits from the public. Even after the company's hotels went into operation for the first four years the company suffered loss which in the aggregate was Rs. 256. 81-lakhs. In the result, the public deposit position as on 31st of March, 1976, stood at Rs

Click Here to Read the rest of this document