( 1 ) BY this order I will dispose of petitions Nos. C. P. 211/90. and C. P. 13/91. This is a petition filed on behalf of M/s Ashok Bhatia, Samir Ghosh, Arup Kumar Banerji, Nirmal Kumar Ghoshal, Surakashit Kumar Mittal, Yogesh Chandra Deveshwar. Mrs. Nandita Sen. Jnanendra Nath Banerji and M/s Pinnacle Investment Ltd. against the Registrar of Companies, Delhi and Haryana and the Registrar of Companies, West Bengal under Section 633 (2) of the Companies Act.

( 2 ) THE petitioner No. 9 is an existing Company within the meaning of the Companies Act, 1956 and is carrying on the business of investment, financing and investment financing company etc. One of the main objects of the said company is financing of industrial enterprises and investment in shares of the company.

( 3 ) THE contention of the company is that Section 370 of the Companies Act, 1956, which stipulates limits up to which loan can be granted by a body corporate to other corporate bodies had no application to intercorporate deposits. The contention of the petitioner is that though transactions in question amounted to deposits, the company through a bonafide mistake inadvertently often described the said deposit transactions as loans and this according to them was done primarily to prepare the balance sheet in accordance with schedule-VI of the Act which did not have any heading titled "deposits".

( 4 ) THE petitioners further contended that Section 370 (2) (a) (v) of the Companies Act excludes loans made by the companies established with the object of financing of industrial enterprises from the scope and operation of the Section 370 of the Act. Since one of the main objects of the petitioner company was financing including Financing of industrial enterprises, they were of the bonafide view that the said Section had no application to the petitioner company. The petitioners had also obtained legal opinion to the same effect.

( 5 ) HOWEVER, the Act underwent certain amendments by virtue of the companies (Amendment) Act 1988 and the said amendment Act also brought about certain amendments to Section 370 of the said Companies Act, 1956. This amendment came into force on 17th April, 1989. On such amendment coming into force the Company again took legal opinion about the availability of exemption to the Company under Section 370 (2) (a) (v ). The Compnay was advised that the said exemption continued to be available to it under the aforesaid provisions, even after amendment of Section 370 of the Companies Act.

( 6 ) THE books of accounts of the petitioner company were being kept at Virginia House, 37 Chowringhee, Calcutta which was the Registered Office of the holding company, pursuant to a Board Resolution dated 26th June, 1983 under Section 209 of the said Act. The authorities under the companies act, in this case the Regional Director, Eastern Region, had an inspection of the books and records of the company carried out under the provisions of Section 209 A of the Act. Following such inspection, the Regional Director, Company Law Board, Calcutta issued letter, which was served on all the Directors including the petitioners I to 7 and the Secretary of the Company the petitioner No. 8 and another Director, namely, Mr. F. R. Vevaina who is the petitioner in C. P. No. 12/91, wherein contravention of Section 370 on the part of the company was complained of for the years ended March 31, 1988, March 31 1989 and March 31, 1990. The said letter was replied to by the company. The explaination of the company did not satisfy the authorities and it resulted in, inter-alia, issuance of another letter from the authorities dated 2nd July, 1990. The said letter was replied to by the Company in detail setting out therein its contentions. One of the contentions raised by the Company was that even after the amendment of the Act. in 1988, the exemption under Sections 370 (2) (a) (v) and Section 370 (b) (v) continues to remain available to the company and it was contended by t