( 1 ) M/s. Sayaji Mills Limited respondent no. 3 (hereinafter referred to as the company) registered under the Companies Act was incorporated in the year 1941. It is engaged in the manufacture of Starches and its derivatives, Liquid Glucose, Dextrose, Sorbitol and other by-products. Since its inception the company has been selling its products through a sole selling agent M/s. C. Doctor and Company, a private limited company in Starch business since 1914. On the amendment of the Companies Act, 1956 by the Amending Act of 1974 it is necessary to seek approval of the Central Government for appointment of sole selling agents. Respondent No. 3 applied and obtained approval of the Central Government to the appointment of M/s. C. Doctor and Company as its sole selling agents for the periods 1972- 77,1977-82 and 1982-87. M/s. C. Doctor and Company was a family concern of M/s. Sayaji Mills Limited in as much as the directors of M/s. C. Doctor and Company were closely related to the Chairman of respondent No. 3 company. In January, 1982, a family arrangement was arrived at by way of a memorandum of understanding between two sons of the family of Shri V. L Mehta, who was the then Chairman-cum-Managing Director of the company. Shri B. V. Mehta and his branch got the management of respondent No. 3 company and other assets and Shri S. V. Mehta and his branch got other companies of the family including M/s. C. Doctor and Company. M/s. C. Doctor and Company had two separate divisions namely;

(1) Starch Division; and (2) Engineering Division. Since M/s. C. Doctor and Company had vested with Shri S. V. Mehta and his branch it was decided to separate the Starch Division and was agreed to be taken over by a new company namely M/s. L G. and Doctor Associates Private Limited, respondent No. 4 herein. By a separate agreement, the entire staff of Starch Division of M/s. C. Doctor and Company was to be taken over by M/s. L. G. and Doctor Associates Pvt. Ltd. Since the sole selling agency agreement with M/s. C. Doctor and Company for the period 1982- 87 was approved by the Company Law Board in the year 1982 in view of the change in the constitution of M/s. C. Doctor and Company and incorporation of M/s. L. G. and Doctor Associates Pvt. Ltd. , respondent No. 3 company proposed to appoint M/s. L. G. and Doctor Associates Private Limited, respondent No. 4-as its sole selling agents. Respondent No. 3 company at its Annual General Meeting on 29th Sept. , 1983 obtained consent of the shareholders to that effect by a special resolution. Respondent No. 3 company applied to the Central Government under S. 294-AA of the Companies Act, 1956 (hereinafter referred to as the Act) for grant of approval for appointment of respondent No. 4 as its sole selling agent w. e. f. 16th Oct. , 1983. One Shri P. K. Vyas objected to the appointment of respondent No. 4 as sole selling agent of respondent No. 3 company before the Company Law Board. The Company Law Board after giving a hearing to the company, M/s. L. G. and Doctor Associates Pvt. Ltd. and Shri P. K. Vyas rejected the application for approval by its order dated 31st May, 1984. The relevant portion of the order reads thus : (a) The Sole Selling Agency company has been incorporated very recently on 26-8-1982 and its entire share capital is held by Shri B. V. Mehta, his wife, son, daughter and HUF Shri B. V. Mehta is the Chairman of the Sole Selling Agency Company. The Sole Selling Agency Company has an authorised share capital of Rs. 5 lakhs and a paid up share capital of Rs. 4 lakhs. The entire share capital has been invested (Rs. 3,89,749) by it in the shares of the applicant company viz. Sayaji Mills Limited. The Sole Selling Agency Company has, thus, no financial resources for carrying on its business of the nature contemplated. The Sole Selling Agent also does not have substantial infrastructural facilities of their own, inasmuch as they are substantially using the facilities of premises, tel