( 1 ) THE applicants in these two applications are the ex-Directors/directors of Bahuma Polytex Ltd. , a Company incorporated under the Companies Act, 1956 and have taken out these two judges summons separately seeking declaration from this Court that the applicants have acted honestly and reasonably and having regard to all the circumstances of the case, the applicants ought to be excused and be relieved from the liability arising out of the notices dated 21. 06. 2002 issued by the Registrar of companies, the opponent herein.

( 2 ) THE applicants have filed affidavits in support of the respective Judges Summons taken out by them in these two applications. Heard Mr. S. N. Soparkar, learned Senior counsel appearing with learned advocate mr. Manish R. Bhatt for the applicants, Mr. Kamal B. Trivedi, learned Additional Advocate General and Senior counsel appearing initially with Ms. P. J. Davawala and thereafter Mr. J. M. Malkan, learned Standing Counsel appearing for the Opponent.

( 3 ) IT is the case of the applicants that Bahuma polytex Ltd. was incorporated and registered on 12. 11. 1986 as a Private Limited Company. Consequent to the change in the status as a public limited company, a fresh Certificate of Incorporation was granted by the registrar of Companies, Gujarat on 23. 11. 1990. The company had issued a prospectus dated 06. 05. 1992 for the public issue of 22 Lacs Equity Shares of Rs. 10 each at par aggregating to Rs. 220 Lacs. The applicants were invited to become Directors of the Company and signatory to the prospectus.

( 4 ) IT is also the case of the applicants that the applicants have received notices dated 21. 06. 2002 issued by the opponent alleging that the Company had come out with the public issue of 22 Lacs Equity Shares of Rs. 10 vide prospectus dated 08. 05. 1992 and that various statements / forecasts were made in the prospectus which have not been implemented. It is also alleged in the said notices that the said statements made in the prospectus were false, deceptive and misleading and, therefore, the said show-cause notices were issued calling upon the applicants and other Directors to explain within seven days as to why penal action under sections 63, 68 and 628 of the Act should not be taken against them.

( 5 ) THE applicants vide their letter dated 02. 07. 2002 gave a detailed reply to the said notices denying the allegations and explaining that the Company has fully implemented the project as mentioned in the prospectus. It was also stated that IFCI has issued a Project completion Certificate and that the final disbursement of the loan was made only after the project was completed. Emphasising on the sales aspect, it was submitted by the company that the Company has achieved what was projected in the prospectus and sometimes it even exceeded the projections so far as sales are concerned. It has also been recorded by the Company that after the project was completed, it was decided to convert one of the plants into a 100% Export Oriented Unit since the company was gearing itself to enter export market in a big way. It was also stated that all the export obligations of the eou were completed as planned. It was, therefore, requested that the Registrar of Companies should not take any penal action under Sections 63, 68 and 628 of the act.

( 6 ) DESPITE the aforesaid reply, the applicants were apprehending penal action to be taken against them and hence, they preferred Company Applications No. 170 of 2002 and 213 of 2002 before this Court under the provisions of Section 633 (2) of the Act. The said two applications came to be disposed off by this Court vide order dated 26. 12. 2002 whereby the applicants were permitted to file additional submissions and the registrar of Companies was directed to consider and pass an order on the same so as to take a view as to whether it was a fit case for justifying dropping of proposed prosecution proceedings. It was also stated in the said order that if th