1. In this order I am considering Company Petition No. 6 of 2003 filed by Union of India, Department of Company Affairs (now Ministry of Corporate Affairs) (the Petitioner) against M/s. Information Technologies (India) Ltd. and Ors. (R-1 Company and other respondents) under Sections 237(b) of the Companies Act, 1956 (hereinafter referred to as 'the Act').

2. M/s. Information Technologies (India) Ltd. was incorporated on 20^th September, 1976 as Usha Services and Consultants Ltd, a wholly owned subsidiary of M/s Usha (India) Ltd, (formerly known as M/s Usha Rectifier Corp. (I) Ltd)., having its registered office at 94, Mahatma Gandhi Road, Lucknow, U.P. The R-1 Company changed its name from Usha Services and Consultant Ltd. to its present name, Information Technologies (India) Ltd in December 1993. The R-1 Company is presently engaged in the business of software development in the areas of project and services, products, portals and education.

3. The CLB had ordered an investigation in C.P. No. 6 of 2003 by its order dated 14^th Sept, 2005 as under:

"Since this Board has already ordered investigation into the affairs of M/s. Usha (India) Ltd. and since the present respondent company is a subsidiary of M/s. Usha India, no separate order is necessary as investigation of holding company, would include investigation of subsidiary also.

Accordingly, the petition is disposed of".

The Respondent preferred an Appeal u/s 10-F of the Act before the Hon'ble High Court of Allahabad who vide its Order dated 22^nd Feb, 2006 remanded the case back to the CLB for deciding the petition u/s 237(b) of the Companies Act, after considering the objections raised by the Respondent before the CLB as under:

"In these circumstances, the impugned order is to be quashed and the petition is to be remanded to the Company Law Board for deciding the petition under section 237(b) of the Companies Act afresh after taking into consideration the objections raised by the appellant before the Company Law Board and after deciding as to whether the investigation is to be made as a subsidiary company of M/s. Usha India .Ltd. or there is a case for making investigation under Section 237(b) separately as an independent company. The learned counsel for the respondents has no objection if, the matter is remanded to the Company Law Board for deciding the petition under Section 237(b) of the Companies Act moved by the respondents against the appellant after taking into consideration the objections raised by the appellant before Company Law Board.

In view of the above, the appeal is allowed. The impugned order dated 14.09.2005 passed in Company Petition No. 6 of 2003 is quashed and the matter is remanded to the Company Law Board for deciding the petition under Section 237(b) of the Companies Act afresh after considering the objections raised by the appellant before the Company Law Board."

4. Shri Sanjay Shorey representing the petitioner pointed out that the SEBI had conducted investigation into the manipulation in the scrip of the respondent Company and had made following observations:-

(a) That the Balance Sheets were not prepared in accordance with the provisions of Section 211 read with Schedule VI of the Act.

(b)That the Auditors i.e. M/s Bansal and Company, Cnartered Accountant has not qualified their report.

(c)That the respondent company valued the human resources from the year ending 31.03.1999 by considering the present value of the future earning of the employees up to their retirement age and has accounted the Human Resources Value as an "Intangible Assets" in its books thereby creating huge reserves to the extent of Rs. 458 Crores under the heading "Reserves 7 Surplus". This is fictitious and bogus entry made in the books of the respondent company in order to boost the net worth of the shares and to project a rosy picture. The provisions of Section 211 read with Schedule VI (Part 1) of the Act does not provide for the intangible such as human resources.

(d)That Respondent