JIYAJEERAO COTTON MILLS LTD Vs. COMPANY LAW BOARD
LAWS(MPH)-1969-1-13
HIGH COURT OF MADHYA PRADESH
Decided on January 16,1969

JIYAJEERAO COTTON MILLS LTD Appellant
VERSUS
COMPANY LAW BOARD Respondents

JUDGEMENT

P.V.DIXIT, J. - (1.) BY this application under Article 226 of the Constitution of India the petitioner, M/s Jiyajeerao Cotton Mills Ltd., Gwalior (hereinafter referred to as the Company), challenges the legality of an order made by the Company Law Board (hereinafter referred to as the Board) on 7th December 1967 under section 237 (b) of the Companies Act, 1956 (hereinafter referred to as the Act), directing that the affairs of the Company be investigated by the Inspectors appointed by the order and seeks a writ of certiorari for quashing that order.
(2.) THE petitioner Company was incorporated as a Public Limited Company under the provisions of the Gwalior Companies Act in the quondam Gwalior State with the object of carrying on the business of spinning, weaving, ginning, baling and pressing of cotton, yarn, hemp, jute and other fibrous material upon its incorporation it started a Textile Mill at Gwalior of which M/s Birla Brothers Ltd. were the Managing Agents. The present business of the Company consists; inter alia, of the manufacture and production of textiles at Gwalior in Madhya Pradesh and caustic soda and soda -ash at Porbunder in Gujarat. Since 1st July 1948 M/s Birla Brothers (Gwalior) Ltd., are the Managing Agents of the Company in place and in stead of M/s Birla Brothers Ltd. The Company claims that whereas its original authorized share capital was Rs. 3,50,000, its present authorized share capital is Rs. 8,25,00,000, its reserves assets and production capacity have also increased considerably since its incorporation and it has at present 59,204 spindles and 1711 looms besides modern and well -equipped dyeing, bleaching, printing and power generating plants. The petitioner further claims that it has also set up four ginning and pressing factories -one in the Punjab, two in Madhya Pradesh and one in Rajasthan and that it has also installed a Chemical Plant at Porbunder in Gujarat. According to the petitioner, the manner in which its Managing Agents have managed and conducted its business has been under the scrutiny and consideration of the Union of India and the Board from time to time and the Board duly accorded its approval for the re -appointment of M/s Birla Brothers (Gwalior) Ltd., as the Managing Agents even though the general policy of the Union of India and of the Board was not to reappoint the Managing Agents of textile mill companies; the last order reappointing M/s Birla Brothers (Gwalior) Ltd., as Managing Agents till 31st December 1969 was passed on 15th September 1966. The petitioner claims that the reappointment of M/s Birla Brothers (Gwalior) Ltd., as Managing Agents was done only after the respondents were fully satisfied that the petitioner's business was being managed, conducted and carried on in a proper and efficient manner and that it would not be against public policy or public interest to allow M/s Birla Brothers (Gwalior) Ltd., to continue to run the petitioner's business. After giving details of the report of the analysis conducted by the Research and Statistics Division of the Company Law Board and of the publications that appeared in the 'Economic Times' about its working on sound business and commercial principles, its business being managed and conducted honestly and efficiently and its steady progress, the petitioner Company proceeds to say that it has built up great credit, good will and reputation in the business world; that its manufacturing business is being carried on successfully, honestly and efficiently and that the persons connected with its affairs are persons of business reputation who have throughout been fully alive to the real interest of the Company as well as the interest of trade, industry and business in India.
(3.) ACCORDING to the petitioner, during and after the last General Elections a persistent propaganda was carried on by certain interested and politically motivated persons against the petitioner and a group described by the propagandists as "Birla Group of Textile Mills" and the petitioner and its Managing Agents were falsely and maliciously accused of indulging in monopolistic industrial activities and since then constant demands were being made by these persons to humiliate the petitioner Company and its Managing Agents on some excuse or the other. The petitioner has given a narration of the simultaneous raids that were conducted in various textile mills of "Birla Group" in India including the petitioner -Mills on 15th June 1967 by the Central Bureau of Investigation and the seizure of books, documents, papers etc., made in the raids and the proceedings that followed in this Court and in the High Court of Gujarat in which the legality of the raids and the seizures made therein was challenged. In Misc. Petition No. 415 of 1967 which was filed in this Court the order that was passed on 20th January 1968 was in the following terms: - "Learned counsel appearing for the parties agreed before us that an order on the lines passed by the Supreme Court in Shri S.K. Rattan vs. New Swadesh Mills and others, C.A. No. 1702 of 1967, should be passed in this case as a working arrangement and that as a consequence of this working arrangement, the grounds of attack raised in the petition in respect of the alleged contravention of section 165 of the Code of Criminal Procedure shall be deemed to have been concluded but the petitioner shall be at liberty to press the other grounds raised in the petition. We order accordingly and further direct, without prejudice to the rights and contentions of the petitioner regarding the validity of the investigation or otherwise and without prejudice to the rights of the respondents to approach the Court of the Additional District Magistrate, Gwalior, for such orders for production of documents etc. as they may be advised to take, and in supersession of the order made by this Court on 27th October 1967 with regard to the sealing of documents seized by the opponents from the petitioner, that - (1) All the documents papers, books and articles etc. seized by the respondent No.1 under the search warrant issued by respondent No.2 on 13th or 16th June 1967, from M/s Jiyajeerao Cotton Mills, Gwalior, shall be returned forthwith to the petitioner after they are initialed in the manner stated herein by the Additional District Magistrate. Gwalior or any other person authorized by him in this behalf. All the books, registered and files which are in a bound condition shall be initialed on the first and last pages by the learned Magistrate in such manner as may be deemed proper by him before they are returned to the petitioner, provided, however, that the Magistrate may initial every page of such documents as may be deemed proper by him at the request of the investigating officer and after hearing the petitioner. (2) Shri Makharia, the Secretary of the petitioner, through the petitioner's counsel undertakes to produce any documents and papers which the Magistrate may order the petitioner to produce. (3) The Magistrate will be at liberty to give such further directions as to the said documents so produced before him as he may deem fit. This arrangement will ensure for the duration of the investigation. The documents will thereafter be at the disposal of the Court in which criminal proceedings if any are initiated as a result of the investigation. If no proceedings for prosecution of the accused are initiated pursuant to the investigation on hand, the Additional District Magistrate will pass appropriate orders relating to the papers.";


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