S.Balasubramanian, - (1.) THE Central Government has filed this petition under Sections 388B and 408 of the Companies Act, 1956 (the Act) in the matter of M/S Premier Automobiles Limited (the company). THE respondents have filed the instant application seeking for production of copies of the Inspection Report, relevant records containing the opinion formed by the Central Government within the meaning of Sub-section (1) of Section 388B of the Act etc.
(2.) Shri Ganesh, Sr. Advocate appearing for the respondents submitted that the entire petition is based on inspection of the books of accounts and other statutory records of the company carried out under Section 209A of the Act. Therefore, it is essential that the said inspection report is produced and filed in the proceedings. Further, in terms of Section 388B (1) of the Act, for initiating a proceeding under Section 388B, the Central Government has to form an opinion on one or more of the matters specified in Clauses (a) to (d) of Section 388B of the Act. In the petition, there is no averment that the Central Government has formed such an opinion. Therefore, it is essential to find out whether such an opinion was formed by the Central Government for the purpose of which the Central Government should be directed to file the relevant records. At the time of inspection, various statements were recorded by the Inspecting Officer and as such the Central Government should be directed to file those statements in the proceedings. Further, it is also stated in the petition that the Central Government has received a complaint in this regard from a shareholder, a copy of which should also be furnished to the respondents. Shri Sanjay Aggarwal, Advocate for the Central Government submitted: The Inspection Report under Section 209A of the Act is a privileged document and therefore privilege is claimed in terms of Section 123 of the Evidence Act. Further, the petition is not based only on the inspection report. Various irregularities observed during the inspection were pointed out to the company by a letter and the company has replied to the various irregularities. On the basis of the reply, the inspecting officer has come to certain conclusions which are not binding on the Central Government. Therefore, it is not necessary to furnish a copy of the inspection report to the respondents. As regards forming of opinion by the Central Government is concerned, the very fact that this petition has been filed, would indicate that the Central Government had formed an opinion in terms of Section 388B of the Act. Ultimately, it is for this Board to decide whether action in terms of Section 388B of the Act is warranted. This application filed by the respondents is nothing but a delay tactic and as such this application should be dismissed.
(3.) IN rejoinder, Shri Ganesh submitted: The Central Government cannot claim privilege in respect of the inspection report on the basis of which the petition has been filed. As a matter of fact, the inspection report is primary evidence and cannot be suppressed. IN terms of Section 74 of the Evidence Act, the inspection report is a public document and as such should be made available for inspection and for a copy thereof especially in the present case since the Government has relied on that report. IN S.P. Gupta v. President of INdia (AIR 1982 SC 149), the Constitutional Bench of the Supreme Court has elaborately dealt with Section 123 of the Evidence Act dealing with privileged document. IN paragraph 74 of that judgment, the court has held that to claim privilege, the sole and the only consideration must be whether the disclosure of the document would be detrimental to public interest in a particular case before the court. IN paragraph 69 of the judgment, the court has broadly indicated a class of documents which could be considered to be privileged documents and inspection report under Section 209 of the Act cannot be considered to fall within that class. Further, in terms of the observation of the court in paragraph 74 of the judgment, it is the Head of the Department who has to file an affidavit claiming privilege. IN the present case, there is no affidavit by the Head of the Department. Therefore, the claim for privilege should be rejected and a copy of the inspection report be made available to the respondents.;