RAJA NARAYANLAL BANSILAL Vs. MANECK PHIROZ MISTRY
LAWS(SC)-1960-8-22
SUPREME COURT OF INDIA (FROM: BOMBAY)
Decided on August 31,1960

RAJA NARAYANLAL BANSILAL Appellant
VERSUS
MANECK PHIROZ MISTRY Respondents





Cited Judgements :-

RAJAH VELUGOTI KUMARA KRISHNA YACHENDRA VARU VS. RAJAH VELUGOTI SARVAGNA KUMARA KRISHNA YACHENDRA VARU [LAWS(SC)-1969-10-27] [REFERRED TO]
BARIUM CHEMICALS LIMITED VS. COMPANY LAW BOARD [LAWS(DLH)-1965-10-13] [REFERRED .14.]
RAJ NATH VS. HONBLE JUSTICE AVADH BEHARI [LAWS(DLH)-1974-8-3] [REFERRED TO]
KRISHNA TILES AND POTTERIES PRIVATE LIMITED VS. COMPANY LAW BOARD [LAWS(DLH)-1978-11-21] [REFERRED]
SWAMI DHIRENDRA BRAHMACHARI VS. UNION OF INDIA [LAWS(DLH)-1979-1-16] [REFERRED TO]
KAMALASHANKER BHULESHANKER DAVE VS. STATE OF GUJARAT [LAWS(GJH)-1961-9-5] [REFERRED TO]
UMA SHANKAR VISHWAKARMA VS. GEETA DEVI [LAWS(ALL)-1983-8-40] [REFERTRED TO 2.]
ANDHRA PRADESH STATE ROAD TRANSPORT CORPORATION VS. GOVERNMENT OF INDIA [LAWS(APH)-1991-3-32] [REFERRED TO]
NEW CENTRAL JUTE MILLS CO LTD VS. DEPUTY SECRETARY MINISTRY OF DEFENCE [LAWS(CAL)-1965-8-12] [REFERRED TO]
SAHU JAIN LTD VS. DEPUTY SECRETARY MINISTRY OF FINANCE [LAWS(CAL)-1965-8-23] [REFERRED TO]
ASHOKA MARKETING LTD VS. UNION OF INDIA [LAWS(CAL)-1965-8-10] [REFERRED TO]
CHITRADURGA DIST CO OP CENTRAL BANK LTD VS. STATE OF MYSORE [LAWS(KAR)-1969-12-16] [REFERRED TO]
DEPUTY SECRETARY MINISTRY OF FINANCE DEPT OF REVENUE AND COMPANY LAW VS. SAHU JAIN LTD [LAWS(CAL)-1969-2-24] [REFERRED TO]
STATE OF MADHYA PRADESH VS. RAMCHARAN [LAWS(MPH)-1976-10-3] [REFERRED TO]
PALAI CENTRAL BANK LTD VS. STATE [LAWS(KER)-1961-12-10] [REFERRED TO]
TITAGARH PAPER MILLS CO LTD VS. UNION OF INDIA [LAWS(CAL)-1984-3-46] [REFERRED TO]
PUBLIC PROSECUTOR GOVERNMENT OF PONDICHERRY VS. ABDUL AZIZ KHAN [LAWS(MAD)-1969-4-17] [REFERRED TO]
CEMENT DISTRIBUTORS PRIVATE LIMITED VS. INSPECTING ASSISTANT COMMISSIONER [LAWS(MAD)-1971-4-15] [REFERRED TO]
SACHINDRA KR BOSE VS. STATE [LAWS(CAL)-1987-3-5] [REFERRED TO]
COAL MINES OFFICERS ASSOCIATION OF INDIA VS. UNION OF INDIA [LAWS(CAL)-1995-3-11] [REFERRED TO]
LAXMAN PADMA BHAGAL VS. STATE OF MAHARASHTRA [LAWS(BOM)-1964-12-5] [REFERRED TO]
PUKHRAJ PANNALAL SHAH VS. K K GANGULY [LAWS(BOM)-1967-11-4] [REFERRED TO]
K JOSEPH AUGUSTHI VS. OFFICIAL LIQUIDATOR PALAI CENTRAL BANK LTD [LAWS(SC)-1964-3-49] [REFERRED TO]
SELVI VS. STATE OF KARNATAKA [LAWS(SC)-2010-5-22] [REFERRED TO]
DIRECTORATE OF ENFORCEMENT VS. DEEPAK MAHAJAN [LAWS(SC)-1994-1-78] [DISTINGUISHED]
KARTAR SINGH KRIPA SHANKAR RAI VS. STATE OF PUNJAB [LAWS(SC)-1994-1-109] [REFERRED TO]
RAMANLALBHOGILAL SHAH VS. D K GUHA [LAWS(SC)-1973-1-29] [REFERRED]
I K JOSEPH AUGUSTHI GEORGE THOMAS KOTTUKAPALLY K GEORGE JOSEPH VS. M A NARAYANAN:M A NARAYANAN:M A NARAYANAN [LAWS(SC)-1964-3-30] [RELIED ON]
BARIUM CHEMICALS LIMITED VS. COMPANY LAW BOARD [LAWS(SC)-1966-5-10] [REFERRED]
NANDINISATPATHY VS. P L DANI [LAWS(SC)-1978-4-11] [REFERRED TO]
BALKISHAN A DEVIDAYAL STATE OF MADHYA PRADESH VS. STATE OF MAHARASHTRA:HARI [LAWS(SC)-1980-7-20] [RELIED ON]
G SEKAR VS. GEETHA [LAWS(SC)-2009-4-159] [REFERRED TO]
BALASAHEB ALIAS RAMESH LAXMAN DESHMUKH VS. STATE OF MAHARASHTRA [LAWS(SC)-2010-12-11] [REFERRED TO]
P N MISHRA VS. STATE OF U P [LAWS(ALL)-2000-5-124] [REFERRED TO]
PEELA POTHI NAIDU VS. STATE OF ANDHRA PRADESH [LAWS(APH)-1998-6-40] [REFERRED TO]
UNITED OIL MILLS VS. COLLECTOR OF CUSTOMS AND CENTRAL EXCISE COCHIN [LAWS(KER)-1962-2-32] [REFERRED TO]
K JOSEPH AUGUSTI VS. M A NARAYANAN OFFICIAL LIQUIDATOR THE PALAI CENTRAL BANK [LAWS(KER)-1962-7-23] [REFERRED TO]
BAIDYANATH BASAK VS. UNION OF INDIA [LAWS(CAL)-1983-6-8] [REFERRED TO]
BHASKAR MONDAL VS. UCO BANK [LAWS(CAL)-2002-4-35] [REFERRED TO]
DESIGN AUTO SYSTEM LTD VS. UNION OF INDIA [LAWS(MPH)-2005-2-8] [REFERRED TO]
ASHOK KUMAR TODI VS. KISHWAR JAHAN [LAWS(CAL)-2010-5-29] [REFERRED TO]
CENTRAL BUREAU OF INVESTIGATION VS. MULANGI KRISHNASWAMY ASHOK KUMAR [LAWS(BOM)-1999-2-26] [REFERRED TO]
INTELLIGENCE OFFICER DRI VS. AMJAD HUSEEIN KHAN [LAWS(BOM)-2002-2-59] [REFERRED TO]
ADANI EXPORTS LTD VS. MAHARASHTRA STATE ELECTRICITY BOARD [LAWS(BOM)-2003-1-11] [REFERRED TO]
INTELLIGENCE OFFICER DIRECTORATE OF REVENUE INTELLIGENCE DRI VS. AMJAD HUSEEIN KHAN [LAWS(BOM)-2003-2-21] [REFERRED TO]
RADHEY SHYAM VS. STATE OF RAJASTHAN [LAWS(RAJ)-1983-8-41] [REFERRED TO]
ROJO GEORGE VS. THE DY. SUPERINTENDENT POLICE [LAWS(KER)-2006-3-98] [REFERRED TO]
MALLALA SURYANARAYANA VS. VIJAYA COMMERCIAL BANK LIMITED [LAWS(SC)-1961-10-23] [REFERRED TO]
BHAVIN IMPEX PVT. LTD VS. STATE OF GUJARAT [LAWS(GJH)-2009-10-181] [REFERRED TO]
UNIVERSAL MUSIC INDIA LTD. AND ANR. VS. UNION OF INDIA (UOI) [LAWS(DLH)-2006-9-233] [REFERRED TO]
SHONKH TECHNOLOGIES LIMITED VS. UNION OF INDIA (UOI) AND ORS. [LAWS(DLH)-2006-12-177] [REFERRED TO]
HYUNDAI MOTOR INDIA LIMITED VS. COMPETITION COMMISSION OF INDIA [LAWS(MAD)-2015-2-43] [REFERRED TO]
SMT. NANDINI SATPATHY VS. P.L. DANI AND ANR. [LAWS(ORI)-1978-1-16] [REFERRED TO]
IN RE: PALAI CENTRAL BANK LTD. VS. STATE [LAWS(KER)-1962-12-39] [REFERRED TO]
NATIONAL FERTILISERS LTD. AND ORS. VS. ENFORCEMENT DIRECTORATE [LAWS(DLH)-2016-3-22] [REFERRED TO]
N. SRINIVASA IYER VS. THE REVENUE DIVISIONAL OFFICER AND ORS. [LAWS(MAD)-1965-10-33] [REFERRED TO]
SMT. BINAPANI NAYAK VS. PRUTHIRAJ PARIDA [LAWS(ORI)-2016-7-14] [REFERRED TO]
NISSAN MOTORS INDIA PRIVATE LIMITED (NMIPL) THROUGH ITS MANAGER (LEGAL), T. NAGAR, CHENNAI 600017. VS. COMPETITION COMMISSION OF INDIA (CCI) NEW DELHI 110001 AND ORS. [LAWS(MAD)-2014-6-438] [REFERRED]
P J JOSEPH VS. STATE OF KERALA [LAWS(KER)-2017-7-189] [REFERRED TO]
COURT ON ITS OWN MOTION VS. STATE OF HIMACHAL PRADESH & OTHERS [LAWS(HPH)-2018-9-106] [REFERRED TO]
FLIPKART INTERNET PVT. LTD. VS. COMPETITION COMMISSION OF INDIA [LAWS(KAR)-2021-7-126] [REFERRED TO]


JUDGEMENT

Gajendragadkar, J. - (1.)The appellant Raja Narayanlal Bansilal of Bombay is the Managing Agent of a Limited Company named the Harinagar Sugar Mills Limited. By virtue of the power conferred on him by S. 137 of the Indian Companies Act, 1913 (VII of 1913) the Registrar wrote to the mills on November 15, 1954, that it had been represented to him under S. 137 (6) that the business of the company was carried on in fraud, and so he called upon the company to furnish the information which he required as set out in a part of his letter (Ex. A). On April 15, 1955, the Registrar made a report (Ex. AA) to the Central Government under S. 137 (5) of the said Act. This report showed that according to the Registrar the affairs of the company were carried on in fraud of contributories and they disclosed an unsatisfactory state of affairs. The report pointed out that the appellant was the Managing Agent of the company as well as its promoter, and that it was suspected that under a fictious name of Bansilal Unchant Account the company was advancing money to the several firms owned by the appellant which were ostensibly purchased from the company's funds. The report further stated that between the years ending in September 1942 and 1951 about Rs. 19,200 were paid for Harpur Farm and Rs. 39,300 for Bhavanipur Farm, and accounts disclosed that the Unchant Account was chiefly operated upon for purchasing such lands out of the funds of the company though the purchase in fact was for and on behalf of the appellant. The Registrar also added that he had reason to believe that the Managing Agent was utilising the property of the company in some cases for his personal gain, and concluded that, in his opinion, a case had been made out for an investigation under S. 138.
(2.)On receiving this report, on November 1, 1955, the Central Government passed an order under S. 138 (4) of the said Act (Ex. B) appointing the first respondent Meneck P. Mistry, who is a Charactered Accountant, as an inspector to investigate the affairs of the company from the date of its incorporation. The said inspector was asked to point out all irregularities and contraventions of the provisions of the said Act or any other law and make a full report as indicated in a communication which was separately sent to him. This separate communication (Ex. BB) prescribes the mode of enquiry which should be adopted by insepctors. It requires that while investigating the affairs of companies the inspectors should bear in mind that for a successful prosecution the evidence in support of a charge must be clear, tangible and cogent, and that their reports should specify with reference to the evidence collected during the investigations, the points specified under paragraph 2 (a) to (e). In the course of their investigation the inspectors are asked to make use of the powers available to them under S. 140 of the said Act including the right to examine a person on oath. The investigation should be conducted in private and the inspectors are not entitled to make public the information received by them during the course of the investigation.
(3.)Pursuant to the powers conferred on him by the said order respondent 1 wrote to the appellant intimating to him that he would examine him on oath in relation to the business of the company under S. 140 (2) of the said Act (Ex. C). Meanwhile on April 1, 1956, the Companies Act of 1913 (VII of 1913) was repealed by the Companies Act of 1956 (I of 1956). For the sake of convenience we would hereafter refer to the repealed Act as the old Act and the Act which came into force on April 1, 1956, as the new Act. On July 26, 1956, the Central Government purported to exercise its power under S. 239 (2) of the new Act and accorded approval to respondent 1 exercising his powers of investigating into and reporting on the affairs of the appellant including his personal books of accounts as well as the affairs of the three concerns specified in the order. These three concerns are M/s. Narayanlal Bansillal, who are the Managing Agents of Harinagar Sugar Mills, the Shangrila Food Products Limited and Harinagar Cane Farm. It appears that the appellant is the proprietor of the firm of Narayanlal Bansilal. After this order was passed respondent 1 served upon the appellant the four impugned notices (Ex. E Collectively) on May 9, 1957, May 16, 1957, May 29, 1957, and June 29, 1957 respectively. These notices are substantially identical in terms, and so it would be sufficient for our purpose to set out the purport of one of them. The first notice called upon the appellant to attend the office of respondent 1 on the date and at the time specified for the purpose of being examined on oath in relation to the affairs of the company, and to produce before respondent 1 all the books of accounts and papers relating to the said company as mentioned in the notice. The appellant was further told that in default of compliance with the requisition aforesaid necessary legal steps would be taken without further reference to him. The notice contains a list of twelve items describing the several documents which the appellant was required to produce before respondent 1.
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