Sarkaria, J. (for himself and Desai, J.) - (1.) THE Judgments of the Court were delivered by-
(2.) THESE appeals arise out of ajudgment, dated 1/05/1979, of the High Court of Delhi, in the followingcircumstances: Appellant 1 in Civil 1629 of 1979 is Swadeshi Cotton MillsGo. Ltd. (hereinafter referred to as 'the Company'), It was incorporatedas a private company with an authorised capital of Rs. 30 lakhs in .1921 bythe Horseman family by converting their partnership business into a PrivateJoint Stock Company. Its capital was raised in 1923 to Rs. 32 lakhs andthereafter in 1945 to Rs. 52.50 lakhs by issue of bonus shares. In 1946,the Jaipuria family acquired substantial holding in the Company. Jaipuriafamily is the present management. By issue of further bonus in 1946, thecapital of the Company was increased to Rs. 122-50 lakhs. In 1948, thepaid-up capital of the Company was raised to Rs. 210 lakhs by the issue offurther bonus shares. The subscribed and issued capital consisting mainly ofthe bonus shares has since remained constant at Rs. 210 lakhs. In the year 1946, the Company had only one undertaking, a TextileUnit at Kanpur, known as "The Swadeshi Cotton Mills, Kanpur".Between 1956 and 1973, the Company set up and/or acquired five furtherTextile Units in Pondicherry, Naini, Udaipur, Maunath Bhanjan andRae Bareilly. Each of these six units or undertakings of the Company wasseparately registered in accordance with the provisions of S. 10 of theIndustries (Development and Regulation) Act, 1951 (hereinafter called 'theIDR Act').
(3.) IN addition to these six industrial undertakings, the Company (it isclaimed) had other distinct businesses and assets. It holds inter alia 97 percent shares in the subsidiary, Swadeshi Mining and Manufacturing CompanyLtd., which owns two sugar mills. The Company claims, it has substantialincome from other businesses and activities including investments in itssubsidiary and in other shares and securities which include substantial holdingof Rs. 10,00,000.00 Equity Shares of Rs. 10.00 each in Swadeshi Polytex Ltd.,representing 3-0 per dent of the total equity capital value of Swadeshi PolytexLtd., the intrinsic value whereof exceeds Rs. 5.00 crores. The Company made considerable progress during the years 1957 to1973. The reserves and surplus of the Company increased from Rs. 2.3crores in 1957 to Rs. 4-3 crores in 1973-74, but declined to Rs. 2-8 croresin 1976-77. The fixed assets of the Company increased from 5.8 crores in1957 to 19 crores in 1973-74, but declined to Rs. 18 crores, registering amarginal decrease of Rs. 1 crore in 1976-77.;