- (1.) These six several appeals are directed against a common judgment and order pronounced on 29th April 1957, by a Division Bench of the Bombay High Court in three several Miscellaneous Applications under Art. 226 of the Constitution, namely, No. 48 of 1957 filed by Shri Ram Krishna Dalmia (the appellant in Civil Appeal No. 455 of 1957), No. 49 of 1957 by Shri Shriyans Prasad Jain and Shri Sital Prasad Jain (the appellant in Civil Appeal No. 456 of 1957) and No. 50 of 1957 by Shri Jai Dayal Dalmia and Shri Shanti Prasad Jain (the appellants in Civil Appeal No. 457 of 1957). By those Miscellaneous Applications the petitioners therein prayed for an appropriate direction or order under Art. 226 for quashing and setting aside notification No. S. R. O. 2993 dated 11th December 1956, issued by the Union of India in exercise of powers conferred on it by S. 3 of the Commissions of Enquiry Act (LX of 1952) and for other reliefs. Rules were issued and the Union of India appeared and showed cause. By the aforesaid judgment and order the High Court discharged the rules and dismissed the applications and ordered that the said notification was legal and valid except as to the last part of cl. (10) thereof from the words "and the action" to the words "in future cases" and directed the Commission not to proceed with the inquiry to the extent that it related to the aforesaid last part of cl. (10) of the said notification. The Union of India has filed three several appeals, namely, Nos. 656, 657 and 658 of 1957, in the said three Miscellaneous Applications complaining against that part of the said judgment and order of the Bombay High Court which adjudged the last part of cl. (10) to be invalid.
(2.) The Commissions of Inquiry Act, 1952, (hereinafter referred to as the Act) received the assent of the President on 14th August 1952, and was thereafter brought into force by a notification issued by the Central Government under S. 1 (3) of the Act. As its long title states, the Act is one "to provide for the appointment of Commissions of Inquiry and for vesting such Commissions with certain powers". Sub-section (1) of S. 3, omitting the proviso not material for our present purpose, provides : "The appropriate Government may, if it is of opinion that it is necessary so to do, and shall, if a resolution in this behalf is passed by the House of People or, as the case may be, the Legislative Assembly of the State, by notification in the official Gazette, appoint a Commission of Inquiry for the purpose of making an inquiry into any definite matter of public importance and performing such functions and within such time as may be specified in the notification, and the Commission so appointed shall make the Inquiry and perform the functions accordingly." Under sub-s. (2) of that section the Commission may consist of one or more members and where the Commission consists of more than one member one of them may be appointed as the Chairman thereof. Section 4 vests in the Commission the powers of a civil Court while trying s suit under the Code of Civil Procedure in respect of the several matters specified therein, namely, summoning and enforcing attendance of any person and examining him on oath, requiring discovery and production of any document, receiving evidence on affidavits requisitioning any public record or copy thereof from any Court or officer, issuing commissions for examination of witnesses or documents and any other matter which may be prescribed. Section 5 empowers the appropriate Government, by a notification in the Official Gazette, to confer on the Commission additional powers as provided in all or any of the sub-ss. (2), (3), (4) and (5) of that section. Section 6 provides that no statement made by a person in the course of giving evidence before the commission shall subject him to, or be used against him in, any civil or criminal proceeding except a prosecution for giving false evidence by such statement provided that the statement is made in reply to a question which he is required by the Commission to answer or is relevant to the subject matter of the inquiry. The appropriate Government may under S. 7 issue a notification declaring that the Commission shall cease to exist from such date as may be specified therein. By S. 8 the Commission is empowered, subject to any rules that may be made, to regulate its own procedure including the time and place of its sittings and may act notwithstanding the temporary absence of any member or the existence of any vacancy among its members. Section 9 provides for indemnity to the appropriate Government, the members of the Commission or other persons acting under their directions in respect of anything which is done or intended to be done in good faith in pursuance of the Act. The rest of the sections are not material for the purpose of these appeals.
(3.) In exercise of the powers conferred on it by S. 3 of the Act the Central Government published in the Gazette of India dated 11th December 1956, a notification in the following terms : MINISTRY OF FINANCE (Department of Economic Affairs) ORDER New Delhi, the 11th December, 1956 S. R. O. 2993 - Whereas it has been made to appear to the Central Government that : (1) a large number of companies and some firms were promoted and/or controlled by Sarvashri Ramkrishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, Shital Prasad Jain or some one or more of them and by others being either relatives or employees of the said person or persons, closely connected with the said persons : (2) large amounts were subscribed by the investing public in shares of some of these companies ; (3) there have been gross irregularities (which may in several respects and materials amount to illegalities) in the management of such companies including transfers and use of funds and assets : (4) the moneys subscribed by the investing public were in considerable measure used not in the interests of the companies concerned but contrary to their interest and for the ultimate personal benefit of those in control and/or management; and (5) the investing public have as a result suffered considerable losses. And Whereas the Central Government is of the opinion that there should be a full inquiry into these matters which are of definite public importance both by reason of the grave consequences which appear to have ensued to the investing public and also to determine such measures as may be deemed necessary in order to prevent a recurrence thereof : Now, therefore, in exercise of the powers conferred by Section 3 of the Commission in Inquiry Act (No. 60 of 1952), the Central Government hereby appoints a Commission of Inquiry consisting of the following persons, namely : Shri Justice S. R. Tendolkar, Judge of the High Court at Bombay, Chairman. Shri N. R. Modi of Messrs A. F. Ferguson and Co., Chartered Accountants, Member. Shri S. C. Chaudhuri, Commissioner of Income-tax, Member. 1. The Commission shall inquire into and report on and in respect of : (1) The administration of the affairs of the companies specified in the schedule hereto; (2) The administration of the affairs of such other companies and firms as the Commission may during the course of its enquiry find to be companies or firms connected with the companies referred to in the schedule and whose affairs ought to be investigated and inquired into in connection with or arising out of the enquiry into the affairs of the companies specified in the schedule hereto ; (3) The nature and extent of the control, direct and indirect, exercised over such companies and firms or any of them by the aforesaid Sarvashri Ram Krishna Dalmia, Jaidayal Dalmia, Shanti Prasad Jain, Sriyans Prasad Jain, their relatives, employees and persons connected with them ; (4) The total amount of the subscription obtained from the investing public and the amount subscribed by the aforesaid persons and the extent to which the funds and assets thus obtained or acquired were misused, misapplied or misappropriated ; (5) The extent and nature of the investments by and/or loans to and/or the use of the funds or assets by and transfer of funds between the companies aforesaid ; (6) The consequences or results of such investments, loans, transfers and/or use of funds and assets ; (7) The reasons or motives of such investments, loans, transfers and use and whether there was any justification for the same and whether the same were made bona fide in the interests of the companies concerned ; (8) The extent of the losses suffered by the investing public, how far the losses were avoidable and what steps were taken by those in control and/or management to avoid the losses ; (9) The nature and extent, of the personal gains made by any person or persons or any group or groups of persons whether herein named or not by reason of or through his or their connection with or control over any such company or companies ; (10) Any irregularities, frauds or breaches of trust or action in disregard of honest commercial practices or contravention of any law (except contraventions in respect of which criminal proceedings are pending in a Court of Law) in respect of the companies and firms whose affairs are investigated by the Commission which may come to the knowledge of the Commission and the action which in the opinion of the Commission should be taken as and by way of securing redress or punishment or to act as a preventive in future cases; (11) The measures which in the opinion of the Commission are necessary in order to ensure in the future the due and proper administration of the funds and assets of companies and firms in the interests of the investing public. SCHEDULE 1. Dalmia Jain Airways Ltd. 2. Dalmia Jain Aviation Ltd., (now known as Asia Udyog Ltd.) 3. Lahore Electric Supply Company Ltd., (now known as South Asia Industries Ltd.) 4. Shri Shapurji Broacha Mills Ltd. 5. Madhowji Dharamsi Manufacturing Company Ltd. 6. Allen Berry and Co., Ltd. 7. Bharat Union Agencies Ltd. 8. Dalmia Cement and Paper Marketing Company Ltd., (now known as Delhi Glass Works Ltd.) 9. Vastra Vyavasaya Ltd. Ordered that the Order be published in the Gazette of India for public information. (No. F. 107 (18-INS/56)). H. M. Patel Secretary. It should be noted that the above notification did not specify the time within which the Commission was to complete the inquiry and make its report.;