G.N.Ray, J. - (1.) On this writ petition, no rule has been issued but the petition has been directed to be heard as a contested application upon notice to the respondents and such notice has been served and the respondents including respondent No. 5, Sri Amal Chandra Chakraborty, have entered appearance and contested the writ petition. This writ petition is directed against the order of the Government of India dated August 10, 1977, under Clause (b) of Section 237 of the Companies Act, 1956, and notification of the Government of India in the Department of Company Affairs, No. G.S.R. 443(E), dated October 18, 1972, and the decision of the Company Law Board to appoint an inspector to investigate into the affairs of the company and to report thereon and also against appointment of respondent No. 5, Sri Amal Chandra Chakraborty, chartered accountant of M/s. S. R. Batliboi & Co., to carry on the investigation and report to the Company Law Board and also against the report submitted by the said inspector to the Under Secretary to the Company Law Board, Government of India, and also against the alleged violation of the provisions of Section 241(2)(a) by the Central Government in not furnishing the company with a copy of the entire report of the inspector. The petitioners have also challenged withholding of the approval regarding reappointment of three whole-time directors and the decision reached by the Company Law Board, Government of India, to launch criminal complaints before the Chief Metropolitan Magistrate, Calcutta, and also against filing of separate complaint petitions before the learned Chief Metropolitan Magistrate, Calcutta, under Section 89(3) read with Section 87 of the Companies Act, registered as Case No. 1966 of 1982 and also under Section 209(5) of the Companies Act, registered as Case No. 2051 of 1982 and under Section 420 read with Section 418 of the said Act, registered as Case No. 2051 of 1982 and under Section 297/299 and 301 of the Companies Act, registered as Case No. 1880 of 1982.
(2.) The petitioners are Titagarh Paper Mills Co. Ltd., Sri Kanak Ghosh and Sri Pinaki Sengupta. The other petitioner, Sri Souren Biswas, had died during the pendency of the writ petition. It may be noted that the said Sri Souren Biswas was the managing director and principal officer of the Titagarh Paper Mills Co. Ltd. and his case for reappointment as managing director of the Titagarh Paper Mills Co. Ltd. was pending before the Company Law Board at the time of presenting the writ petition. The other two petitioners, namely, Sri Kanak Ghosh and Sri Pinaki Sengupta, are respectively the director and chief accountant of the Titagarh Paper Mills Co. Ltd. It is contended by the petitioners in the writ petition that the Titagarh Paper Mills Co. Ltd. is being managed and administered very efficiently and due to such efficient management, there has been gradual increase in the sales and the total quantity produced, in the net profits earned and in the building up of impregnable reserves. The board of directors of the petitioner company is made up of eleven directors, of whom five represent financial institutions, namely, the Industrial Development Bank of India, the Industrial Finance Corporation of India, the Life Insurance Corporation and the Industrial Credit and Investment Corporation of India, two from the professional management personnel in the employment of the company, two industrialists and one representing the share broker. At the relevant time, the chairman of the board of directors was Mr. S.P. Puri, formerly the managing director of the State Bank of India. It has also been contended in the writ petition that at the material time, the shareholding of public undertakings in the equity share capital of the petitioner company was made up of : JUDGEMENT_94_CC59_1986Html1.htm
(3.) It has been further contended in the writ petition that the management of the petitioner company has been maintaining internal audit system through the independent agency of a professional firm of auditors, Messrs Lovelock & Lewes, in addition to the statutory audit being conducted by another independent firm of auditors, Messrs Price Waterhouse Peat & Co. The petitioners have contended that either in the internal audit or in the statutory audit, no allegation of mismanagement and/or misfeasance and/or misconduct has been made.;