B.N. Banerjee, J. - (1.) The petitioner-company claims to carry on business as exporter, investor and financier and further claims to have been acting as selling agent for the State Trading Corporation in respect of cement and also as sole selling agent or selling agent of several other companies. According to the petitioner-company, it has built up a very efficient and effective marketing organisation covering the whole of India. In paragraph 5 of the petition, there is a recitation of the commodities in which the petitioner-company trades, which includes cement, paper, fertilisers, plywood, bicycles, machinery, machine parts, motors and transformers, cables, tools, refractory materials and oil firing equipments. The petitioner-company has an issued and subscribed capital of Rs. 15,00,000 and claims to have built up a reserve of over Rs. 40,00,000. After having made provisions for taxation and reserves, the petitioner-company is said to have declared substantial dividends to its shareholders during the years 1958-59 to 1962-63. The directorate of the petitioner-company, it is said, includes businessmen of reputation and lawyers of respectability. The above facts are pleaded in order to emphasise upon the contention that the petitioner-company should have been regarded as beyond reproach. The measure put by the petitioner-company upon itself is not, however, an agreed measurement and is disputed in the affidavit-in-opposition.
(2.) On 11th April, 1963, the Central Government made the following order against the petitioner-company ; "Whereas the Central Government is of the opinion that there are circumstances suggesting that the business of Ashoka Marketing Company Limited, a company having its registered office at No. 18-A, Brabourne Road, Calcutta (hereinafter referred to as the said company), is being conducted with intent to defraud its creditors, members or other persons and the persons concerned in the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the said company or its members; And whereas it has come to the notice of the Central Government that the said company is acting as the selling agent of M/s. Rohtas Industries Limited, Dalmianagar, Bihar, and New Central Jute Mills Co. Ltd., Calcutta, (hereinafter referred to as the said managed companies); And whereas Sahu Jain Ltd., a company having its registered office at No. 11, Clive Row, Calcutta, is the managing agent (hereinafter referred to as the managing agent) of the said managed companies ; And whereas a question (hereinafter referred to as the said question) has arisen as to whether Ashoka Marketing Limited is an 'associate' as denned in Clauses (c) and (d) of Sub-section (3) of Section 2 of the Companies Act, 1956 (1 of 1956), of the managing agent ; And whereas it appears to the Central Government that there is good reason to investigate the said question ; And whereas the Central Government consider it desirable that an inspector should be appointed to investigate the affairs of the said company as well as to investigate the said question and to report thereon ; Now therefore in exercise of the several powers conferred by Sub-clauses (i) and (ii) of Clause (b) of Section 237 of the Companies Act, 1956 (1 of 1956), and Clause (a) of Sub-section (1) of Section 249 of the said Act, the Central Government hereby appoint Shri S. Prakash Chopra of M/s. S. P. Chopra & Co., Chartered Accountants, 31-F, Connaught Place, New Delhi, as inspector to investigate the affairs of the said company, namely, Ashoka Marketing Company Ltd., for the period from 1st April, 1958, to date and also prior to 1st April, 1958, should the inspector consider necessary and to investigate the said question, namely, whether M/s. Ashoka Marketing Co. Ltd. is the associate of Sahu Jain Ltd., which is the managing agent of the said managed companies and report thereon to the Central Government pointing out, inter alia, all irregularities and contraventions in respect of the provisions of the Companies Act, 1913, or of any other law for the time being in force and the person or persons who are responsible for such irregularities and contraventions. The inspector shall complete the investigation and submit six copies of his report to the Central Government not later than four months from the date of issue of this order unless time in that behalf is extended by the Central Government, A separate order will be issued with regard to the remuneration and other incidental expenses of the inspector." The aforesaid order, in so far as it is one under Clause (b) of Section 237 of the Companies Act, is characterised by the petitioner-company to be bad, illegal, without jurisdiction and mala fide in law on the same grounds as were urged against similar orders made against New Central Jute Mills Co. Ltd., [1966] 36 Comp, Cas. 512 dealt with by me in my judgment (Matter No. 272 of 1964). In so far as the order is one under Section 249(1)(a) of the Companies Act, the petitioner-company denies that it is an associate of Sahu Jain Ltd., and asserts that there is no reason even to suspect such association.
(3.) However, without prejudice to its contentions that the impugned investigation could not and should not have been ordered, it is said the petitioner-company decided to comply with the requisitions made by S.P. Chopra, the inspector. The petitioner-company alleges to have supplied to S.P. Chopra such statements and information as he wanted and ultimately on 17th May, 1963, the managing director of the petitioner wrote to him in the following language : " This completes all information that you wanted by your letter...... dated 16th April, 1963. Except that certain information regarding the year 1958 and some very trivial information for the years 1959 and 1960 remain to be supplied. The same is being complied with and will be made available to you shortly. " The information supplied apparently did not satisfy S.P. Chopra, who, according to the petitioner-company, was carrying on a roving enquiry and was fishing for information. He, therefore, asked for more and went on meeting the senior officers of the petitioner and gathering more information. Further, he obtained from the petitioner-company volumes of minutes books, and in spite of promise to return them quickly, sat over them until May, 1964. Also, he verbally examined the managing director, secretary, controller of accounts, another director of the name of N.R. Khaitan and also several other officers of the petitioner-company, without giving the least indication about the purpose of the enquiry.;