B.C.Mitra, J. - (1.) The respondent is the managing agent of several companies incorporated under the Indian Companies Act and mentioned in paragraph 1 of the petition. On April 11, 1963, an order was made by the Central Government in exercise of the powers conferred by Sub-clauses (i) and (ii) of Clause (b) of Section 237 of the Companies Act, 1956 (hereinafter referred to as " the Act "). In this order it was recited that whereas the Central Government was of the opinion that there were circumstances suggesting that the business of the respondent was being conducted with intent to defraud its creditors, members and other persons and the persons connected in the management of the respondent's affairs had in connection therewith been guilty of fraud, misfeasance or other misconduct towards the respondent or its members or other persons and whereas the Central Government considered it desirable that an inspector should be appointed to investigate the affairs of the respondent and to report thereon, the Central Government in exercise of the powers under the said provisions of the Act appointed one S. Prakash Chopra, as inspector to investigate the affairs of the respondent for a certain period mentioned in the order. The inspector so appointed was to complete the investigation and submit his report within four months from the date of the order unless the time was extended. 6n the very next day the respondent protested in writing against the order and denied that there were any circumstance justifying the formation of the alleged opinion by the Central Government. The respondent also requested that information may be supplied to it regarding materials in the possession of the Government on the basis of which the alleged opinion was formed by the Central Government. By a letter dated June 17, 1963, the appellant No. 1 refused to disclose any materials to the respondent.
(2.) The investigation was not completed within the time fixed by the order and by an order dated August 9, 1963, the time to submit the report was extended up to October 31, 1963. A second extension was also granted on October 31, 1963, and the time of submitting a report was extended up to January 31, 1964. The investigation, however, was not completed within the extended time and a third extension was granted by an order dated January 29, 1964, and the time to make the report was extended till June 30, 1964. On June 30, 1964, however, the inspector was relieved of his duties and two new persons, namely, S. D. Agarwal and S. Rajagopalan, were appointed co-inspectors and the time to make the report was again extended up to December 31, 1964. Aggrieved by the order appointing inspectors for the investigation and also by subsequent orders granting extension of time to make the report the petitioner moved this court under Article 226 of the Constitution and obtained a rule nisi. By a judgment and order dated August 6, 1965, this rule was made absolute and the order dated April 11, 1963, and the subsequent order mentioned above whereby time to submit the report was extended was quashed and appropriate writs were directed to be issued. It was, however, provided that nothing contained in the order would stand in the way of the Central Government in making a fresh investigation order according to law. This appeal is directed against the judgment and order dated August 6, 1965.
(3.) The question involved in this appeal is whether the appellants were justified in refusing to disclose to the respondent the materials which led the Central Government to form the opinion as to matters set out in Sub-clauses (i) and (ii) of Clause (b) of Section 237 of the Act. I set out below the relevant portion of the statute : " 237 (b) may do so if, in the opinion of the Central Government, there are circumstances suggesting-- (i) that the business of the company is being conducted with intent to defraud its creditors, members, or any other persons, or otherwise for a fraudulent or unlawful purpose, or in a manner oppressive of any of its members, or that the company was formed for any fraudulent or unlawful purpose ; (ii) that persons concerned in the formation of the company or the management of its affairs have in connection therewith been guilty of fraud, misfeasance or other misconduct towards the company or towards any of its members.";