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Union of India Vs. Seksarai Cotton Mills Ltd. (In Liquidation) and ors. - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberCompany Application No. 5 of 1972 (In Company Petition No. 159 of 1967)
Judge
Reported in[1975]45CompCas613(Bom)
ActsIndustries (Development and Regulation) Act, 1951 - Sections 2, 3, 15, 15A, 15A(1), 15A(2), 18(1), 18A, 18AA, 18FA, 20 and 29D; Constitution of India - Article 14; Companies Act, 1956 - Sections 290 and 530;
AppellantUnion of India
RespondentSeksarai Cotton Mills Ltd. (In Liquidation) and ors.
Advocates:D.H. Buch, Adv. for the Supporting Creditors and ;Official Liquidator in person, ; F.S. Nariman,; M.M. Vakil, ;M.O. Chinoy and ;Ashok H. Desai, Advs.
Excerpt:
company - liquidation - sections 2, 3, 15, 15a, 15a (1) and 15a (2) of industries (development and regulation) act, 1951 - application made by union of india for granting permission to them to investigate into affairs of respondent no. 1 company in liquidation under section 15a - whether central government can make investigation into affair of company in liquidation under section 15a - order passed by central government appointing a committee of inspector to undertake investigation under section 15 (a) (i) was struck by court - it was doubtful as to whether an order under section 15 (a) (i) could be made in respect of company which was being wound up - subsequently ordinance was passed inserting new section 15a expressly made applicable to company which was being wound up - initial.....tulzapurkar, j. 1. this is a judges summons dated 12th january, 1972, taken out by the applicants (the union of india) seeking permission or leave of this court to make or cause to be made investigations into the possibility of restarting the industrial undertaking of the 1st respondent (the seksaria cotton mills ltd. (in liquidation) in the interest of the general public and particularly in the interest of productions of cotton textiles, under section 15a of the industries (development and regulation) act, 1951, as amended by the amending act no. 72 of 1971. 2. the fact giving rise to the application by way of judge's summons may be stated : the seksaria cotton mills ltd. (hereinafter referred to as 'the 1st respondent-company'), a public limited company incorporated under the indian.....
Judgment:

Tulzapurkar, J.

1. This is a judges summons dated 12th January, 1972, taken out by the applicants (the Union of India) seeking permission or leave of this court to make or cause to be made investigations into the possibility of restarting the industrial undertaking of the 1st respondent (the Seksaria Cotton Mills Ltd. (in liquidation) in the interest of the general public and particularly in the interest of productions of cotton textiles, under section 15A of the Industries (Development and Regulation) Act, 1951, as amended by the Amending Act No. 72 of 1971.

2. The fact giving rise to the application by way of judge's summons may be stated : The Seksaria Cotton Mills Ltd. (hereinafter referred to as 'the 1st respondent-company'), a public limited company incorporated under the Indian Companies Act, VII of 1913, used to run textile mills situate at Delise Road, Parel, Bombay. It ceased production and actually stopped its business since about 18th October, 1967. On a creditor's petition, being Company petition No. 139 of 1967, filed on 7th December, 1967, the 1st respondent-company was ordered to be wound up by this court on 2nd March, 1969, and the official liquidator (respondent No. 2) was appointed liquidator thereof with necessary powers under the Indian Companies Act, 1956, to take charge of the assets of the company and to conduct its affairs in the course of winding-up and to distribute its assets in accordance with the provisions of the Companies Act. However, it appears that on 14th September, 1962, the 1st respondent-company had executed two debenture trust deeds - one in favour of Gobindram Seksaria Charity Trust to secure the advance of Rs. 39 lakhs and interest thereon (respondents Nos. 4, 5 and 6 being the trustees thereof) and the other in favour of the Trustees of Hashimara Industries Ltd. (respondents Nos. 7, 8 and 9 being the trustees thereof) to secure the advance of Rs. 45 lakhs and interest thereon; the second debenture deed was subject to the first debenture deed and by the second debenture trust deed the properties of the miles belonging to the company including the lands, buildings and machinery and plant were conveyed to the trustees of the second debenture trust deed. It further appears that pursuant to power contained in that behalf in the second debenture trust on defaults being committed in payment of certain installments, the trustees (respondents Nos. 7, 8 and 9) on 7th October, 1967, appointed one Sumat Prasad as a private receiver to take possession of the mills and its assets and to exercise the power of sale and to recover the amount due under the second debenture trust deed and accordingly the 3rd respondent took possession of the mills on 17th October, 1967, and on the very next day, i.e., on 18th October, 1967, the management retrenched all the workers of the mills and the mills ceased to function on and from that date and remained entirely closed ever since. Since the secured creditors did not join in the winding-up proceedings and the private receiver was in possession and control of the mills and its assets, this court while passing winding-up order and appointing the official liquidator as the liquidator of the company gave specific directions that, 'this winding-up order will not in any way prejudicial affect the rights of the secured creditors nor will the appointment of the official liquidator displace the private receiver, who, however, will have no power to run the mill but will enjoy all powers for the purpose of realising the security by sale thereof for the benefit of secured creditors'.

3. After the 1st respondent-company was ordered to be would up as aforesaid, the State of Maharashtra in or about March, 1968, started negotiations with the 3rd respondent (private receiver) and the official liquidator (2nd respondent) for taking over the said mills for being run on leave and licence basis as part of the unemployment relief scheme. But the negotiations ultimately railed in April, 1970, inasmuch as the State of Maharashtra withdrew its offer on the ground that the workers were unwilling that the management should receive yearly licence fee of Rs. 8 lakhs as demanded. Thereafter, on 2nd June, 1970, the Central Government passed an order under section 15(a)(i) of the Industries (Development and Regulation) Act, 1951, appointing a committee of investigators for making a full and complete investigation into the circumstances resulting in the fall in the production of the textile goods manufactured by the company. Respondent No. 3, the private receiver appointed by respondents Nos. 7, 8 and 9 (being the trustees of the second debenture trust deed), filed a petition in this court, being Misc. Petition No. 4 of 1971, challenging the said order passed by the Central Government on 2nd June, 1970. It appears that the committee of investigators had submitted its report to the Union of India on or about 5th January, 1971, and the said report was also challenged by the 3rd respondent in the said writ petition. Mr. Justice Chandrachud who ultimately heard the writ petition by his judgment and order passed on 9th October, 1971, set aside the order dated 2nd June, 1970, and the Central Government was directed not to take any steps in pursuance of the said order or in pursuance of the said report submitted by the committee of inspectors on the ground that the order under section 15 of the said Act could not have been made in June, 1970, when the mills had been closed and remained closed since October, 1967. Thereafter, the Industries (Development and Regulation) Amendment Ordinance No. XX of 1971 was promulgated on 1st November, 1971, and by that Ordinance, inter alia, two new sections, being sections 15A and 18FA were introduced in the said Act of 1951. Under the former new section (section 15A) power to investigate into the affairs of a company in liquidation for certain purposes and upon fulfillment of certain conditions was conferred upon the Central Government while under the latter new section (section 18FA) power to point authorised persons to take over management or control of industrial undertakings in respect of which an investigation has been made under section 15A on fulfilment of certain conditions was conferred upon the Central Government. On 24th December, 1971, the Amending Act, being Act No. 72 of 1971, was passed by Parliament incorporating substantially the provisions of the Ordinance in the original Act of 1951 and the Amending Act was deemed to have come into force on the 1st day of November, 1971. According to the applicants (the Union of India) after the promulgation of the aforesaid Ordinance and the coming into force of the said new sections, the Central Government formed an opinion that it was necessary in the interest of the general public and in particular in the interest of production of cotton textiles to investigate the possibility of restarting the industrial undertaking of the 1st respondent-company and in pursuance of that opinion so formed the applicants have taken out the present judges summons on 12th January, 1972, under section 15A of the said Act seeking permission of the court to make or cause to be made an investigation into such possibility by such person or body of persons as the applicants may appoint for the purpose.

4. The application for the grant of necessary permission under section 15A of the said Act has been resisted by respondent No. 3 who is the private receiver of the mills appointed by the trustees of the second debenture trust deed as also by respondents Nos. 7, 8 and 9, who are the trustees of the second debenture trust deed on 3 or 4 grounds. In the first place it has been contended that section 15A of the said Act is not applicable to the industrial undertaking of the 1st respondent-company and as such the application is misconceived and no permission as sought should be granted. Secondly, it has been urged that even if it be held that section 15A applicable to the present case, the condition precedent as mentioned in the section, namely, formation of requisite opinion on relevant materials has not been fulfilled and as such permission sought cannot be granted. Thirdly, it was contended that the alleged formation of opinion was contrary to the principles of natural justice, inasmuch as no opportunity of being heard was given to the 3rd respondent or the trustees of the second debenture trust deed and as such the requisite opinion even if formed could not be acted upon. Fourthly, the vires of section 15A and section 18FA was challenged under article 14 and article 19(1)(f) and (g) of the Constitution. Lastly, it was contended that the application seeking permission under section 15A has been made mala fide with ulterior motive of dispossessing the 3rd respondent of the assets which were in his hands and the same has been made at the behest of the State Government. We may state that respondent No. 2 who is the official liquidator has submitted to the orders of the court and so far as respondents Nos. 4, 5 and 6, who are the trustees of the first debenture trust deed, are concerned, it has been pointed out on their behalf that as the present application is merely for leave to make investigation into the possibility of restarting the mills of the first respondent-company and as after investigation it may be found that it is not possible to re-start the mills or otherwise, they have no objection to this court granting the permission sought; of course, without prejudice to their rights to challenge the relevant provisions of the Act of 1951 and its amendment as being invalid and void as and when occasion arises. In other words, respondent No. 2 and respondents Nos. 4, 5 and 6 have not opposed the application. We shall, therefore, deal with four or five objections that have been raised by the private receiver and the trustees of the second debenture trust deed to the grant of permission as sought by the applicant under section 15A of the Act. But before we do so it would be desirable to set out the material provisions of the amending Act.

5. As stated earlier, the present application has been made by the Union of India for granting permission to them to investigate into the affairs of the 1st respondent-company in liquidation under section 15A of the Act. Section 15A, which has come into force from 1st November, 1971, runs as follows :

'15A. Power to investigate into the affairs of a company in liquidation. - (1) Where a company, owing an industrial undertaking, is being would up by or under the supervision of the High Court, and the business of such company is not being continued, the Central Government may, if it is of opinion that it is necessary, in the interest of the general public and, in particular, in the interests of production, supply or distribution of articles or class of articles relatable to the concerned scheduled industry, to investigate into the possibility of running or re-starting the industrial undertaking, make an application to the High Court praying for permission to make, or cause to be made, an investigation into such possibility by such person or body or persons as that Government may appoint for the purpose.

(2) Where an application is made by the Central Government under sub-section (1), the High Court shall, notwithstanding anything contained in the Companies Act, 1956 (1 of 1956), or in any other law for the time being in force, grant the permission prayed for.'

6. It may be stated that after the investigation contemplated by section 15A of the Act is carried out and if as a result of such investigation the Central Government forms an opinion that there are possibilities of restarting the industrial undertaking in question, then, under section 18FA, power has been conferred upon the Central Government to appoint authorised persons to take over the management of the said undertaking after obtaining the permission of the High Court in that behalf. The material part of section 18FA runs as follows :

'18FA. Power of Central Government to authorise, with the permission of the High Court, persons to take over management or control of industrial undertakings. - (1) If the Central Government is of opinion that there are possibilities of running or restarting an industrial undertaking, in relation to which an investigation has been made under section 15A, and that such industrial undertaking should be run or restarted, as the case may be, for maintaining or increasing the production, supply or distribution of articles or class of articles relatable to the scheduled industry, needed by the general public, that Government may make an application to the High Court praying for permission to appoint any person or body of persons to take over the management of the industrial undertaking or to exercise in respect of the whole or any part of the industrial undertaking such functions of control as may be specified in the application.

(2) Where an application is made under sub-section (1), the High Court shall make an order empowering the Central Government to authorise any person or body of persons (hereinafter referred to as the 'authorised persons') to take over the management of the industrial undertaking or to exercise functions of control in relation to the whole or any part of the industrial undertaking (hereinafter referred to as the 'concerned part') for a period not exceeding five years :

Provided that if the Central Government is of opinion that it is expedient in the interest of the general public that the authorised person should continue to manage the industrial undertaking, or continue to exercise functions of control in relation to the concerned part, as the case may be, after the expiry of the period of five years aforesaid, it may make an application to the High Court for the continuance of such management or functions of control, for such period, not exceeding two years at a time, as may be specified in the application and thereupon the High Court may make an order permitting the authorised person to continue to manage the industrial undertaking or to exercise functions of control in relation to the concerned part :

Provided further that the total period of such continuance (after the expiry of the initial period of five years) shall not, in any case, be permitted to exceed ten years. (3) Where an order has been made by the High Court under sub-section (2), the High Court shall direct the official liquidator or any other person having, for the time being, charge of the management or control of the industrial undertaking, whether by or under the others of any court, or any contract or instrument or otherwise, to make over the management of such undertaking or the concerned part, as the case may be, to the authorised person and thereupon the authorised person shall be deemed to be the official liquidator in respect of the industrial undertaking or the concerned part, as the case may be .....'

7. Sub-section (6) enables the authorised person to raise any loan on such terms and conditions and subject to such limitations as may be prescribed for the purpose of running the industrial undertaking and further enables him for that purpose to create a floating charge on the current assets of the industrial undertaking; sub-section (10) provides that the proceedings in the winding-up of the company shall be stayed during the period while the undertaking remains under the management and control of authorised person and in computing the period of limitation for the enforcement of any right, privilege, obligation or liability in relation to such undertaking, the period during which such proceedings remained stayed shall be excluded. The next material provision is to be found in section 290 which gives priority to all debts incurred by the authorised person over all other debts, whether secured or unsecured, incurred before the management of such industrial undertaking has been taken over. Section 290 runs as follows :

'29D. Debts incurred by the authorised person to have priority. - Every debts arising out of any loan obtained by the authorised person for carrying on the management of, or exercising functions of control in relation to, an industrial undertaking or part thereof, the management of which has been taken over under section 18A or section 18AA or section 18FA, -

(a) shall have priority over all other debts, whether secured or unsecured, incurred before the management of such industrial undertaking was taken over;

(b) shall be a preferential debt within the meaning of section 530 of the Companies Act, 1956 (1 of 1956),

and such debts shall rank equally among themselves and be paid in full out of the assets of the industrial undertaking unless such assets are insufficient to meet them, in which case they shall abate in equal proportions.'

8. At the outset we may state that part from challenging the vires of section 15A under which the present application has been made, respondents Nos. 3 and 7 to 9 have also challenged the vires of section 18FA and 29D and during the course of argument counsel for these respondents desired to make their submissions in that behalf. We did not permit counsel to go into the question of vires of sections 18FA and 29D, inasmuch as, in our opinion, the occasion for challenging the vires of those sections has not arisen at this stage. It is true that all the three sections, viz., sections 15A, 18FA and 29D form part of one scheme. But even so, the present application has been made by the applicants merely for leave or permission to make investigations into the possibility of restarting the industrial undertaking of the 1st respondent-company in the interest of the general public and particularly in the interest of production of cotton textile and it is possible that after investigations are carried out it may be found that it is not so possible to restart the undertaking, in which event no further application as contemplated by section 18FA would at all be made by the applicants to this court. In view of such eventuality being there, it would not be proper nor advisable for us at this stage to go into the question of vires of sections 18FA and 29D of amending Act. We have, therefore, confined our attention only to such objections that were raised by respondents Nos. 3 and 7 to 9 to the grant of requisite permission sought by the applicants under section 15A of the Act. We may also mention that it was pointed out to us that the Proclamation of Emergency was issued on 3rd December, 1971, and that the same is still in operation and as such respondents Nos. 3 and 7 to 9 were not entitled to challenge any of the provisions of the amending Act as being violative of article 19 of the Constitution. Counsel for respondents Nos. 3 and 7 to 9 also fairly conceded this position and accordingly the contention that section 15A is violative of article 14 of the Constitution need be considered by us.

9. According to the applicants, the present case squarely falls within the provision of section 15A of the Act and as such the applicants are entitled to get the necessary permission or leave to make or cause to be made investigation into the possibility of restarting the industrial undertaking of the 1st respondent-company. Mr. Nariman, the learned Additional Solicitor General, appearing for the applicants pointed out that the Seksaria Mills Ltd. used to run textile mills at Parel, Bombay, and as such owned an industrial undertaking that was engaged in production of cotton textiles and as such is a scheduled industry falling within the First Schedule of the Act; secondly, the said company owning such scheduled industrial undertaking is being would up by and under the direction of this court after passing of the winding-up order on 12th March, 1969; thirdly, admittedly, the business of the said company has been stopped and is not being continued since 18th October, 1967, and, therefore, all the initial requirements of section 15A are fulfilled with regard to the 1st respondent-company. He has further pointed out that in the affidavit in support declared on 23rd December, 1971, it has been averred that after the promulgation of the Ordinance No. XX of 1971 and the coming into force of section 15A, the Central Government formed an opinion that it was necessary in the interest of the general public and in particular in the interest of production of cotton textiles to investigate the possibility of restarting the undertaking of the 1st respondent-company and after such opinion was formed the present application seeking permission of this court to make investigations into such possibility has been made and, according to him, when all the requirements of section 15A and the condition precedent mentioned in the section have been satisfied, it is obligatory upon this court to grant the necessary permission sought for. Under sub-section (2) of section 15A it has been provided that where an application has been made by the Central Government under sub-section (1), the High Court shall, notwithstanding anything contained in the Companies Act, 1956, or in any other law for the time being in force, grant the permission prayed for. He, therefore, urged that unless the court found that any of the requirements of sub-section (1) of section 15A had not been satisfied or the condition precedent mentioned therein has not been fulfilled or that section 15A was violative of article 14 as contended by respondents Nos. 3 and 7 to 9, this court should grant the permission sought by the applicants.

10. Counsel for respondents Nos. 3 and 7 to 9 contended that on a proper construction section 15A will not apply to the 1st respondent-company, inasmuch as the business of the company had stopped since 18th October, 1967, and section 15A on a true construction is intended to be applied to a company whose business has ceased in the immediate past, that is to say, whose business has ceased within a short time prior to formation of opinion contemplated by the section. In this behalf counsel relied upon the opening words of section 15A, namely, 'where a company, owning an industrial undertaking, is being wound up by or under the supervision of the High Court and the business of such company is not being continued'. It was urged that the phrase 'the business of such company is not being continued' suggested that unless the business of a company was discontinued in the immediate past, the section would be inapplicable. Reliance was also placed upon the expression 'industrial undertaking' which occurs in the section and which has been defined in section 3(d). The definition runs thus :

''industrial undertaking' means any undertaking pertaining to a scheduled industry carried on in one or more factories by any person or authority including Government'.

and the expression 'carried on' occurring in the definition was relied upon. Having regard to the definition of 'industrial undertaking' as occurring in section 3(d) and in view of the phrase 'the business of such company is not being continued' occurring in section 15A, it was urged that the section was intended to apply to a company whose business has ceased to continue in the immediate past and the section would not apply to a company whose business closed for the last over 3 or 4 years and, therefore, the permission sought could not be granted by this court. We are unable to accept this contention of counsel urged on behalf of respondents Nos. 3 and 7 to 9 for more than one reason. In the first place, by the very language employed in section 15A it is clear that the section is applicable to a company which is being would up by or under the supervision of the High Court, which otherwise means, ordinarily, it would be a company whose business would come to a stop if not earlier at least by reason of winding-up order that would be passed by the High Court and such winding-up could, in a conceivable case, be passed many years prior to making of an application by the Central Government under the section or prior to formation of opinion by the Central Government. Further, the language clearly indicates that it must be a company which is not merely being would up but a company whose business 'is not being continued' and there is nothing in the section nor in any other provision of the Act to suggest that the expression 'is not continued' should be confined to a case of a company whose business has been stopped or is not being continued since the immediate past. In Stroud's Judicial Dictionary (fourth edition) the expression 'being' is explained thus at page 267 of volume I :

'Being - 'Being', as used in a sense similar to that of the ablative absolute, has sometimes been translated as, 'having been'; but it properly denotes a state or condition existent at the time when the conclusion of law or fact has to be ascertained.'

11. In other words, it is clear that the phrase 'the business of such company is not being continued' must be interpreted to mean the company whose business is non-existent at a time when the requisite opinion contemplated by the section is formed by the Central Government and if at such time the business is not continued or has stopped, the case would fall within that phrase. Apart from that, there is yet one more indication in the section which runs counter to the contention urged by counsel for respondents Nos. 3 and 7 to 9. The section contemplates an investigation into the possibility of restarting the industrial undertaking, which must mean that the undertaking must be one which has been closed and which needs restarting and not necessarily an undertaking which is kept closed in the immediate past. It is true that reliance was placed by counsel upon the definition of 'industrial undertaking' given in section 3(d) and the definition shows that it means an undertaking pertaining to scheduled industry carried on in one or more factories. But this definition cannot be allowed to be imported into section 15A while giving proper meaning to the expression 'industrial undertaking' occurring therein. The entire section 3 of the Act, which defines several concepts including the concept of industrial undertaking, is qualified by the opening words of the section, namely, 'in this Act, unless the context otherwise requires', and, therefore, unless the context otherwise requires, the expression 'whenever it occurs in the Act' should be understood in the sense it has been defined in section 3(d) but the context of section 15A clearly suggests that the expression 'industrial undertaking' cannot be understood in the same sense in which the expression has been defined in section 3(d), for, in terms, the section is made applicable to a company which owns an undertaking and which company is being wound up and whose business is not being continued. It is thus clear that in the context of section 15A the expression 'industrial undertaking' occurring therein cannot be given the same meaning which has been given to that expression by the definition clause. In support of our view, reference may be made to a decision of the Supreme Court in Vanguard Fire and General Insurance Co. Ltd. v. Fraser and Ross, where in spite of the expression 'insurer' having been defined in the definition clause in a particular way, having regard to the context of particular sections, namely, section 20 and section 33 of the Insurance Act, 1938, the expression 'insurer' in those sections was held to include an intending insurer or quondam insurer. In our view, therefore, there is nothing in the language of section 15A which warrants an inference that it is intended to apply to a company whose business has stopped in the immediate past. On the other hand, as stated earlier, the phrase 'and the business of such company is not being continued' and the expression 'restarting' occurring in that section in the context of a company which is being wound up under the direction of the High Court clearly suggests that the section would be applicable even to a company whose business has stopped even for some years prior to formation of requisite opinion by the Central Government. Besides, it may be stated that, in the present case, the company had stopped its business since 18th October, 1967, and even thereafter on admitted facts the State of Maharashtra was exploring a possibility of taking over the said mills on leave and licence basis for running the same under the unemployment relief scheme and that such negotiations were continued till as late as April, 1970, when those negotiations failed. In other words, even respondent No. 3 with whom the said negotiations were carried on was also of the opinion in April, 1970, that the undertaking was in such condition that it could be run by the State of Maharashtra on leave and licence basis, if terms had been finally agreed upon. In our view, therefore, there is nothing in the language of the section nor in any other provision of the Act to suggest that section 15A would be applicable only to such company whose business has stopped in the recent past as suggested by counsel for respondents Nos. 3 and 7 to 9. It seems to us clear that all the three initial requirements of section 15A, namely, that the company in question owns a schedule undertaking, that the company is being wound up by or under the supervision of the High Court and that the company is one whose business is not being continued, are satisfied in the present case and as such the application under section 15A concerning the 1st respondent-company would be maintainable.

12. It was next contended on behalf of respondents Nos. 3 and 7 to 9 that the condition precedent as mentioned in section 15A was not fulfilled and as such the permission sought should not be granted by this court. It was pointed out that the condition precedent has been expressed in the following words in the section :

'the Central Government may, if it is of opinion that it is necessary, in the interests of the general public and, in particular, in the interests of production, supply or distribution of articles or class of articles relatable to the concerned scheduled industry, to investigate into the possibility of running or restarting the industrial undertaking, make an application to the High Court ...'

13. It was urged that the power to investigate into the affairs of a company in liquidation was conditioned upon the formation of requisite opinion and the opinion must be as to the necessity of conducting an investigation into the possibility of restarting the undertaking in the interest of the general public and in particular in the interests of production, supply of distribution of concerned articles and what was urged was that it was not shown that the requisite opinion was formed on relevant materials or on materials having reasonable nexus on the basis of which any reasonable body of persons could come to a conclusion that it was in the interest of general public and in particular in the interest of production of cotton textiles that the investigation into the possibility of restarting the undertaking was necessary and, therefore, the condition precedent had not been fulfilled. Clearly, the contention raised pertains to the factual aspect of the matter and it would, therefore, be necessary to consider whether the materials on the basis of which the requisite opinion was formed have been disclosed by the applicants and whether the materials so disclosed could be said to be relevant materials on which a reasonable body of persons could form the requisite opinion or not. On behalf of the applicants an affidavit-in-rejoinder dated 19th February, 1972, of Shri H. K. Bansal, Deputy Secretary to the Government of India, Ministry of Foreign Trade, has been filed an in para. 6 thereof the entire material on the basis of which the requisite opinion was formed by the Central Government has been set out. In sub-paras. (a), (b) and (c) if para. 6 the general aspects touching the position of the cotton textile industry generally and cotton textile industry in the State of Maharashtra in particular, such as its importance in the economy of the country, recent deterioration in its productive efficiency, problems created by closure of large number of textile units, etc., that were kept in view as a background have been set out and in sub-paras. (d), (e) (f) and (h) the matters or aspects particularly touching the 1st respondent company that were taken into account have been set out. Sub-paras. (d), (e), (f) and (h) of para. 6 clearly show that the following factors were taken into consideration :

(a) that the mill has a composite unit with 1154 looms and 81,036 spindles and is also equipped with a wet processing house;

(b) that since the closure of the mills from October, 1967, there was huge loss of production of cotton textiles;

(c) that if the production in the mills could be restarted, having regard to its production capacity at its optimum level which was very high, such resumption would substantially increase the production, supply and distribution of cloth, an article needed by the general public and help reduce the shortfall in production;

(d) that as a result of the closure of the mills, 4,000 workers had been thrown out of employment increasing the acute problem of unemployment in the country and affording employment to such workers by restarting the mill would be in the interest of general public;

(e) the mill being export-oriented has substantial potential of earning foreign exchange;

(f) that the written down value of the assets of the mill was Rs. 58.91 lakhs as on April 8, 1967, while the market value may be much more;

(g) that due to resistance offered by the receiver in 1970, the plant and machinery could not be inspected by the members of the committee appointed under order dated 2nd June, 1970, but the immediate prior technical survey carried out by the survey team of the Textile Commissioner's Office in July, 1966, in respect of the mill showed that the machinery was by and large found to be reasonably satisfactory.

14. It has been stated that after taking into consideration the aforesaid facts including in particular the interest of general public which included unemployment of about 4,000 workers and the interest of production, supply and distribution of cotton textiles, the dependent, Shri B. D. Kumar, Joint Secretary, and the Honourable Minister concerned formed the opinion that it was necessary to investigate into the possibility of restarting the said mills. It was pointed out by counsel for respondents Nos. 3 and 7 to 9 that the latest condition of the machinery at the time when the opinion was formed in December, 1970, whether it was satisfactory or had become rusted, had not been taken into consideration. But, in our view, for that respondent No. 3 himself who offered resistance was responsible. Item (g) above shows that the immediate prior technical survey carried out by the survey team of the Textile Commissioner's Office in 1966 showed that the machinery was by and large reasonably satisfactory in July, 1966. Besides, since the negotiations were carried on by the State of Maharashtra to take over the mills on leave and licence basis under the unemployment relief scheme with the 3rd respondent till as late as April, 1970, that fact clearly shows that the condition of the machinery was considered to be satisfactory for running the same till then. Having regard to these materials that have been put on record by the applicants in their affidavit-in-rejoinder, it will be difficult to accept the contention that the requisite opinion was formed on materials which had no nexus or on materials which were utterly irrelevant. On the contrary, the materials disclosed were not only relevant but more than sufficient for any reasonable body of persons to form the requisite opinion.

15. It was next contended that the aforesaid requisite opinion was formed by the Central Government in contravention of the principles of natural justice, inasmuch as no opportunity of being heard was given to respondent No. 3 or respondents Nos. 7 to 9 and as such the said opinion got vitiated and could not be acted upon by the applicants. In our view, there is no substance in this contention. In the first place, it is clear from section 15A that it contemplates an opinion to be subjectively formed by the Central Government about the necessity to investigate into the possibility of re-starting the industrial undertaking in the interest of general public and in particular in the interest of production, supply and distribution of concerned articles. Secondly, there is nothing in the section which makes it incumbent upon the Central Government to grant hearing of any kind to respondent No. 3 or any other person before forming an opinion or taking action under section 15A. Further, the purpose for which the opinion is to be formed is quite clear, inasmuch as action taken under that provision merely results in an investigation being made with the permission of this court into the possibility of re-starting the undertaking. It is thus clear that no adverse civil consequence flowed affecting any vested right of any person like respondent No. 3 or respondents Nos. 7 to 9 and, as such, in our view, there would be no question of following principles of natural justice or giving a hearing to persons like respondents No. 3 and 7 to 9 before formation of opinion by the Central Government. Mr. Desai for respondents Nos. 7 to 9 faintly referred to the provisions of section 18(1) of the Act under which power has been conferred upon a person or body of persons appointed to make any investigation under section 15A to call for assistance from any person or persons possessing special knowledge of any matter relating to the investigation during the course of investigation and pointed out that persons like respondent No. 3 or respondents Nos. 7 to 9 may be called upon to render assistance to the person by or body of persons so appointed. But that, in our view, does not amount to visiting any adversed civil consequence upon persons like respondent No. 3 or respondents Nos. 7 to 9. In our view, therefore, since the purpose for which the investigation is to be undertaken under section 15A is very clear, namely, to ascertain whether a particular undertaking could be re-started or not of the opinion getting vitiated on account of no opportunity of hearing being afforded to any person or persons like respondent No. 3 and respondents Nos. 7 to 9. It is clear that the subjective opinion formed by the Central Government in the present case is such as could be acted upon and after fulfilling the condition precedent it is open to the Central Government to make an application under section 15A.

16. We will next deal with the challenge to the provisions of section 15A on the ground that the said provisions are violative of article 14 of the Constitution. The challenge to the provisions of section 15A under article 14 was made in a three-fold manner. In the first place it was contended that while dealing with companies falling within the purview of section 15A, that is to say, the companies owning scheduled industrial undertakings and which are being wound up by or under the supervision of the High Court and whose business are not being continued, section 15A gives an absolute, unguided and unfettered power or discretion to the Central Government to pick and choose any particular company or its undertaking and no guidelines have been given or indicated by following which power or discretion could be exercised and, therefore, the provision suffers from the vice of excessive delegation and as such is violative of article 14. In other words, within the class or ground of companies delay with by the section the Central Government could practice discrimination. It was pointed out in this context that there is no provision for an appeal against the opinion formed by the Central Government under the section. The second leg of the argument to support the challenge to the vires of the section under article 14 was that if the provisions of section 15 and the provisions of section 15A of the Act, under both of which power to make investigation has been conferred upon the Central Government, are compared, it would appear that the ultimate object of both the investigations is to take over the management of an undertaking, and even so there is discrimination between the two investigations, inasmuch as for the investigation under section 15 certain procedure has been prescribed by framing rules which provide for hearing to be given to the management but no such procedure has been prescribed by any rules for the investigation to be undertaken under section 15A and, therefore, the investigation contemplated under section 15A has been discriminated and treated differently and as such section 15A is repugnant to article 14. The third leg of the argument to support the challenge to the vires of section 15A under article 14 was that for taking over the management of an undertaking of a company which was being wound up and whose business is not being continued, two different procedures - one under the general law and the other under section 15A and section 18FA of the Act - were available to the Central Government and the latter procedure under section 15A and section 18FA of the Act was positively disadvantageous and prejudicial to the creditors of the company and since it was open to the Central Government at its sweet will to pick and choose any one of the two procedures that were available to it, discrimination was bound to result and hence the provisions of the Act, particularly section 15A, is violative of article 14.

17. We may mention that the learned Additional Solicitor-General apart from contending that the aforesaid three-fold argument raised in support of the challenge to the vires of section 15A had no substance in it, relied upon article 31A(1)(b) of the Constitution for urging that the vires of section 15A or for the matter of that even section 18FA under article 14 could not be gone into, for, according to him, the said provisions were protected by article 31A(1)(b). The relevant provision of article 31A on which reliance has been placed runs as follows :

'31A. (1) Notwithstanding anything contained in article 13, no law providing for ....

(b) the taking over of the management of any property by the State for a limited period either in the public interest or in order to secure the proper management of the property ....

shall be deemed to be void on the ground that it is inconsistent with, or takes away or abridges any of the rights conferred by article 14, article 19 or article 31.'

18. It was urged on behalf of the applicants that the provisions of section 15A and section 18FA were meant for taking over the management of an industrial undertaking of a company falling within section 15A for a limited period in the public interest and as such the said provisions were protected under the aforesaid provision of the Constitution and the same could not be challenged on the ground that these were inconsistent with or took away or abridged any rights conferred by article 14. On the other hand, counsel for respondents Nos. 3 and 7 to 9 pointed out that in order that protection under article 31A(1)(b) should be available, it was necessary that the law claiming such protections must provide for taking over the management by the State and the expression 'state' has been defined under article 12 of the Constitution under which the State included the Government and Parliament of India and all local or other authorities within the territory of India or under the control of the Government of India and in this particular case the management of the undertaking of the 1st respondent-company was being taken over under the provisions of section 15A and section 18FA not by the State or other authority but by the persons or body or persons who were designated as 'authorised persons' under the Act and that the authorised persons could not be said to be 'other authority' as contemplated by article 4. The learned Additional Solicitor-General rejoined by saying that the authorised persons who were to take over the management under section 18FA will have to be regarded as falling within the expression 'other authority' occurring in article 12. On the question as to whether the authorised person contemplated by section 18FA of the Act would be 'other authority' within the meaning of that expressions as used in article 12, reliance was placed by counsel on both sides on a couple of authorities, which supported each one's rival contentions, e.g. Rajasthan State Electricity Board v. Mohan Lal and Pramodrai Shamaldas Bhavsar v. Life Insurance Corporation of India. The question not being free from doubt we do not propose to deal with or decide and, in our view, it is really unnecessary to decide that question as, for reasons we shall presently indicate, we find no substance in any of the arguments raised to support the challenge to thieveries of section 15A under article 14 of the Constitution.

19. On the point whether within the group or class of companies falling under section 15A any absolute, unguided and unfettered power or direction to pick and choose any particular under taking has been conferred on the Central Government without providing any guidelines by reference to which such power or discretion should be exercised, it is not possible to accept the argument urged by counsel for respondents Nos. 3 and 7 to 9. In the first place, the preamble to the Act indicates legislative policy by reference to which the several provisions in the Act have to be understood and put into operation. The preamble to the Act it as follows : 'An Act to provide for the development and regulation of certain industries.' This is followed by the declaration as to expediency of control by the Union of India over such industries as are specified in the First Schedule under section 2 of the Act. It is obvious that by reason of such declaration contained in section 2 of the Act the particular topic of legislation is transferred exclusively to the legislative filed of the Union legislature, i.e., Parliament. The aforesaid preamble clearly shows that the enactment was placed on the statute book with the object of providing for the development and regulation of scheduled industries at the hands of the Union of India the provisions of section 15A will have to the understood, interpreted, worked and put into force for the purpose of carrying out the object of the Act as indicated in the preamble. The preamble, therefore, clearly indicates the legislative policy and the objects to carry out which the provisions of the Act including section 15A will be have to be resorted to. Further, in our view, far from conferring absolute, unguided and unfettered power on the Central Government to investigate into the affairs of the company in liquidation under section 15A, section 15A itself contains sufficient guidelines as to in respect of which particular industrial undertaking or undertaking of which particular companies in liquidation, the Central Government should make an application to this court praying for permission to make an investigation into the possibility of restarting such an undertaking and the guidelines are to be found in the following words which occur in the section :

'....... if it is of opinion that it is necessary, in the interests of the general public and, in particular, in the interests of production, supply or distribution of articles or class of articles relatable to the concerned scheduled industry, to investigate into the possibility of running or restarting the industrial undertaking ......'

20. These words clearly indicate that the power conferred by the section is conditioned by the formation of opinion as to the necessity of investigating into the possibility of restarting particular industrial undertakings in the interests of the general public in particular in the interests of production, supply or distribution of the concerned articles manufactured by the undertaking. In other words, unless the requisite opinion is formed by the Central Government that it is necessary in the interests of the general public and in particular in the interests of production, supply or distribution of concerned articles to investigate into such possibility of restarting any particular industrial undertaking, no application as contemplated by section 15A could be made by the Central Government to this court. Even if the undertaking happens to be a scheduled undertaking falling in the First Schedule, having regard to its magnitude and capacity or having regard to the glut that may be obtaining in the market in the articles manufactured by it, the Central Government may form the opinion that it will not be in the interests of the general public and in particular in the interests of production of the articles concerned to restart such undertaking. The aforesaid words which occur in section 15A, therefore, clearly provide sufficient guidelines by reference to which the Central Government can decide as to in respect of which industrial undertaking of which particular company falling under the section an application seeking permission to investigate into the possibility of restarting the same should be made. In our view, the power or discretion or discretion for selecting particular undertakings or particular companies falling within the section cannot be regarded as absolute, unguided or unfettered as contended by counsel for respondents Nos. 3 and 7 to 9. The preamble of the Act together with the particular provision occurring in section 15A discussed above, in our view, affords sufficient guidelines by reference to which the Central Government can make its selection from among the class or group dealt with by the section. It is true that once the initial requirements of section 15A are satisfied and the condition precedent mentioned therein is fulfilled and an application is made by the Central Government to this court under sub-section (2), this court is under an obligation to grant the permission prayed for, notwithstanding anything contained in the Companies Act or in any other law for the time being in force. But this aspect of the matter has nothing to do with the question as to whether absolute, unguided or unfettered power or discretion has been conferred upon the Central Government to pick and choose without providing any guideline under section 15A in that behalf. As stated earlier, the preamble together with the relevant provision contained in section 15A itself clearly provides sufficient guidelines by reference to which the Central Government can select any particular undertaking of a particular company which is being wound up and whose business in not being continued.

21. It was, however, contended by Mr. Desai appearing for respondents Nos. 7 to 9, that guidance afforded by the relevant provision occurring in section 15A itself, which we have discussed above, should be regarded as very vague and insufficient to enable the Central Government to make selection. We are unable to accept the submission of Mr. Desai as we feel that specific and clear guidance has been afforded to the Central Government by reason of a particular relevant provision that is to be found in the section itself. In this context we may refer to a decision of the Supreme Court in Inder Singh v. State of Rajasthan. In that case provisions of section 15 of the Rajasthan (Protection of Tenants) Ordinance, No. 9 of 1949, which authorised the Government to exempt any person or class of persons from the operation of the Act was challenged on the ground that the section did not lay down the principles on which exemption could be granted and that the decision of the matter was left to the unfettered and uncanalised discretion of the Government and that, therefore, the section was repugnant to article 14 and Supreme Court took the view that though that particular section did not itself indicated the grounds on which exemption could be granted, the preamble to the Ordinance set out with sufficient clearness the policy of the legislature; and as that governed section 15 of the Ordinance, the decision of the Government thereunder could not be said to be unguided. The preamble to the Ordinance ran as follows :

'Whereas with a view to putting a check on the growing tendency of landholders to eject or dispossess tenants from their holdings, and in the wider national interest of increasing the production of foodgrains, it is expedient to make provision for the protection of tenants in Rajasthan from ejectment or dispossession from their holdings.'

22. It will appear clear that the preamble on which the court relied in that case was in fact more widely worded than the particular relevant clause occurring in section 15A of the instant Act and, even then, the Supreme Court held that the aforesaid preamble to the Ordinance set out with sufficient clearness the policy of the legislature which governed the actions of the Government in granting exemptions under section 15 of the Ordinance, and as such the decision of the Government under section 15 of the Ordinance could not be said to be unguided. In the present case, apart from the preamble to the Act of 1951, the particular relevant clause occurring in section 15A, which we have referred to above, clearly affords more than sufficient guidance to the Central Government in making selection while resorting to section 15A. It is, therefore, not possible to accept the contention that guidance afforded by particular relevant clause occurring in section 15A is vague or insufficient. It is true that the section nowhere provides for any appeal against the opinion formed by the Central Government. In the first place, as has been indicated by us earlier, it is the subjective opinion that is required to be formed by the Central Government before resorting to section 15A and, secondly, providing for an appeal may be one of the ways of providing a check on unguided or unfettered power but that is not the only way in which the exercise of power could be guided or checked. As stated above, the object of the enactment as indicated in the preamble and the particular relevant clause occurring in section 15A itself clearly provide more than sufficient guidance to the Central Government by reference to which it can make its selection of an undertaking of a particular company in liquidation before making an application to the court thereunder. The first leg of the argument raising a challenge to section 15A under article 14 must, therefore, fail.

23. Mr. Desai for respondents Nos. 7 to 9 further urged that in between the two investigations that were contemplated under section 15 and section 15A of the Act, though the ultimate purpose of both the investigations was the same, namely, to take over the management of the industrial undertaking of a particular company, discrimination was bound to result, inasmuch as for the investigation to be undertaken under section 15 certain procedure was prescribed by framing rules, whereas for the investigation under section 15A no procedure and no rules had been framed and as such the investigation contemplated under section 15A has been discriminated against and, therefore, the provisions of section 15A are violative of article 14. The argument, in our view, merely requires to be stated to be rejected for the simple reason that before invoking the equality clause under article 14, it must be shown that the two things or two matters are similarly situated or similarly circumstances and are given unequal treatment and if sections 15 and 15A are carefully scrutinised, it will appear clear that the two investigations contemplated by the aforesaid two provisions can in no sense be said to be investigations of same character. In the first place, under section 15 the investigation contemplated is in respect or a scheduled undertaking which is a running concern while section 15A is applicable to an undertaking of a company which is being wound up and whose business is not being continued or has stopped. Secondly, and this is important, the nature, scope and purpose of the investigation contemplated under section 15 are entirely different from the nature, scope and purpose of investigation contemplated under section 15A; whereas the purpose of carrying out the investigation under section 15A is a fact-finding one, namely, to investigate into the possibility of ascertaining whether a particular industrial undertaking covered by that section is capable of being restarted or not, the purposes for which the investigation is undertaken under section 15 have been indicated in sub-clauses (i) to (iv) of clause (a) and clause (b) of section 15 and those purposes, if scrutinised, would clearly appear to be different from the purpose of the investigation contemplated under section 15A. Thirdly, the opinion which is required to be formed by the Central Government under section 15 is of entirely different character from the opinion that is required to be formed by the Central Government while resorting to section 15A of the Act. It will thus be clear that the two investigations contemplated by the two sections, viz., sections 15 and section 15A, respectively, can in no sense be said to be investigations of the same character or similarly circumstanced. In fact, the two are intended to cater to two entirely different situations and even the ultimate taking-over of the management would be for different purposes depending upon whether the investigation is carried out under one or the other provision. In this view of the matter, there will be no question of section 15A violating article 14 on the ground suggested.

24. The last leg of the argument was that the Central Government has two procedures available to it to take over the management of companies which have gone into liquidation; one under the general law and the other under section 15A and section 18FA of the Act and that the procedure under section 15A and section 18FA was clearly more harmful and prejudicial to the creditors of the company like respondents Nos. 7 to 9 and it was urged that since it was left to the sweet will of the Central Government to choose one or the other of the two procedures, the discrimination was bound to result. Relaying on certain section of the Companies Act dealing with powers of the official liquidator it was pointed out that, ordinarily, whenever a company went into liquidation and the official liquidator was appointed, the Government could apply to the liquidator for taking over the management of the undertaking on leave and licence basis on certain terms including payment of yearly or monthly licence fees that were fixed by the High Court and it was further pointed out that usually the High Court on fixing the terms permitted the Government to take over the management of the mills for certain period and the amount of licence fee was available to the liquidator in winding-up proceedings. But, on the other hand, section 15A and section 18FA were resorted to by the Central Government for taking over the management of the undertaking of the company in liquidation, then, there is no provision in the Act directing the Government to pay any licence fee for running the mills; not only that but if loans were raised by the authorised persons appointed to run the undertaking, such debts have been given priority over all other secured and unsecured creditors of the company under section 29D of the Act. It was, therefore, urged that out of these two procedures, the one under the Act was more prejudicial to the creditors of the company and it was left to the sweet will of the Central Government as to which of the procedures it should adopt for taking over the management of the undertaking and, therefore, discrimination was bound to result. In support reliance was placed upon the Supreme Court's decision in Northern India Caterers' case. In our view, the contention is without any substance. In the first place, there is no general law nor any particular law including the Companies Act under which any procedure for making an application by the Government to the court for taking over the management of the company in liquidation is provided for. What actually happens in that like any other private citizen who can apply to the court for taking over the management of the undertaking of a company in liquidation, the Government also can make such application to the court and obtain the management of the undertaking on terms that may be fixed by the court. In other words, it is a matter of private contract which either citizen or Government enters into with the official liquidator through the intervention of the court on the basis of which the management of the undertaking of a company in liquidation is taken over. This is far from saying that two sets of procedures, one under the general law and the other under the Act, are available to the Government for taking over the management. That being the correct position, it is difficult to accept the contention urged by counsel for respondents Nos. 7 to 9. In our view, therefore, the challenge to the vires of the provisions of section 15A of the Act under article 14 must fail.

25. Lastly, it was contended that the present application has been made mala fide the Union of India at the behest of the State Government and with ulterior motive of dispossessing respondent No. 3 of his control over the security. Two or three facts were pressed into service to support this plan. It was pointed out that the winding-up order was passed by this court on March 12, 1969, and the official liquidator was appointed and this court on March 12, 1969, and the official liquidator was appointed and this court had specifically directed that the appointment of the official liquidator will not displace the private receiver who, however, will have no power to run the mills but will enjoy all the powers for the purpose of realising the security by sale thereof for the benefit of secured creditors. In other words, it was pointed out that physical control of the 3rd respondent over the security covered by the second debenture trust deed was not affected by the appointment of the official liquidator. Secondly, it has been pointed out that an attempt was made by the State Government after the company had gone into liquidation to run the said mills on the leave and licence basis under the unemployment relief scheme but those negotiations failed in April, 1970, when the Government of Maharashtra withdrew its own offer on the ground that the workers were unwilling that the management should receive annual licence fee of Rs. 8 lakhs. It has been further pointed out that no sooner negotiations filed in April, 1970, the Central Government issued its order on June 2, 1970, under section 15(a)(i) of the Act appointing a committee of inspectors to undertake an investigation to ascertain whether there has been or is likely to be a substantial fall in the volume of production of cotton textiles manufactured by the mills without any justification and that order was struck down by this court on October 9, 1971, at the instance of the 3rd respondent and that thereafter the present application has been made by the Central Government at the behest of the State Government. On these facts it was urged that for extraneous reasons such as to dispossess the 3rd respondent of his control over the security under the second debenture trust deed and at the behest of the State of Maharashtra the present application is made and as such the same is mala fide. Counsel urged that in substance the present application is an attempt to get round the winding-up order passed by this court and sale of the security by the private receiver and because negotiations carried on the State Government failed and because the Central Government's order section 15(a)(i) was struck down by this court the present application was moved on behalf of the Union of India. In our view, there is no substance in this plea of mala fides raised on behalf of respondents Nos. 3 and 7 to 9. There is no question of any attempt being made by the Central Government to get round this court's winding-up order or to prevent the sale of security by the private receiver. In the first place, the relevant direction given by this court while passing the winding-up order, on which reliance has been placed by respondent No. 3, does not empower the private receiver to run the mills but all that the direction does is that it safeguards all powers of his in the matter of releasing the security by sale for the benefit of the secured creditors; secondly, though the private receiver's control over the security had been safeguarded by this court while passing the winding-up order, no attempt seems to have been made by the private receiver to have the security realised so far and nothing prevented him from realising the security by sale and as such it cannot be said that the present attempt is to get round the winding-up order. It is true that the negotiations carried on by the State of Maharashtra for taking over the mills for running the same on leave and licence basis failed in April, 1970, because no settlement on the point of licence fee payable by the State Government was arrived at. But it is clear on record that even that offer had been made by the State Government only with a view to see that the unemployment of 4,000 workers was relieved inasmuch as, admittedly, the management of the mill was sought to be taken over by the State Government as part of unemployment relief scheme. Similarly, though the order passed by the Central Government on June 2, 1970, appointing a committee of inspectors to undertake an investigation under section 15(a)(i) was struck done by this court on October 9, 1971, that was not on merits but on the ground that on a proper interpretation of the section action under section 15(a)(i) could not be taken in respect of the mills which had closed its business in October 1967. The language of section 15(a)(i) clearly warranted that view. It was also doubtful as to whether an order under section 15(a)(i) could be made in respect of a company which was being wound up and, therefore, with a view to remove all doubts an Ordinance No. XX of 1971 was passed inserting new section 15A which was expressly made applicable to a company which was being wound up and the affidavit-in-rejoinder filed on behalf of the applicants clearly shows that it was after passing of the Ordinance and the coming into force of new section 15A that the Central Government applied its mind to the formation of opinion as required by section 15A and after the requisite opinion was formed the present application has been preferred. As discussed earlier, the opinion required to be formed under section 15(a)(i) is entirely different from the opinion that is required to be formed by the Central Government section 15A of the Act and purpose of the two investigations contemplated by the two provisions are different. Therefore, it will be difficult to say that because the Central Government failed in its attempt to sustain its order passed under section 15(a)(i), it has an oblique motive in resorting to section 15A. Further, once it is accepted that the Central Government had relevant materials before it, that upon such materials it formed the requisite opinion and that the purpose of the investigation to be undertaken is the one specified in the section, then the plea that action is being taken for some extraneous or ulterior motive must fall to the ground. As we have already come to the conclusion that the initial requirements of section 15A have been satisfied in the present case and even the condition precedent mentioned in section 15A has been fulfilled, it was perfectly open to the Central Government to make an application under that section and the application cannot be regarded as having been motivated by any mala fide intention or extraneous considerations.

26. In the result, all the objections raised by respondents Nos. 3 and 7 to 9 fail and the permission sought must be granted. Summons is, therefore, made absolute in terms of prayer (a). We also direct that respondents Nos. 3 and 7 to 9 should afford all facilities to the person or body of persons that will be appointed by the applicants in their work of carrying out the investigation contemplated by section 15A.

27. Respondents Nos. 3 and 7 to 9 will pay the costs of the summons to the applicants; costs quantified at Rs. 750.

28. Mr. Desai applies for stay of the operation of our order. We do not think that a blanket stay as asked for should be granted. We direct that the Central Government can proceed to appoint a person or body of persons to investigate into the affairs of the undertaking of the 1st respondent-company. We, however, further direct that commencement of the investigation at the hands of that person or body of persons is stayed for a period of eight days.


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