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All India Reporter Ltd. and anr. Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectCompany
CourtMumbai High Court
Decided On
Case NumberSpecial Civil Appln. No. 161 of 1979
Judge
Reported inAIR1982Bom41; 1982TAXLR2422
ActsCompanies Act, 1956 - Sections 214(1-B), 314(1-B) and 637-A
AppellantAll India Reporter Ltd. and anr.
RespondentUnion of India
Appellant AdvocateV.R. Manohar and;A.B. Oka, Advs.
Respondent AdvocateM.G. Bhangade, Adv.
Excerpt:
.....an approval should be granted taking into account the relevant material related to the financial structure and managerial structure of the company - - 2500-50=3000. clearly for such a salary scale, there is no need to obtain the sanction of the central government......approved the salary of rs. 2500 in the pay scale of rs. 2500-50=3000. clearly for such a salary scale, there is no need to obtain the sanction of the central government. while passing the initial order the central government did not take into account even the provisions of s. 314(1-b) of the companies act. much less the relevant material supplied by the petitioner company. in the case of the second petitioner in this petition his salary increase has been approved with effect from 1-7-1977 while in the case of the second petitioner in special civil applnn. no 180 of 1979 the increase in salary is approved only with effect from 1-2-1978. there is nothing in the orders to indicate why such a distinction has been made between the two sets of orders by the central government.3. for.....
Judgment:

Sujata Manohar, J.

1. In this petition the first petitioners have sought approval under the provisions of S. 214(1-B) of the Companies Act to the appointment of the second petitioner as Administrative officer of the first petitioner Company on a salary of Rs. 4000 in the pay-scale of Rs. 4000-250-5250. The second petitioner is the younger brother of the General Manager of the first petitioner Company and accordingly sanction is required for his being appointed as Administrative Officer in the pay scale of Rs. 4000-250-4250. The second petitioner is a graduate. He is working with the first petitioner since 1954. He was designated as Assistant Manager with effect from 1-4-1967 and his remuneration was fixed at Rs. 1500-100-2000 with effect from 1-4-1967. He reached the maximum in the scale on 1-4-1972. Thereafter on account of the 25% increase in the salary which was granted by the first petitioner to all its imployees, he started drawing a monthly salary of Rs. 2500 with effect from 1-9-1973. By a special resolution passed by the Company on 14-1-1978 he was appointed Administrative officer and he was given a salary of Rs. 4000 in the 1982 Bom./4 I G - 19 pay scale of its 4000-250-5250. With effect from 1-7-1977. Thereafter by its letter dated 311-1978 the first petitioner applied to the Central Government fot its approval to the above appointment giving all relevant material.By its order dated 29-6-1978. The Central Government granted its approval to the second petitioner being appointed as Administrative Officer, However, it accorded its sanction to a reduced increase in the salary of the second petitioner. It sanctioned a salary of Rs. 2500 per month in the pay-scale of Rs. 2500-50-3000, effective from 1-7-1977. The other terms and conditions imposed in the order were similar to the terms and conditions imposed in the order in Special Civil appln No. 160 of 1979, (Reported in ) Thereafter on the application of the first petitioners, this order was revised by the Central Government by its order dated 28-10-1978. By the revised order the Central Government granted its approval to a fixed salary of Rs. 2000 and other terms and conditions of the previous letter were to remain unaltered.

2. For the reasons set out in our judgment in Special Civil appln No. 160 of 1979, (Reported in ), these two orders which are in terms identical with the orders in special Civil appln. No. 160 of 1979, except for the quantum of salary, are also passed with out application of mind. In the present case, there is another additional factor which also further strengthens the conclusion that the orders are passed with out application of mind. Under S. 214(1-B) of the Companies Act, approval of the Central Government is required only if the salary that is proposed to be paid to a relative of the Manager is not less than Rs. 3000. In the initial order which was passed in the present case, the Central Government approved the salary of Rs. 2500 in the pay scale of Rs. 2500-50=3000. Clearly for such a salary scale, there is no need to obtain the sanction of the Central Government. While passing the initial order the Central Government did not take into account even the provisions of S. 314(1-B) of the Companies Act. Much less the relevant material supplied by the petitioner Company. In the case of the second petitioner in this petition his salary increase has been approved with effect from 1-7-1977 while in the case of the second petitioner in Special Civil Applnn. No 180 of 1979 the increase in salary is approved only with effect from 1-2-1978. There is nothing in the orders to indicate why such a distinction has been made between the two sets of orders by the Central Government.

3. For the reasons set out above an also in our judgment in special civil appln No190 of 1970. (Reported in ) the present petition is allowed. The orders of the Central Government dated 29-6-1978. And 25-10-1978 with reference to the second petitioner are set aside and the respondent is directed to issue fresh orders under S. 314(1-B) read with S. 637-A of the Companies Act after taking into consideration the material supplied by the first petitioners. The respondent will pay to the petitioners the costs of this petition.

4. Petition allowed.


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