2,000 preference shares were held by New Central Jute Mills Company Ltd., and 2,000 preference shares were held by Rohtas Industries Ltd. New Central Jute Mills Co. Ltd. and the Rohtas Industries Ltd., were both companytrolled by the Sahu Jains or Sri S. P. Jain.
1 1967 2S.C.R.583,585,588.
100 per share against cash payment.
The Regional Director was also asked to report whether the preference shares of the Albion Plywoods Ltd. carried any voting rights before companyversion.
The preference shares were redeemable at the option of the Albion Plywoods Ltd., at any time after 10 years from the date of their issue on September 7, 1957.
17 on June 10, 1960 and Rs.
In pursuance of the above order Shri Sisir Kumar Datta Secretary to the Government of India, Ministry of Industrial Development and Company Affairs.
Niren De, Attorney General, V. C. Mahajan and S. P. Nayar, for the respondents in all the appeals .
18 of 1966, 910 of 1965 and 397 of 1966 respectively.
Evidently as he was inquiring into the companyplaint made against the New Central Jute Mills Co. Ltd. he did number mention the market quotation for the shares in question either on May 6, 1960 or immediately before that date.
C. Setalvad, M. C. Chagla, R. K. Garg, S. C. Agarwal and S. Chakravarti, for the appellant in all the appeals .
The various extensions given for companypleting the investigation are also challenged in some of the appeals.
Appeals by special leave from the judgments and orders, dated January 20, July 4, and July 5, 1966 of the Patna High Court in C.W.J.C., Nos.
These materials are to be found in the companyplaint dated January 27, 1961 with regard to the sale of 2,000 preference shares by New Central Jute Mills Co. Ltd., and the companyrespondence passed between the Secretary to the Government of India, ministry of companymerce and industry, department of companypany law administration, New Delhi and the regional director, companypany law administration, Calcutta.
The Judgment of S. M. SIKRI and K. S. HEGDE, JJ.
As a matter of fact Albion Plywoods Ltd., by a special resolution passed on May 20, 1960 companyverted 5,000 preference shares into 50,000 ordinary shares and M s. Sahu Jains were appointed as its managing agents.
100 per share.
The Inspector shall companyplete the investigation and submit six companyies of his report to the Central Government number later than four months from the date of issue of this order unless time in that behalf is extended by the Central Government.
100 each of Albion Plywoods Ltd. The preference shares were acquired by Rohtas Industries Ltd. A Sahu Jain Company on allotment by the Albion Plywood Ltd. of such shares on 15th June, 1951.
The annual return filed by Albion Plywoods Ltd., on May 30, 1960 showed that 32,000 ordinary shares in the companypany were then held by the members of the Bagla family.
One of the points on which information was called for was whether Sahu Jains Cos other than New Central Jute Mills Co. Ltd. who were holding 3,000 shares of Albion Plywoods Ltd. had also transferred their shares to Bagla Co. Podar and Sons and to give full details thereof.
The market price of an ordinary share as shown in the Indian Finance was Rs.
was delivered by HEGDE, J. R. S. BACHAWAT, J. delivered a separate Opinion.
In his reply he stated I have been able to gather the following information regarding the 3,000 preference shares of Rs.
3 lacs.
14 on May 13, 1960, Rs.
17 on May 27, 1960, Rs.
These 3,000 prefe rence shares were sold to M s Bagla Co., on 6th May, 1960 at par for Rs.
On January 29, 1962, the Regional Director replied to that letter.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
The said affidavit was directed to be filed within a fortnight from that date and the appellants were permitted to file a reply affidavit within a week thereafter.
Shri Jain is being prosecuted in the Court District Magistrate, Delhi under sections 120B read with sections 409, 465, 467 and 477 of the Indian Penal Code in regard to his misconduct in the management of what are known as the Dalmia Jain group of companypanies, and most of the material upon the basis of which this prosecution was launched was available to the Central Government on 11 4 63.
The charge is that the management of Rohtas Industries Ltd., sold the preference shares at an under value with a view to benefit the managing agents, their friends and brokers knowing fully well that on companyversion into ordinary shares they would fetch a much higher price.
It was number disputed before us that the market quotation for the ordinary shares of Albion Plywoods Ltd. on or immediately before May 6, 1960 was Rs.
The Regional Director in his letter of 10th November, 1961, had given the market quotations for the ordinary shares of Albion Plywoods Ltd. on some of the dates in May, 1960.
Alongwith that affidavit, the relevant companyy of the Indian Finance was produced.
2 4 CL.1/63, Government of India, Ministry of Commerce and Industry, Department of Company Law Administration on April 11, 1963 is liable to be struck down as number having been made in accordance with law.
Some of these were referred to and inquired into by a companymission of Inquiry headed by Mr. Justice Vivian Bose of the Supreme Court of India, which in its report, dated 15 6 62 made adverse findings and observations against Shri S. P. Jain.
According to him those quotations were gathered from Indian Finance.
2274 to 2276 of 1966.
For one reason or the other the investigation directed is still in its initial stage.
Shri Jain is also being prosecuted in Calcutta for misconduct in the management of Messrs. New Central Jute Mills Co., Ltd., a companypany under the same management as the petitioner , on the basis of an F.I.R. lodged by the Department with the Special Judge, Police Establishment just before the 1 1 th April 1963, Shri Jain is also being proceeded against before the Companies Tribunal under sections 388B and 398 for misconduct in managing the affairs of M s. Bennett Coleman Co., Ltd. and details as to Shri Jains misconduct were with the Central Government as on 11th April, 1963.
The appellant in these appeals is a companypany incorporated under the Indian Companies Act, 1913 having its registered office at Dalmia Nagar, Shahbad District, Bihar State.
Its authorised capital is rupees 15 crores and the paid up capital little more than six crores.
It would appear that these shares were sold before 20th May, 1960 the date on which the preference shares were companyverted into ordinary shares.
The Eleventh day of April, 1963.
In April 1960 New Central Jute Mills Co., Ltd., sold 2,000 preference shares held by it to M s. Bagla Co., and M s. Poddar Sons at Rs.
On the dates when the sales were effected the management of New Central Jute Mills Co. Ltd., and Rohtas Industries Ltd., knew that the preference shares would be companyverted into ordinary shares.
It is manufacturing paper, cement, sugar, vanaspati and other articles.
15 44 on May 20, 1960, Rs.
It was incorporated in the year 1933.
The charge was originally made with regard to the sale of 2,000 preference shares held by New Central Jute Mills Co. Ltd., in a letter dated January 27, 1961 addressed by a company plainant to the Secretary to the Government of India, department of companypany law administration.
A separate order will issue with regard to the remuneration and other incidental expenses of the Inspector.
Thereafter on December 2, 1961 the UnderSecretary to the Government of India wrote to the Regional Director asking for some further information.
During the hearing of these appeals an affidavit has been filed on behalf of the appellant stating that the market quotation of the ordinary share in the Albion Plywoods Ltd. on May 6, 1960 or immediately before that date was Rs.
By order and in the name of the President of India Sd D.S. Dang Deputy Secretary to the Government of India The time granted to the Inspector has been repeatedly ex tended.
Department of Company Affairs New Delhi filed his affidavit on October 4, 1968.
Along with that affidavit he produced into Court three companyplaints received by the Government which are marked as Annexures A to C. Shri Datta does number claim to have any personal knowledge of the facts of this case.
14 on June 17, 1960.
3 1951 A.C.66,77.
On May 6, 1950 Rohtas Industries Ltd., sold 3,000 preference shares held by it to M s. Bagla Co., at Rs.
2 1950 S.C.R.621.
