Section 235, read with sections 236 and 237 of the Companies

HIGH COURT OF ANDHRA PRADESH S. Ravi Kiran v. Secretary, Minister of Company Affairs P.S. NARAYANA J. WRIT PETITION NO. 14788 OF 2007 October 29, 2007 Section 235, read with sections 236 and 237 of the Companies Act, 1956 - Investigation of affairs of a company - Petitioner’s case was that he and his relatives had purchased certain shares of third respondent company but neither any annual report nor notice of any extraordinary annual meeting of that company was ever received by them -Subsequently, petitioner came to know that said company had become sick and proposed scheme before BIFR for revival - Petitioner thus, sent a notice to first respondent seeking investigation by a competent person to investigate into affairs of company - Thereupon, petitioner filed instant writ petition seeking direction to first respondent to appoint a competent person as investigator for investigating into affairs of third respondent-company and to file a report before court and to pass suitable orders - Whether since petitioner was having a remedy to approach Company Law Board or to invoke such other remedies available to him under law or under provisions of Act, he was to be given liberty to pursue such other legal remedies in accordance with law - Held, yes FACTS The case of the petitioner was that in the year 1995 he had invested certain amount for the purchase of shares of the third respondent company. However, for the last few years he had not received any annual report nor notice of any extraordinary annual general body meeting of the company which he brought to the notice of the second respondent, i.e., the Registrar of Companies. Subsequently, the petitioner came to know that the third respondent-company had become allegedly sick and proposed a scheme before the Board for Industrial and Financial Reconstruction (BIFR) for revival of the company. The petitioner, thus, sent a notice to the first respondent with the above said facts and sought investigation by a competent person to investigate into the affairs of the company from 1995 onwards; subsequently, the petitioner filed instant petition seeking direction of the court to first respondent to appoint a competent person as investigator for investigating into the affairs of the third respondent-company from 1995 onwards and to file a report before the court and to pass suitable orders. The respondent raised objection to the instant petition alleging that the remedy, if any, available to the petitioner was to approach the Company Law Board, in accordance with the provisions of the Act and, hence, the petition itself was not maintainable. HELD The power conferred on the Central Government under section 237(b) is a discretionary power whereas under section 237(a), the Central Government is bound to appoint one or more competent persons as inspectors to investigate into the affairs of a company, as held in Rohtas Industries Ltd. v. S.D. Agarwal [1969] 39 Comp. Cas. 781 (SC); [1969] 1 Comp. LJ 350 (SC); AIR 1969 SC 707. As can be seen from the different provisions of the Act and also the scheme of the Act, since the petitioner is having a remedy to approach the Company Law Board or to invoke such other remedies available to him under law or under the provisions of the Act, the petitioner was given liberty to pursue the other legal remedies available to him, in accordance with law. [Para 15] Accordingly, the writ petition was disposal of. [Para 16]