Company Law Board
Union Of India (Uoi) vs R.C. Bhargava on 23 June, 1998
Equivalent citations: [1999]95COMPCAS394(CLB)
ORDER
1. This is a reference to the Company Law Board (CLB) by the Union of India under Section 388B of the Companies Act, 1956 (hereinafter referred to as "the Act") stating a case that in the opinion of the Union of India there are circumstances suggesting that the respondent, R. C. Bhargava, in the conduct and management of the affairs of the company, Maruti Udyog Limited (hereinafter referred to as "the company"), is or has been in connection therewith guilty of fraud, misfeasance, persistent negligence or default in carrying out his obligations and functions under the law or breach of trust or that the business of the company is not or has not been conducted by the respondent in accordance with sound business principles or prudent commercial practices. This reference is now made with a request that Company Law Board may inquire into the case and record a decision as to whether or not the respondent, Bhargava, is a fit and proper person to hold the office of director or any other office connected with the conduct and management of the company.
2. Such opinion is alleged to have been formed on the basis of the CBI charge-sheets and reports relating to five cases against the respondent Bhargava and a few others in the employment of the company.
3. There are two other applications in the proceedings, one by the respondent, Bhargava, challenging the maintainability of the reference, and other by the Suzuki Motor Corporation, fifty per cent shareholder of the company for intervening in the pending proceedings. (However, this application was not pressed.) The respondent, Bhargava, has challenged the maintainability of the reference on the grounds, inter alia, that the subject-matter of this reference is also the subject-matter of several criminal proceedings on the self-same charges initiated by the Union of India against the respondent, Bhargava, and a few others, and as such two parallel proceedings relating to the same subject matter cannot proceed at the same time. Further, the respondent in this reference, according to him, may be seriously prejudiced if he is made to disclose his defence in the present proceedings to the self-same charges before the commencement of the trial in the criminal proceedings. The other ground as to the maintainability of the reference, is that the alleged cause of action in this reference is barred by limitation or that the applicant is guilty of inordinate delay in making the reference relating to charges alleged to have occurred long before filing of this reference.
4. The case of the applicant in this reference, in short, is that a joint venture agreement was signed by the Government of India, with Suzuki Motor Corporation (for short "Suzuki") of Japan in 1982. Suzuki had initially a shareholding of 20 per cent, which was later increased to 40 per cent, in 1987. The equity shareholding of Suzuki was further increased to 50 per cent, in June, 1992. Initially, the company was a Government company within the meaning of the Act, and now from 1992, the Government of India is having a little less than fifty per cent, of the Maruti shareholding, i.e., 49.74 per cent. The company is, therefore, no longer a Government company. The respondent, Bhargava, is associated with the company since August, 1981, when the company was a Government company. He became the managing director in July, 1987, and chairman-cum-managing director from April, 1990. According to the applicant-Union of India, the respondent, Bhargava, was a public servant so long as the company was a Government company and, thereafter, he ceased to be a public servant. The board of directors of the company has the nominees of the Government and Suzuki all throughout.
5. It is alleged by the applicant in this reference that the said Bhargava as director/managing director allegedly committed various offences which resulted in the registration of five first information reports (FIRs) against the said Bhargava and his associates as co-accused. After completion of investigations, the Central Bureau of Investigation (CBI) has filed charge-sheets in two cases in the court of the Special Judge, Delhi, who has taken cognizance thereof. In the third case, the Superintendent of Police, CBI, has submitted his report after investigation, and launching of prosecution, according to the applicant, is under consideration. The fourth case is still under investigation of the CBI and in the fifth and the last case, the investigation is complete and initiation of prosecution is said to be under consideration of the applicant.
6. The five such cases may be categorized as, (a) cars diversion case, (b) Hydraulics case, (c) dealership at Ghaziabad case, (d) transport case, and (e) Subros case. In regard to the cars case (12 cars case) an FIR No. R.C.-1(A)/92-SEU(IV) was registered in April, 1992, and after completion of the investigation the CBI has filed charge-sheets before the court of the Special Judge, Delhi, who has taken cognizance thereof. With regard to Hydraulics case, an FIR was registered as RC-3(A)/92-ACU(V) on December 14, 1992, and on completion of investigation charge-sheets were filed in the court of the Special Judge, Delhi, who has taken cognizance of the trial of the accused persons. In the Ghaziabad dealership case, an FIR being No. RC-3(A)/94-ACU(IV) was registered in September, 1994, and the same is still under investigation. In the transport case an FIR RC-2(A)/94-ACU was registered in September, 1994, and charge-sheet has been filed, and in the Subros case no charge-sheet has yet been filed.
7. 12 cars case : It is alleged in the reference that some time during 1990-91, the respondent, Bhargava, entered into a criminal conspiracy with one A. K. Jain, the then departmental manager in sales and despatch and one Ms. Rohini Prakash, Executive (sales and despatch) of the company, with the object to cause pecuniary advantage to certain customers and in pursuance of the said conspiracy the said Bhargava delivered to such customers cars of different make at pre-budget price. During the relevant period, the company was a Government undertaking and on the budget day in the year 1990-91, the excise duty was enhanced on vehicles. The basic price of the vehicles was also increased by the company with immediate effect.
8. It is alleged that the said A. K. Jain and the respondent in connivance with other accused persons allegedly entered into criminal conspiracy and obtained special permission from the Excise Commissioner for taking out the vehicles from the factory on the budget day. It is alleged that 17 vehicles could not be taken out of the factory gate because of the closure of excise gates. According to the applicant, these 17 vehicles were priority category vehicles from the manufacturer's quota as well as foreign exchange quota. It is further alleged that on July 24, 1991, 19 vehicles were stock transferred for being delivered to the customers who are registered in special category through Maruti Sales and Service (MSSD). According to the applicant, it is revealed from the CBI investigation that the said Bhargava in criminal conspiracy with the co-accused, namely, the said A. K. Jain and the said Rohini Prakash fraudulently selected different customers for bestowing undue pecuniary benefits by supplying vehicles at pre-budget price while denying the same to the customers in the general category in order of seniority thereby unduly causing financial losses.
Hydraulic case :
The charge in this case is that the said R. C. Bhargava, in criminal conspiracy with one Shri C. Krishnamurthy, who was then the managing director and with the object of benefiting Hydraulics Ltd., Madras, caused the company to make substantial advances to Hydraulics and also caused purchases of shock absorbers to be made from Hydraulics at a price which was higher than that quoted by Hydraulics from a date prior to the date from which other suppliers were given benefit of such price increase. Further, the increase in price in respect of supplies made by Hydraulics was made without any corresponding increase of price in respect of supplies by others, and further, Hydraulics were given a larger share of business than other suppliers. In regard to advances made to Hydraulics it is alleged that advance of Rs. 50 lakhs on a security of landed property at Madras, which, according to the applicant, was not worth more than Rs. 25.70 lakhs, was allowed by the said Bhargava and the said Krishnamurthy defying all usual norms. It is further alleged that K. Jayakar, son of the said V. Krishnamurthy, the then chairman of the company was married in June, 1983, to a daughter of Shri Muthu-krishnan who was controlling the said Hydraulics. The charge is that the said R. C. Bhargava along with the said Krishnamurthy entered into a criminal conspiracy with the said Muthukrishnan in pursuance of which certain acts of omission and commission were committed.
Dealership at Ghaziabad :
The allegations in this regard are that the said R. C. Bhargava entered into criminal conspiracy with the said V. Krishnamurthy, the then chairman, and one Lalit Suri and caused Lalit Suri to be appointed as a dealer of the company in Ghaziabad in reversal of the policy decision of the board of directors of the company not to appoint a dealer at Ghaziabad. It is alleged that the said Krishnamurthy along with the respondent the said Bhargava entered into criminal conspiracy to reverse the said policy decision of the board not to appoint any dealer at Ghaziabad and took a decision by themselves on December 21, 1987, by which one Rohan Motors, Ghaziabad, of which the said Lalit Suri was the owner, was appointed dealer for the company. According to the applicant, this was done in consideration of the said Lalit Suri providing a commercial flat to the said Bhargava and his relatives in a prestigious commercial building, the World Trade Centre, Connaught Place, New Delhi.
Transport case :
The charge in this case is that the said R. C. Bhargava in criminal conspiracy with V. K. Mathur, S. N. Dewan, R. K. Verma and Y. P. Nanda of Delhi-Ahmedabad Roadways awarded a long-term transportation contract to Delhi-Ahmedabad Roadways (DAR) for transportation of CKD kits from Kandla to Gurgaon and caused a loss of Rs. 90,46,000 to the company. It is alleged that the said R. C. Bhargava had a personal interest in this transaction as he was residing in premises owned by the wife of the said Y. P. Nanda's brother. It is further alleged that the said Bhargava had caused this contract to be given in favour of the said DAR though DAR was not a tenderer and one of the tenderers had agreed to transport at a rate lower than DAR.
Subros case :
The charge in this case is that the said R. C. Bhargava during 1986-87 had entered into a criminal conspiracy with one Lalit Suri of Subros Ltd. and others and caused undue advantage to Subros, owned by the said Lalit Suri, in awarding to it a one-time contract for purchase of 10,000 air-conditioners and also gave advance to the said Subros. It is alleged that the respondent, the said Bhargava, without resorting to any open tender enquiries issued a letter of intent on April 4, 1986, to the said Subros intimating that the said Subros had been selected as approved bidder of the company to place supply order for air-conditioners to the company. It is further alleged that the respondent increased the price for each air-conditioner component without proper justification and also allowed an advance of Rs. 195.36 lakhs to the said Subros in June, 1986, whereas there was no such stipulation about payments of advance in the supply order. It is alleged that all this was done in consideration of Lalit Suri providing a commercial flat.
9. According to the applicant-Union of India, the above are the circumstances clearly suggesting that the respondent, R. C. Bhargava, in the conduct and management of the affairs of the company, is guilty of fraud, misfeasance, persistent negligence and further the respondent has not conducted the affairs of the company in accordance with sound business principles and prudent commercial practices.
10. The respondent in his reply to the said alleged charges and also the opinion formed by the Union of India on the basis thereof submits that the formation of the opinion may be a subjective process, but it is always open to the court, here the Company Law Board, being called upon to make an inquiry in a proceeding of reference under Section 388B and Chapter IVA of the Companies Act, 1956, to find out whether there are proper materials for the formation of such opinion, and also the manner and the method by which such an opinion has been formed. He submits that in making such inquiry under Chapter IVA of the Companies Act, the Company Law Board should make an independent assessment of the circumstances as alleged, and examine whether such circumstances suggest a case of fraud, misfeasance, negligence or that the acts complained of were done ignoring sound business principles or prudent commercial practices.
11. It is his further case that the alleged opinion has been formed solely on the alleged CBI investigation resulting in registering of FIRs and in some cases filing of charge-sheets. It is his further contention that the incidents which are the subject-matter of the said investigation by the CBI and the only material in the formation of the said alleged opinion by the Union of India, are all incidents alleged to have occurred during the period between 1983-84 and 1990-91. It is the grievance of the respondent that the Union of India, having a substantial shareholding in the company and having a majority of the nominees on the board of directors of the company at the relevant time, did not make any whisper of the said allegations or any one of them until this present reference. It is the case of the respondent that he was never considered unfit to become a director of the company in the span of his long service in the company from 1981, till 1996, either by the Union of India or other partner, Suzuki. The Union of India now for the first time in this reference claims to have formed an opinion that the respondent is not a fit and proper person to hold the office of director of the company. The respondent, therefore, submits that the said opinion of the Union of India does not reveal that the same was taken bona fide and upon proper materials. His apprehension is that the said opinion may have been formed as a result of some compulsions not explained or explainable.
12. With regard to the allegations as to car cases, the case of the respondent, R. C. Bhargava is that the cars in question were allotted to the persons either under the manufacturer's quota of five per cent, as approved by the Supreme Court in Voice v. Maruti Udyog Ltd. [1986] 3 SCC 294, or to those who paid in foreign exchange. According to the respondent, this is not disputed, the company had primarily three categories of customers, viz., customers eligible under the manufacturer's quota (MQ), customers eligible under foreign exchange quota (FQ), and general categories of customers (GQ). The MQ consisted of 5 per cent of the cars manufactured, FQ 15 per cent, of such cars. It is stated by the respondent that 17 vehicles which were in the factory of the company were already invoiced or to be invoiced came under the special quota of MQ, and FQ. Further, for the year 1991-92, the budget day was July 24, 1991, the cars were cleared after July 24, 1991, and for clearance of the cars special permission was obtained from the Excise Commissioner.
13. With regard to the Hydraulics case the answer of the respondent is that all decisions were taken pursuant to a recommendation of a technical committee of which he was not a member. As regards advance, it is his case that the loans were advanced according to the usual practice followed by the vendor development policy of the company. And in any event, all the loans in question were repaid with interest and the company did not suffer any loss on this account.
14. With regard to the dealership case, the case of the respondent is that the question of dealership was fully considered in the board meeting held on December 21, 1987, and no objection was raised by any of the directors. Further, regarding the dealership in Ghaziabad, it is not established that the said award of dealership is a bad business decision or contrary to any accepted commercial practice.
15. With regard to the transportation case, the respondent, R. C. Bhargava, states that the decision was duly approved by the board of directors which consisted of the two secretaries of the Government of India and the case of alleged financial loss to the company has not been supported by any document or any statement of witnesses before the investigating authorities relied upon by the Union of India, the applicant in this reference.
16. As regards the Subros case, it is stated by the respondent that there are no documents or statements furnished by the Union of India to support this charge.
17. Finally, the case of the respondent, R. C. Bhargava, is that the action of the Union of India in initiating the present proceedings is wholly mala fide. He submits that approval for his appointment as managing director of the company was accorded by the Government as required under the Act after the filing of the FIR. He also submits that no sanction for prosecution has been given against any of the accused who are public servants.
18. It is the submission of the respondent that what has to be considered in this proceeding is not each and every transaction or some transaction in isolation, but the record of the business of the company when the respondent was a director or the managing director. The record will show that the company has been a very successful venture, and is still a successful enterprise. The further submission of the respondent is that no individual member of the board including the respondent can be singled out for action under Chapter IVA of the Act as the decision of the board is taken within the legitimate powers of the board. The respondent's further contention on the facts is that there is nothing on record to show that the board was in any way misled or misguided by the respondent R. C. Bhargava in taking any decision.
19. Learned counsel for the respondent, R. C. Bhargava, wanted to proceed first with the respondent's application as to the maintainability of the petitioner's application before such application is taken up for consideration on the merits. Since learned counsel for the respondent Bhargava insisted upon taking his application first, we allowed learned counsel to proceed with the respondent's application since we thought if he succeeded in his contention as to the maintainability of the petitioner's application, then such application filed under Section 388B of the Act, need not be proceeded with. But after hearing S. B. Mookerjee, learned senior advocate for some time we decided to take up the main petition for hearing since contentions and counter-contentions from either side were common.
20. As stated above, S. B. Mookerjee, learned senior advocate appearing for the respondent, R. C. Bhargava, raised certain preliminary objections as to the maintainability of the reference initiated by the Union of India under Section 388B of the Act. The first objection is on the question of limitation or delay. The second objection is that in view of the initiation of criminal proceedings against the respondent on the self-same charges, this reference agitating the same charges is not maintainable. The third objection is that there is a conflict in duties of Central Government as shareholder of the company and as applicant in this reference.
21. Mr. Mookerjee argues that the cause of action in the instant application arose long prior to the presentation of this reference by the Union of India, and as such the cause of action is barred by the laws of limitation. Mr. Mookerjee submits that all the cases relating to which the charges were made arose during the period between 1983-1984, and 1991-1992. In the submission of Mr. Mookerjee the Limitation Act would thus apply and the Company Law Board cannot go into the matter in respect of which the relief was barred after three years from accrual of the cause of action as pleaded.
22. Mr. Mookerjee also argues that prior to May 31, 1991, when the Companies (Amendment) Act, 1988, came into force vesting the jurisdiction of the High Court in the Company Law Board, the jurisdiction under Section 388B was to be exercised by the High Court. Therefore, according to Mr. Mookerjee, the jurisdiction as exercised by the High Court should now be exercised by the Company Law Board. He argues that the Limitation Act is equally applicable to proceedings before the Company Law Board being a quasi-judicial authority, which exercises the same powers and authority as used to be exercised by the High Court. Regarding the application of the Limitation Act, Mr. Mookerjee places reliance on a few decisions of the Supreme Court in State of Madhya Pradesh v. Bhailal Bhai [1964] 15 STC 450 ; AIR 1964 SC 1006, Tilokchand Motichand v. CST [1970] 25 STC 289 ; AIR 1970 SC 898, Director of Inspection of Income-tax v. Pooran Mall and Sons [1975] 96 ITR 390 ; AIR 1975 SC 67 and Kerala State Electricity Board v. T. P. Kunhaliumma, AIR 1977 SC 282. Mr. Mookerjee, submits that the instant proceedings have been filed after December 4, 1996, more than three years after the incidents alleged in the petition. He submits that there was no subsisting cause of action or legally conferrable right in 1966, when the present application was filed.
23. M. C. Dhingra, learned counsel for the Union of India, the applicant has submitted that the Limitation Act is not applicable to proceedings under Section 388B of the Act before the Company Law Board, as the Company Law Board is not a court. He relies on the decision of the Company Law Board in Shiv Dayal Agarwal v. Sidhartha Polyster Pvt. Ltd. [1997] 88 Comp Cas 705. He also argues that the Companies Act is a comprehensive legislation providing substantive law besides limitation and procedures. As he submits, if the Limitation Act is applied or delay and laches are being resorted to to reject the application under Section 388B, it would then simply defeat the purpose of incorporating Section 388B in the Act, that is, protection of public interest at large. It is his argument that rejection of a complaint under Section 388B on the ground of limitation or delay and laches would tantamount to legalising the criminal conduct of the person concerned on technical grounds. He submits that public interest being the object of Section 388B, such technical objection should not be entertained. He refers to certain decisions of courts in Collector, Land Acquisition v. Mst. Katiji [1987] 62 Comp Cas 370 (SC) ; [1987] 2 SCC 107, Tilokchand Motichand v. CST [1970] 25 STC 289 ; AIR 1970 SC 898, Rabindra Nath Bose v. Union of India, AIR 1970 SC 470 and Ramchandra Shankar Deodhar v. State of Maharashtra, AIR 1974 SC 259,
24. Under the provisions of the Companies Act, the Company Law Board is a court in a restricted sense. Under Section 10(4C) of the Companies Act, the Company Law Board would have powers under the Code of Civil Procedure only in respect of the matters specified in Sub-sections (4C), (a) to (f), of Section 10E of the Act. The Company Law Board is a quasi-judicial authority to be guided by the principles of natural justice in the exercise of its powers and discharge of its functions under the Act and it shall act in its discretion. On the plea of application of the Limitation Act to the proceedings before the Company Law Board it has been consistently held by the Company Law Board that the Limitation Act as applied by the civil court is not applicable to the proceedings before the Company Law Board, a quasi-judicial authority and not a court in the strict sense of the term.
25. But even though the Limitation Act may not be applicable to proceedings before the Company Law Board, it, as a quasi-judicial authority, can always entertain the plea of delay and laches on the part of the petitioner in initiating proceedings before the Company Law Board.
26. In the instant proceedings it is not disputed that the acts complained of took place during the period between 1983-84 and 1991-92. The instant proceedings have been filed in December, 1996. It is nobody's case that the acts complained of are continuing acts or that the effects of these acts are continuing.
27. Moreover, there are certain peculiar features in this case. At the relevant time the Union of India, or the Central Government as it is known, held approximately 60 per cent, of the shareholding in Maruti Udyog Limited, the company till 1992. The respondent the said R. C. Bhargava was a public servant and a nominee of the Central Government on the board of directors of Maruti Udyog Limited, the company. All matters complained of were prior to Suzuki becoming equal shareholder in the Maruti Udyog Limited, the company. During the relevant period, the board of the company had other Government directors including the secretary to the Government of India. The respondent, Bhargava, at the relevant time was the nominee of the Central Government on the board of directors of the company. It, therefore, appears that the Union of India is a substantial participant in the affairs -of the company and at the relevant time the board of directors of the company, comprising a good number of nominees of the Government or Government institutions along with other directors was conducting and managing the affairs of the company with the best endeavour to protect the interest of the company or the public interest, if it can be so called. There is no explanation or any plausible explanation as to why the Central Government came to know of the acts complained of in 1992 or 1994, i.e., the dates of filing of FIRs when the Government was in substantial control of the management of the company having a majority in the board of directors including R. C. Bhargava being the nominee of the Government, and the Government have the power of recalling any of the delinquent nominee directors. Further, it has been submitted by and on behalf of the respondent, Bhargava, that some of the said acts complained of were enquired into by a high-powered departmental committee as also some objections were raised by an independent and constitutional authority being the Comptroller and Auditor-General. It is also submitted that the company satisfactorily explained the acts complained of to the satisfaction of the authority concerned and eventually the cases were dropped and the Government thereafter appointed the respondent Bhargava as managing director, the consideration of which, according to the respondent, was held up due to certain enquiries into the aforesaid cases. This is not, however, disputed by the Government or its counsel at the hearing. The Government have not, however, referred to those files at the hearing. It is not explained by the Government as to why those stale cases, some of which had been enquired into departmentally or otherwise, have been reopened by initiating criminal case and stating a case under Section 388B by the instant application after a lapse of 5 to 13 years. It has, however, been argued by Mr. Dhingra, counsel for the Central Government that even assuming that the instant application suffers from the vice of delays or laches or acquiescence on the part of the Union of India, the same cannot defeat the public interest, which according to Mr. Dhingra, is a paramount consideration in a proceeding under Section 388B of the Act. It is also argued by Mr. Dhingra that the Union of India have approached the Company Law Board acting pro bono publico. He submits that the scheme of Section 388B is to place the Union of India in the position of guardian of public interest and is under a statutory duty to move the Company Law Board, if it is of the opinion that any director is guilty of misfeasance, fraud etc.
28. We appreciate the arguments of Mr. Dhingra in projecting the Union of India as guardian of public interest, which we have no doubt, that the Government is such a guardian and is supposed to be. But we wonder, why the Government being the active participant if not the dominating participant in the affairs of the company at the relevant time and having been actively participating, conducting and managing the affairs of the company with all due diligence through the board of directors of which most of the directors including Bhargava at the relevant time were the nominees of the Government, did not move the Company Law Board at the relevant time in vindication of public interest when some of the aforesaid acts complained of involving the respondent Bhargava were detected and enquired into by the appropriate authorities. It is also not explained by the Government why the CBI enquiry was initiated after such a long delay. It is also not explained by the Government why this proceeding is initiated presently under Section 388B of the Act just a few months before the respondent, Bhargava, is due to retire. It is also a fact that the said Bhargava was successively appointed during the relevant period and thereafter as director, managing director and for some time chairman-cum-managing director with due concurrence of the Central Government. It is also not the fact in the instant proceeding that the Central Government in its independent capacity, not being in any way concerned with the company or any of its directors, has initiated these proceedings under Section 388B of the Act after holding an independent opinion about circumstances suggesting the cases as enumerated in Section 388B against the concerned director.
29. It appears from the record that the decision for allotment of cars was discussed by the board consisting of Government directors besides the other directors. Later, an aggrieved non-allottee instituted a case against the company which was dismissed. All were in the knowledge of the Central Government at the relevant time. No steps seem to have been taken by the Government for recall of the director concerned. The FIR was lodged in April, 1992, charge-sheet filed in December, 1993, and this petition is filed in 1996.
30. In the Hydraulics case, loans advanced in 1985, orders placed between 1984 and 1991, files said to be collected by the Central Bureau of Investigation in September, 1992, the FIR filed in December, 1992, and the charge-sheet was filed in 1993.
31. In the Ghaziabad dealership case, the dealership was awarded in 1987. The board decision in the presence of the Secretary, Heavy Industries was taken in 1987. There is a Government's letter to Suzuki, annexure-R of the rejoinder of the petitioner, for reference of the matter to investigation against the respondent, FIR was lodged in 1994, no charge-sheet has yet been filed.
32. In Kandla transport case, FIR was lodged in 1994, charge-sheet filed in 1996. The departmental enquiry was held in 1987 or 1988, CAG raised objection in 1985, all within the knowledge of the Government at the relevant time.
33. There is no explanation from the Government about the gross delay in forming an opinion and making the reference. All the aforesaid acts complained of were well within the knowledge of the Government and even the FIR in all cases and charge-sheets in some of the cases were filed long before the presentation of this petition in December, 1996.
34. From the narration of the facts of the case, it is apparently clear that the Central Government was all along in the knowledge of these allegations not only in the capacity of a shareholder but also as sovereign Government. We do agree with Mr. Dhingra that the technical plea of delay and laches should not stand in the way of the Central Government's attempt to cleanse the environment from vices, here in the present case, assuming for arguments, that the charges against the respondent merit a case being stated against him, which would debar him from holding any position as a director in any company, the Central Government itself as a majority shareholder as well as the appointing authority made him the managing director, when some of the cases came to its knowledge and after conducting enquiries.
35. In a normal case, if a reference is made on incidents which took place before a long time on the plea, that the Central Government came to know of the same belatedly, we would definitely go by what Mr. Dhingra has submitted. But unfortunately in the present case it is not so. There is no explanation from the Government about the gross delay in forming an opinion and making the reference. All the aforesaid acts complained of were well within the knowledge of the Government and even the FIR in all cases and charge-sheets in some of the cases were filed long before the presentation of this petition in December, 1996. There is no explanation as to why the Government chose to wait till December, 1996.
36. Under these circumstances, this reference is liable to be dismissed and should be dismissed for gross and inordinate delay.
37. In view of this, we are not considering the other preliminary objections raised by the respondent. We also record that counsel for both sides desired that whatever our decision on the maintainability may be, we may record our findings on the allegations against him. Counsel for both sides urged before us to inquire into and record a decision on the merits of the case. We do not consider it appropriate to do so when we have decided to dismiss the reference as not maintainable and also in view of certain criminal cases pending against the respondent on the same charges.
38. In view of the aforesaid, this reference is dismissed. We do not, however, propose to make any order as to costs.