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(4) The second respondent is not a Government company as defined in section 617 of the Companies Act, 1956. For the purpose of that Act,Govemment company means any company in which riot less than 51% of the paid up share capital is held by the Central or State Government and includes a company which is subsidiary of a Government company. Public financial institutions have been specified in section 4A of the Act and these include Industrial Development Bank of India (IDBI), Life Insurance Corporation of India (LIC), Unit Trust of India (UTI), Industrial Finance Corporation of India (IFCI) and General Insurance Corporation of India (GIC) as per notification issued under sub-section (2) of section 4A of the Act. The shareholding of the second respondent is as under:- ____________________________________________________________________________ Name of the Institution No of % age shares ____________________________________________________________________________ Private Investors 19,85,450 50.91 National Textile Corporation (U.P.) Ltd. 13,11,000 33.61 Financial Institution Industrial Development Bank of India 3,14,300 8.06 Industrial Finance Corporation of India 71,400 1.83 Life Corporation of India 1,71,5754 4.53 Unit Trust of India 32,3754 0.83 General Insurance Corporation of India 2,4254 0.06 Nationalised Banks 6.475 0.17 Sub Total: 6.03.440 15.48 Total; 9.00.0004 100.00% ____________________________________________________________________________ (5) From the shareholding it is apparent that the second respondent is not a Government company Respondents have contended that affairs of second respondent are managed by a Board of Directors and that the company is governed by its own Memorandum and Articles of Association. Respondents have stated that National Textile Corporation (U.P.) Limited is a subsidiary of National Textile Corporation Ltd (NTC), a Government Company. It is stated that prior to I April 1985 shares now being held by Ntc (UP) Limited were held by Swadeshi Cotton Mills Company Limited, a public limited company, and after that date by virtue of the provisions of Swadeshi Cotton Mills Company Limited (Acquisition and Transfer of Undertaking) Act, 1986, the shares held by Swadeshi Cotton Mills Company Limited and by its subsidiary vested in the Central Government and immediately thereafter the said shares stood transferred and vested in the NTC. Further by virtue of transfer of textile undertaking of Swadeshi Cotton Mills Company Limited the shareholding in Swadeshi Polytex Limited, the second respondent, stood transferred to Ntc (UP) Limited. The Board of Directors of second respondent at the relevant time had three nominees of Ntc, two nominees of the financial institutions, and two nominees from the private investors. Respondents contend that merely because that nominees of the financial institutions and the Ntc are on the Board of Directors of the second respondent it neither means that Ntc is in the management of the second respondent nor that the Central Government is controlling that company. It is stated that Central Government is neither a party to the management policy of the company nor the actions of the management require any approval of the Central Government except where any statute so requires. There is no de jure or de facto control by the Central Government, so the respondents put. It is also stated by respondents that the Central Government does not appoint Cmd of the second respondent and that it is done by the Board of Directors of the second respondent. They say that the petitioner has created a wrong impression that Cmd of Ntc automatically becomes the ex officio Director or Cmd of the second respondent and also that merely because the third respondent is an I.A.S. officer it would not mean that Central Government is in control of the company.

(6) There is no dispute about the shareholding of the second respondent. In M/s.Doypack Systems Pvt. Ltd v. Union of India & others the question for consideration was whether equity shares in the two companies, i.e.,10 lakhs share in Swadeshi Polytex Limited and 17,18,344 shares in Swadeshi Mining and Manufacturing Company Limited, held by Swadeshi Cotton Mills vested in the Central Government under section 3 of the Swadeshi Cotton Mills Co. Ltd. (Acquisition and Transfer of Undertakings) Act, 1986. The Supreme Court answered the question in affirmative in favor of the NTC. The judgment was given on 12 February 1988. The Supreme Court held that the shares so vested in the Central Government and under sub-section (2) of section 3 of that Act these now vested in Ntc which had right over the said shareholding of Swadeshi Polytex Limited.

(9) The second respondent need not be a Government company as defined in section 617 of the Companies Act and it may also not be subsidiary of Ntc in strict sense of the term as defined in section 4 of that Act We any note that sub-section (1) of section 4 which defines holding company and subsidiary says that for the purposes of the Companies Act a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if that other controls the composition of its Board of Directors. Then sub-section (3) and other sub-sections spell out the conditions, but those may not be strictly relevant for our purposes and we need not go into the question if the second respondent is a subsidiary of Ntc, as we find that Ntc in effect controls the affairs of the second respondent. We have seen the constitution of the Board of the second respondent. Three of the Directors including the Cmd are the nominees of Ntc, a Government company, and two are nominees of financial institutions which are all statutory corporations and 'State' within the meaning of Article 12 of the Constitution. The other two members of the Board of the second respondent are nominees of the private investors. Third respondent is also the Cmd of NTC. We have also seen above that difference in shareholdings between the private investors and the Ntc and other financial institutions is very marginal, otherwise second respondent could well have been a Government company. That the affairs of second respondent are governed by its Memorandum and Articles of Association, appears to be an attractive argument and would be even so, but then it is the nominees of the State which are at the helm of affairs of the second respondent and the contention in the present case of the respondents that it is beyond the reach of this Court in writ jurisdiction under Article 226 of the Constitution is a mere pretence. There is no specific denial to the averment made by the petitioner that before he was appointed there were series of interviews and ultimately he was selected by a panel of experts which included Textile Secretary to the Government of India. Petitioner has also drawn our attention to an extract from the minutes of the meeting of the Board of Directors of the second respondent held on 5 August 1991 which was fought on record by the respondents. In this certain discussions have been recorded regarding the confirmation of the minutes of the previous meeting held on 4 May 1991. In the meeting of 4 May 1991 two-resolutions were passed. By first resolution the third respondent was appointed Chairman of the Board and by the second resolution the third respondent was appointed Managing Director of the company "pursuant to provisions of Articles of Association and sections 269, 316 and other applicable provisions of the Companies Act, 1956, for a period of two years from the date on which new duly elected Managing Director assumes office whichever is earlier." When these minutes came for confirmation in the meeting of the Board on 5 August 1991 one of the members Of the Board pointed out that notice for appointment of the third respondent as Managing Director of the company had not been circulated as an "agenda item" and hence requirement of section 316(2) had not been complied with. The minutes record that Chairman pointed out "that as already notified to all the Board Members that the minuted item 5/18 reads as follows:- "SHRIV. Sundaram then proposed that as already notified to all the Board Members Shri R. Ramakrishna was also to be appointed as Managing Director of the Company."

(11) Reference to these minutes was made to show that instructions were being issued by the Government and that Articles of Association of the second respondent did not provide for any instructions from the Government. We have not been shown any provision under which a member of the Indian Administrative Service or for that matter any Government servant could act as the Chairman and Managing Director of a company incorporated under the Companies Act, 1956 which is not a Government company. As we see the records of this case, the third respondent has become Cmd of the second respondent because he is also the Cmd of NTC. a Government company. Mr. P.V. Kapur, learned counsel for the .petitioner, said that the Central Government in this case was exercising "deep and pervasive" control in the second respondent as a result of which it would be a State under Article 12 of the Constitution. He said assuming that second respondent is not a State, the court would nevertheless be entitled to assume, and the petitioner entitled to invoke, its jurisdiction under Article 226 of the Constitution since the court can issue an order or direction to a person in contradistinction to a State or authority. He said such an order could be issued if that person "wears the hat" of the Government and exercises public functions. Mr. Kapur said justice of the case demanded that court would certainly issue a direction or an order against the second respondent, or the third, as the case might be. We have seen above that the Ntc and the financial institutions have overwhelming majority in the Board of Directors. Their shareholding is such that for all times to come they could exercise control over the company and directions are in fact issued by the Central Government for the conduct of the affairs of the second respondent. Appointment of senior officers, and in any case that of the petitioner, had been made by the Cmd and also terminated by the Cmd, an officer of the Central Government. Mr. - Kapur said he was not asking for any mandamus and was praying only for an appropriate order or direction in the matter and that this Court could in exercise of jurisdiction under Article 226 of the Constitution do that. Mr. Kapur referred to a decision of the Andhra Pradesh High Court in T. Gattaiah and another v. Commissioner of Labour and others. 1981 Lab.l.C. 942, which he said was noticed in a Full Bench decision of the Andhra Pradesh High Court in Sri Konaseema Co-operative Central Bank Ltd., Amalapuram and another v. N. Seetharama Raja, Air 1990 A.P. 171, wherein in was mentioned that as held in Gattaiah's case writ could undoubtedly be issued against a co-operative society on the basis that it was a 'person' within the meaning of Article 226, and that decision in Gattaiah's case was affirmed by a Division Bench in appeal reported in(1982)1 Andh. L.T.(NRC)12. Mr. Kapur said these judgments were authorities for the proposition he was advancing and that even a writ could lie against a company incorporated under the Companies Act.