Indian Kanoon - Search engine for Indian Law

(5) Passing over the orders which I had passed in the meantime reference may be made to my having, on 12-4-1973, come to the conclusion, in the presence of Mr. A. N. Pareekh (learned counsel for the Company), Mr. I. D. Khanna for Mr. Ved Vyas (for certain members of the Managing Committee), Mr. Jai Dev Chandhok and Mr. N. D. Kapur (members of the Managing Committee) that it was necessary to have an Internal Auditor of high standing, one who had held a top position in the Government with knowledge of accounts. An Air Commodore, who had retired as the accounts Chief of the Air Force, was found by my Lord the Chief Justice Mr. S. N. Andley, out of those who had applied in response to an advertisement made in this behalf, to be the most suitable and was appointed the Internal Auditor. He was to be paid remuneration according to what was applicable to such officials who had retired from Government--a course which was felt to be cheaper than appointing a private Chartered Accountants of standing and may not yet ensure such whole-time and competent attention to the accounts side of the working of Globe Steels Division.

Ireferred this question, of the above-said loans by and repayments to V. K. Mudhra and his associates to the Internal Auditor. He reported that some loans had been advanced by V. K. Mundhra and his associates and they had been repaid. He pointed out that this was due to the lacuna in the Scheme which omitted to provide for needed working capital.

THEREis, however, no need to be detamed about this aspect because in the affidavit of V. K. Mundhra dated 28-11-1974 he finally agreed that he will unconditionally pay to the Company Rs. 6,50,000.00 within such time as the Court may be pleased to direct and that the same will be adjusted against the proposed issue of equity shares as per his proposals dated 10-11-1974. He also further agreed that on his proposals dated 12-11-1974 being approved he and .his associates would subscribe to the extent of Rs. 3,50,000.00 such of the shares as may be renounced by the shareholders raising such subscription to Rs. 10 lakhs. It was explained to me by his counsel Mr. G. L. Sanghi, on 3-12-1974, [hat the said sum of Rs. 6,50,000.00 alone represents the siim taken back by V. K. Mundhra out of the sums (described by him as advance by way of loan) which he had advanced to the company on his own-accord. On his representation that V. K. Mundhra and his associates required 6 weeks time to pay back the amount to the Company he was by order dated 3-12-1974 permitted to do so.

(16) It Ls needless to be detained by these considerations because the essential question, which arises for consideration, is whether the already existing Scheme in operation is to be extended for a further period subject to the modifications discussed above. In this view there is no need to be detained by the consideration whether the Punjab National Bank Ltd., is willing to pay the creditors in full within the identical or nearly equal period, as proposed by V. K. Mundhra. What is more material is that whether this proposal of V. K. Mundhra or of anybody eise, like the Punjab National Bank Ltd., is to be adopted, the payment to creditors is going to take some more time. In other words, the necessity of this Court having to exercise control over the Globe Motors Ltd., whatever course is adopted, is going to spread over a further period. This being so the sole question for consideration is whether it will be more in the interest of the creditors and shareholders (or even in the national interest) to wind up the Globe Motors Ltd. and along with it the Globe Steels Division, which is now functioning and has the potentiality of paying the creditors and preserving it as a going concern for the members also or the existing Scheme should be continued for a further period by granting an extension of time for this purpose and also provide such further safeguards as may ensure proper working of the Scheme without allowing any one to exploit the situation for his own private ends. It seems obvious that the latter course would be best to adopt in the circumstances. As I have already indicated the question of whether any private profit has been made already by V. K. Mundhra, as alleged on the basis of certain heats (photostat copies of which were made available to the Internal Auditor as well as to this Court) is a matter which requires further consideration than what lias yet been possible. This need for such investigation could only be considered by having the services, as I shall presently explain, of a technical person on the Managing Committee. I wish to make it clear that if anything results from such investigation indicating that private advantage has been taken by V. K. Mundhra and those with whose assistance he is working the Scheme than, on this sole ground, V. K. Mundhra would be removed forthwith from the Management, regardless of the course that is now being taken; what turner and consequential steps have to be taken would then be considered. I am now v proceeding further with the proposal of V. K. Mundbra on the materials placed before me and the report submitted by the Internal Auditor on this question, nothing having been yet placed before me which should induce me to go more fully into this question even now, i.e., before extending the period fixed h the original Scheme.

(19) There are at present two vacancies to be filled up : one in place of Saluja who has resigned and the second in place of P. N. Handa. In the place of one of them, namely, that of Saluja, I appoint the Internal Auditor as a member of the Managing Committee. This is to ensure that he would promptly bring to the notice of the Court anything happening at the Committee meetings and would thus be a more effective watch-dog of the interests of the depositors and creditors than even what he could be at present; it would also be possible for him to take even greater initiative, in the matter of making his suggestions for the better performance of the Globe Steels Division in particular and generally towards the payment to the creditors in full within as short a time as may be possible. He will continue to be the Internal Auditor on a full-time basis, as already appointed, which would not be hundered in any manner by his being a member of the Committee, but could only be helped further. I do not propose to allow any further additional remuneration to him for this purpose except that he, like any other member of the Committee, would draw the usual sitting fee alone, for attending the meetings of the Committee.