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(14) The reasons in the first category, as already stated above, relate to the alleged acts of V. H. Dalmia between 1945 and 1947. As pointed out by the Division Bench in the Judgment, dated 22-3-1968, the said activities were "nto wholly irrelevant", and they "have to be considered on their own merits in the entire background of toher relevant circumstances, for determining as. to how far each fact is likely to have impact on the question of managing agent being fit and proper for re-appointment". The question then is as to what the impact of the said activities is? In the first instance, the said alleged activities of V. H. Dalmia, admittedly, were of the years 1945-47, i.e. about 20 years' ago. They had happened, if at all, at such a remtoe period of time that it would nto be reasonable to assume that the nature, character and outlook of the person concerned as shown by the said activities at that time have remained the same even after the passage of such a long time. An argument was advanced before the learned Single Judge that in considering the question, 230 the same principles should .be followed as are followed in cases of preventive detention, and that what has to be seen in whether the facts or the activities on which the opinion as to the fitness of the person is based, are proximate in time. Reliance was placed upon the decision of the Supreme Court in Rameshwar Shah v. District Magistrate, Burdwan, (1) in which it was observed by the Supreme Court that it is- "necessary to bear in mind that the past conduct or antecedent history of the person on which the authority purports to act, are ordinarily proximate in point of time and should have a rational connection with the conclusion that the detention of the person is necessary". It was contended on behalf of the respondents that the analogy of detention cases was nto apposite in so far as the consideration of the fitness and propriety of a managing agent-company is concerned. It may be that the analogy of preventive detention cases may nto strictly apply to cases like the one under corsideration. Yet, in my opinion, when certain acts or activities of the person concerned alleged to have been indulged in by him a long time ago, are relied upon as indicating the character and integrity of the said person, the fact that the said acts or activities were of a period in the remtoe past cannto be ignored altogether, and coupled with toher circumstances, may provide a valid ground for nto approving an appointment. However, under section 326,the respondents have to condsider the fitness and propriety of the proposed managing agent at the time they are called upon to do so. In doing so, the activities of the person in the past as showing his character and integrity at that time have, no doubt, to be taken into consideration. But, the Board has also to take into consideration the subsequent conduct, acts and activities of the person in order to see whether the character and integrity shown by the acts and activities in the past have since changed for the better or nto. The nature and character of a man is nto static, but is apt to change with the passage of time. It would be irrational and unreasonable to assume that a person who possessed certain character or nature of an undesirable type at a certain point of time would continue to have the same nature or character for all time to come. Therefore, in my opinion, when the respondents are to form an opinion as regards the fitness and propriety of a proposed managing agent for appointment or re-appointment, they should take into consideration nto only the past acts or activities of the concerned person which might show a character or nature of an undesirable type, but also his subsequent acts and activities which might show that his previous character and nature had since changed for the better.

(19) It is, therefore, a matter for consideration as to whether the fact that V. H. Dalmia has been holding such important positions without any comment or criticism by any one from 1947, is a circumstance which would go a long way to outweigh any reflection upon his character and integrity by reason of his alleged acts or activities in the years 1945 to 1947, in connection with certain toher companies, and the comments regarding them in the report of the Vivian Bose Commission in considering the question as to the fitness of the managing agent-company for re-appointment. In the circumstances, the Company Law Board and the 2nd respondent erred in relying only upon the reasons 1 to 4 which formed the first category, without taking into consideration the subsequent acts and activities of V. H. Dalmia which show that he has been holding important positions without any comment or criticism by any one from 1947.

(20) As regards the 5th reason which forms the second category, the alleged acts or activities of V. H. Dalmia were of the years 1945-47. The first Information Report was lodged in 1953, and a charge sheet is said to have been filed in May, 1964, in respect of those offences. The matter is thus sub-judice, and all that has happened so far is only the filing of a charge sheet. It was averred in paragraph 29 of the writ petition that V. H. Dalmia had ntohing to do with the said alleged happenings, that he was aged about 19 years at that time, and was too young to be in any way connected with the said alleged happenings, and that he did nto take any part whatsoever with regard thereto. Shri Chopra, the learned counsel for the appellant-company, argued that the report of the Vivian Bose Commission was available with the Government in October, 1962, and the respondents were fully aware of the comments made in the said report, and in spite of the same, the respondents granted extension of the term of managing agency twice, and that it follows there from that the respondent did nto consider the managing agent-company as unfit at the time of the granting of the extensions. Shri Dipak Chaudhury, the learned counsel for the respondents, contended that this contention was urged in the writ petition which was heard by H. R. Khanna, J., that the learned Judge rejected the contention, and that it was nto, therefore, open to the appellant-company to raise the said contention again. It is true that the respondents explained that they granted the extensions, even after the report of the Vivian Bose Commission, as tentative measures, and Khanna, J. accepted the said explanation and came to the conclusion that the granting of the extensions did nto necessarily mean that the respondents admitted or considered that the managing agent-company was a fit and proper person for re-apointment. But, even if the granting of the extensions does nto by itself necessarily mean that the Government considered the managing agent-company as a fit and proper person for re-appointment, the fact still remains that the respondents, in fact, re-appointed the managing agent-company by extending the term of managing agency though for short periods, under section 326 of the Companis Act. Apart from this aspect, there is the question as to whether the mere launching of prosecution against the Managing Director of the Managing agent- company renders the said managing agent-company unfit for- re-appointment or renders the appointment improper. The answer to this question has to be in the nagative. The mere launching of prosecution against a person can at the most be an allegation against him, and unless and until the allegations or charges are proved and established in a court of law, they cannto in any way legally cast any reflection on the character or integrity of the person against whom the prosecution is launched. In this connection, reference may be made to section 283 of the Companies Act, the provisions in which indicate what constitutes the fitness of a person to be a Director. One of the provisions therein is to the effect that the office of a Director shall become vacant if he is convicted by acourt of any offence involving moral turpitude and sentenced in respect thereof to imprisonment for nto less than six months. It thus provides that a Director need nto vacate his office even on a conviction unless the conviction is for an offence involving moral turpitude and the sentence is nto less than six months. When even conviction which does nto fall within the exception contained in section 283 does nto render a Director disqualified, would it be rational or reasonable to say that the mere launching of prosecution against a Director or a Managing Director of a Company would render it unfit and improper to appoint the company as managing agent of antoher company? In my opinion, it would nto be rational or reasonable to say so. I am unable to agree with the view taken by the learned Single Judge to the contrary. The contention of the respondents that the mere launching of prosecution against one of the Directors or the Managing Director of the managing agent-company renders the company an unfit and improper person for re-appointment, cannto, therefore, be accepted. The 5th reason, given by the Company law Board is nto thus a valid reason, and is nto one which by itself would lead reasonable person to form the opinion that the managing agent-company is nto a fit and proper person for re-appointment as managing agent.

(24) I agree with the conclusion arrived at by my learned brtoher Tatachari, J. but would like to record my own reasons therefore. The five grounds on which the refusal to extend the term of the Managing Agency is based are contained in the letter dated 6th June, 1967, from the Company Law Board, and have been set out in the judgment of my learned brtoher. It has rightly been said that reasons 1 to 4 fall into one category and relate to the acts of V. H. Dalmia between the years 1945 and 1947. My learned brtoher has, in this connection observed:- "INdoing so, the activities of the person in the past as showing his character and integrity at that time have, no doubt, to be taken into consideration. But, the Board has also to take into consideration the subsequent conduct, acts and activities of the person in order to see whether the character and integrity shown by the acts and activities in the past have since changed for the better or nto."