Union Of India (Uoi) Through Secretary, ... vs Eveready Industries India Ltd. on 20 December, 2004
17. The Learned Counsel for respondent further submitted that the present of reputed persons is already on the Board of Directors of the respondent company. It is a relevant consideration while adjudicating the application under Section 408 and the Learned Counsel relied on the judgement of Central Govt. v. Peerless General Finance and Investments Co. Ltd. (1999 Comp. Cases Vol 95) wherein it is held that "under section 408 of the Companies Act, 1956, the purpose of appointment of Government directors is to prevent the affairs of the company being conducted either in a manner which is prejudicial to the interest of the company or to the public interest. In the present case, since the company, on its own, by inducting reputed professionals in various fields, had taken remedial steps to tone up the working of the company, which was also reflected in the latest inspection report of the Reserve Bank of India and its affidavit before the High Court, there was no reason to order appointment of Government directors at this juncture especially when the Reserve Bank of India was monitoring the affairs of the company on a continuous basis. However, the Central Govt. was at liberty, if later, h were to find, either on its own or through a feedback from the Reserve Bank, that there had been no substantial improvement in conducting the affairs of the company, to move the Company Law Board."