1968 (3) TMI 58 - HC - Companies Law

Temporary protection of employee Protection of employees during investigation by inspector or pendency of proceedings before appellate tribunal in certain cases

Issues Involved:
1. Validity of the notice of objection by the Company Law Board under section 635B of the Companies Act, 1956.
2. Requirement of specifying grounds for objection in the notice under section 635B.
3. Alleged violation of the principles of natural justice by the Company Law Board.
4. Nature of the decision-making process by the Company Law Board under section 635B - whether it is judicial, quasi-judicial, or administrative.
5. Allegations of mala fide intentions behind the Company's action.

Detailed Analysis:

1. Validity of the notice of objection by the Company Law Board under section 635B of the Companies Act, 1956:
The appellant contended that the notice of objection issued by the Company Law Board was not in compliance with section 635B and thus invalid. The appellant argued that the notice must specify the grounds of objection, which was not done initially. The Company Law Board, however, argued that only a notice of objection was required, without the necessity to specify grounds.

2. Requirement of specifying grounds for objection in the notice under section 635B:
The appellant argued that sub-section (b)(ii) of section 635B mandates that the notice must specify the grounds of objection. The initial notice did not specify these grounds, and the subsequent letter providing the grounds was not within the statutory 30-day period. The Company Law Board argued that the subsequent appeal by the appellant implied acceptance of the notice as valid.

3. Alleged violation of the principles of natural justice by the Company Law Board:
The appellant contended that the Company Law Board's decision to object to the proposed termination was made based on representations received behind the appellant's back, violating the principles of natural justice. The appellant cited the case of Jagannath Kashinath Kavalekar v. Union of India, which emphasized the necessity of giving reasons to prevent abuse of power and ensure effective appellate review.

4. Nature of the decision-making process by the Company Law Board under section 635B - whether it is judicial, quasi-judicial, or administrative:
The court examined whether the Company Law Board's decision to object to the proposed termination was judicial, quasi-judicial, or administrative. The court referred to several precedents, including Harinagar Sugar Mills Ltd. v. Shyam Sunder Jhunjhiinwala and Province of Bombay v. Khushaldas S. Advani, to determine the nature of the decision-making process. It was concluded that the Company Law Board's decision under section 635B is administrative and not judicial or quasi-judicial, as it does not involve a duty to decide judicially or consider representations from both sides.

5. Allegations of mala fide intentions behind the Company's action:
The appellant did not explicitly argue that the Company Law Board's objection was made with mala fide intentions. The court noted that the protection under section 635B was introduced to prevent obstruction of investigations by removing employees who assist in such investigations. The court found no evidence of mala fide intentions behind the Company Law Board's objection and stated that the decision could only be challenged on the ground of mala fide, which was neither alleged nor proven.

Conclusion:
The court held that the Company Law Board's decision to object to the proposed termination of Mr. R. S. Paul was administrative and not subject to the principles of natural justice. The decision was made unilaterally and subjectively, without the need to specify grounds in the initial notice. The appeal was dismissed, and no order as to costs was made.

← Previous Next →