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TMI Blog1979 (4) TMI 108X X X X Extracts X X X X X X X X Extracts X X X X ..... porated under the Companies Act, 1956 (hereinfater referred to as "the Act"). The company had made investments in other companies as shareholders of those companies including a company known as Nera Terai Association Ltd. (hereinafter referred to as "the subsidiary company"). The company had 7,120 ordinary shares of the subsidiary company, nominal value of the said shares being Rs. 71,200. The authorised capital of the subsidiary company was Rs. 8,00,000 out of which share capital was subscribed to the extent of Rs. 7,20,000 which was fully paid up. The subsidiary company has a tea garden known as Panihatta Tea Estate in Tarai, West Bengal. Majority of the shares, i.e ., 33,939 ordinary shares of the subsidiary company, belonged to M/s. Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase and an application was made for the approval of the Central Government regarding these investments. By the impugned order dated October 8, 1968, the respondent No. 1 rejected the aforesaid application on the ground that it had no power to grant ex post facto approval under section 372(4) of the Act read with the Notification No. G.S.R. 72 dated January 1, 1966, issued by the Government of India, Ministry of Finance, department of Company Affairs and Insurance. By the impugned order, the respondent No. 1 also directed the company to dispose of those investments. Thereafter, for about two years, the respondents Nos. 1, 2 and 5 did not take any action against the petitioners and then suddenly in November, 1970, a complaint was lodged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itself in law in rejecting the aforesaid application of the petitioners by relying on the aforesaid notification and also by prejudging the issue. It is only under section 373 of the Companies Act; 1956, that a company can be directed to sell its investments. Section 373, however, does not apply to the instant case and, therefore, the respondent No. 1 had no power to direct the company to sell those investments. Since no previous approval of the company in its annual general meeting or of the Central Government is necessary under section 372(4) of the Act, the petitioners have not made any default in complying with the provisions of section 372(4) of the Act and, therefore, the aforesaid case No. C/3988 of 1970 under section 374 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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