( 1 ) BY this petition, the petitioners have challenged the order dated January 23, 1967 of the Company Law Board which was reaffirmed by a further order dated June 6, 1967 whereby the extension of the managing agency term of Messrs. Govan Brothers (Rampur) Private Limited was refused. ( 2 ) THE petitioner company is a public limited company which had Messrs. Govan Brothers (Rampur) Private Limited as its managing agents from about 1943 when they were appointed as such for a period of 20 years. In or about July, 1946, the Dalmias assumed control of the said managing agent company and the managing agent company then had four Directors, namely V. H. Dalmia. Lalita Dalmia. N. H. Dalmia and M. H. Dalmia. the first named being also the Managine Director. A first information report was lodged in November, 1953 in a Delhi court in respect of offence alleged to have been committed in 1946-47 under sections 120-B and 409 of the Indian Penal Code by, inter alia, V. H. Dalmia aforesaid. But it is not disputed that the alleged offences were not in respect of anything done by V. H. Dalmia in connection with the affairs of Messrs. Govan Brothers (Rampur) Private Limited, hereinafter REFERRED TO to as the "managing Agents". Nothing seems to have been done in pursuance of the first information report aforesaid except that in or about December, 1955. the Vivian Bose Inquiry Commission was appointed to enquire and report on the administration of some companies said to be included in the Dalmaia Jain Group. ( 3 ) UPON the expiry of the term of 20 years, the petitioner company, on or about December 10 1959 passed a resolution appointing the Managing Agents as Managing for a period of 10 years with effect from August 15. 1960 and. upon application to the Central Government extension was granted by the letter for a period of 5 years only by an order dated July 22, 1960. In the meantime the report of the Vivian Bose Commission was published in the year 1962 wherein certain remarks, which will be adverted to later, were made against V. H. Dalmia aforesaid. ( 4 ) THE Company Law Board was consttituted after the commencement of the Companies (Amendment) Act. In the meantime the report of the Vivian Bose Commission was published in the year 1962 wherein certain remarks, which will be adverted to later, were made against V. H. Dalmia aforesaid. ( 4 ) THE Company Law Board was consttituted after the commencement of the Companies (Amendment) Act. 1963, and the Central Government, by a notification in that behalf, delegated its functions which were to be exercised by it, inter alia. under section 326 of the Companies Act, 1956 to the Company Law Board. It may also be stated that pursuant to the first information report lodged in November, 1953. and after the publication of the Vivian Bose Commission report Charge-Sheets were filed, in or about May, 1964 against various persons including V. H. Dalmia aforesaid in respect of the aforesaid offences alleged to have been committed in 1946-47. ( 5 ) BEFORE the expiry of the term of extension, the petitioner company passed another resolution on September 23. 1964 renewing the managing agency for a further period of five years with effect from August 15, 1965, and, in view of the provisions of section 326 of the Act, this resolution was subject to the approval of the Central Government: It is again not disputed that the business of the petitioner company is not one of the businesses in respect of which it has been provided that there shall not be any Managing Agents. The request for extension pursuant to the resolution of the petitioner company was REFERRED TO to the Company Law Advisory Commission which is stated to have disapproved of the extension. HOWEVER, by letter dated May 28, 1965 the Company Law Board granted an extension of the terms but only up to March 31, 1966 It was stated in this letter that "no further extension of the term of the managing agents would be allowed. I am, therefore, to suggest that appropriate steps be taken within the period of extension now granted to adopt an alternate form of management as allowed under the Companies Act. 1956 other than that of managing agents or Secretaries and Treasurers. In reply to this letter, the petitioner Company wrote a letter dated January 15. I am, therefore, to suggest that appropriate steps be taken within the period of extension now granted to adopt an alternate form of management as allowed under the Companies Act. 1956 other than that of managing agents or Secretaries and Treasurers. In reply to this letter, the petitioner Company wrote a letter dated January 15. 1966, to the Company Law Board stating inter alia: "we would, however, like to inform you that we are taking necessary steps to make provisions in our Articles of Association to provide for alternate form of management should the Government of India finally decide, on receipt of the report of the Managing Agency Inquiry Committee, not to allow managing agency system in the business in which our Company is engaged. "it was prayed in this letter that extension be granted for another year upto March 31, 1967. Thereafter there appear to have been certain interviews between the representatives of the Petitioner Company and the Company Law Board and the development which is relevant to this petition is that by letter dated July 12. 1966. the Company Law Board, approved a further extension of the tenure of office of the Managing Agents upto March 31, 1967. Before the expiry of this fresh extension, the petitioners made a fresh representation by their letter dated August 25, 1966 to the Company Law Board for extension of the term of Managing Agents upto August 14. 1970. IT appears that certain decisions were taken and minutes recorded by the Company Law Board which indicated the reasons for refusing the extension asked for but all that the petitioner Company got was a letter dated January 23, 1967 from the Company Law Board stating: "i am directed to refer to you letter No. RDN: 5319 dated 25-8-66 on the above subject and to say that after careful consideration of the facts and circumstances of the case the Company Law Board regrets its inability to approve extension of the tenure of the managing agents of your company for a further term from 1-4-67. " ( 6 ) SIMILAR orders refusing extensions to the Managing Agents of other Dalmia Group companies like Orissa Cement Limited, Dalmia Cement Limited, Dalmia Cement (Bharat) Limited and Raza Buland Sugar Company limited were made by the Company Law Board at about this time and these companies filed writs in this Court challenging the orders of the Company Law Board refusing the extension. It may only be stated that the Govan Brothers (Rampur) Private Limited were managing Agents of the Raza Buland Sugar Company Limited also ( 7 ) REPRESENTATIONS against the refusal dated January 23. 1967 were made by the petitioner company and by their letter dated June 6, 1967. the Company Law Board informed the petitioners that their request for extension of the term of Managing Agents had been rejected. This letter was issued after judgments had been given by this Court in the aforesaid writ petitions filed by the other companies named above. ( 8 ) AS will be evident from the narration of facts above, reasons for refusing extensions were not recorded by the Company Law Board in their letter dated January 23, 1967 but the letter dated June 6, 1967 contains the reasons which persuaded the Company Law Board to reject the Petitioner s application for extension. The reasons may be summarised as follows: (1) That V. H. Dalmia was a Director of certain other Dalmia Companies and was one of the signatories to an agreement which had been entered into between Allenberrt and Co. . Ltd. and Dalmia Jain Airways Ltd. which had been described by the Vivian Bose Commission as "one-sided and unfair" and it had also been remarked that the way in which it was worked in practice made matters- still worse. Relevant quotations from the report of the Vivian Bose Commission report were extracted in this letter. (2) that V H. Dalmia had been disbelieved by the Vivian Bose Commission because It had stated that the story deposed by v. H. Dalmia was totally false. (3) That V. H. Dalmia was also a Director of S. S. B. Mills Ltd. and M. D. M. Company which had advanced loans to D. C. P. M. without any security. The observation of the Vivian Bose Commission which was relied upon by. (3) That V. H. Dalmia was also a Director of S. S. B. Mills Ltd. and M. D. M. Company which had advanced loans to D. C. P. M. without any security. The observation of the Vivian Bose Commission which was relied upon by. the Company Law Board was: "it will be seen from the above that the loans to D. C. P. M. were made to enable the group and later Shri R. Dalmia to retain control over other companies and particularly to benefit Shri R. Dalmia who obtained large advances from D. C. P. M. in his own name even though he was not a director or an officer of D. C. P. M. " Some other transactions of investments made in Bennett Coleman and Company s Shares by S. S. B. Mills Ltd. , and M. D. M. Co. , Ltd. in which V. H. Dalmia was one of the Directors were also held to be improper and it had been observed by the Vivian Bose Commission: "in our opinion they ought to have looked into this matter and they should not have allowed the purchase. We find it impossible to justify Questionable investments that did not leave enough money in the mills to carry their day-to-day business. " (4) That charge-sheets had been filed against V. H. Dalmia and others in May, 1964, in respect of offences under sections 120-B and 409 of the Indian Penal Code alleging breach of trust of the funds and assets of Dalmia Jain Airways Limited and the commission of offences for forgery and falsification of accounts. ( 9 ) IT will, therefore, be seen that the circumstances which were considered by the Company Law Board with reference to the application of the petitioner Company related personally to V. H. Dalmia and to his activities in relation to some other companies of which he was a Director. It is obvious from what is stated in this letter that the refusal of extension was not based upon any allegations with regard to the activities of V. H. Dalmia with reference to the affairs either of Messrs. Govan Brothers (Rampur) Private Limited or of the petitioner company and it is only because of the reasons contained in the said letter dated June 6, 1967 that Messrs. Govan Brothers (Rampur) Private Limited or of the petitioner company and it is only because of the reasons contained in the said letter dated June 6, 1967 that Messrs. Govan Brothers (Rampur) Private Limited were considered by the Company Law Board not to be fit or proper persons to be Managing Agents of the petitioner company. ( 10 ) VARIOUS points have been urged in this petition. One of the points urged was that I am bound by the decision of a Division Bench of this Court given in Writ Petn. No. 223 of 1966, D/- 23-3-1967 (Delhi), in the case of Orissa Cement Ltd. v Union of India by which judgment this Court had issued a writ of Mandamus to the Company Law Board to grant the extension prayed for by that company. Although the petitioner company has addressed me on this point. I have not called upon Mr. Niren De. learned Solicitor General who appears for the respondents to answer this point because I am resting my judgment upon my reading of the provisions of section 326 of the Companies Act. This section provides: " (1) In respect of any company to which neither the prohibition specified in sections: 324 nor that specified in section 325 applies a managing agent shall not be appointed or re-appointed. (a) except by the Company in general meeting; and (b) unless the approval of the Central Government has been obtained for such appointment or re-appointment. (2) The Central Government shall not record its approval under sub-section (1) in any case, unless it is satisfied (a) that it is not against the public interest to allow the company to have a managing agent; (b) that the managing agent proposed is, in its opinion, a fit and proper person to be appointed or re-appointed as such, and that the conditions of the managing agency agreement proposed are fair and reasonable;and (c) that the managing agent proposed has fulfilled any conditions which the Central Government requires him to fulfil. " ( 11 ) IT is the common case of the parties that this writ petition is to be decided upon the proper interpretation of theprovisions of clause (b) of sub-section (2) of section 326. " ( 11 ) IT is the common case of the parties that this writ petition is to be decided upon the proper interpretation of theprovisions of clause (b) of sub-section (2) of section 326. The contention of the learned Solicitor General is that the provisions of this section are regulatory and he points out that, the language of sub-section (2) of this section proceeds on the basis that extensions of managing agency are not to be accorded normally and they are to be accorded only the Central Government is satisfied that is not against public interest to allow the company to have a Managing Agent; that the, Managing Agent proposed is, in its opinion, a fit and proper person to be appointed or re-appointed as such and that the conditions of the managing agency agreement proposed are fair and reasonable and the managing agent proposed has fulfilled any conditions which the Central Government equires him to fulfil. It is further not disputed that the only point for consideration is whether the Company Law Board could reasonably and justifiably come to the conclusion, upon the material disclosed by it in its letter dated June 6,1967, that Messrs. Govan Brothers, (Rampur) Private Limited were or were not fit and proper persons to be re-appointed as , Managing Agents It is contended by the learned Solicitor General that it is a relevant factor to take into consideration that any of the persons who are Directors of the Managing Agency, in case of its being incorporated, is a fit or proper person. ( 12 ) AS I read the section, the object seems to be to consider the interest of the managed company and for that purpose to consider whether or not the proposed Manag 255 ing Agent or the existing Managing Agent who is sought to be re-appointed is a fit and proper person. The person REFERRED TO to is the Managing Agent and, in the case of its being incorporated, it is the body corporate itself, and not any of Its Directors or other officers in relation to whom its fitness or propriety is to be considered. The person REFERRED TO to is the Managing Agent and, in the case of its being incorporated, it is the body corporate itself, and not any of Its Directors or other officers in relation to whom its fitness or propriety is to be considered. What has to be seen is whether the affairs of the managed company were carried on or are likely to be carried on by the Managing Agent concerned in a manner which will not be injurious to the Managed company and it is for that purpose and that purpose alone that the fitness and propriety of the Managing Agent is to be taken into consideration. It is possible to take what may be described as the personal acts, activities and affairs of a Director of the Managing Agency company into consideration if there is an impact of such acts, activities or affairs either on the acts, activities or affairs of the managing agency company or of the managed company. It is not possible for me, in other words, to accept the contention that the personal activities of one of the many Directors can be a relevant consideration for determining fitness and propriety of the Managing Agents if the activities remain personal and have no connection whatsoever either with the managing agency company or with the managed company ( 13 ) MR. Sidharath Bay, learned counsel appearing for the petitioners, has REFERRED TO to the provisions of Section 326 of the Companies Act in aid of the interpretation of S. 326 and he says that a conviction of a Director of a Managing Agency company results in the Managing Agent vacating its office if the term of imprisonment is not less than 6 months. Even so he points out the provisions. of Sections 340 and 341 of the Companies Act, to which Section 336 is subject, and these sections provide that even in a case of conviction for a period of not less than 6 months, the vacation of the office is stayed until the expiry of 30 days after conviction and. if during that time, the Managing Agent Company expells the convicted Director, the provisions of Section 336 will not be enforced. if during that time, the Managing Agent Company expells the convicted Director, the provisions of Section 336 will not be enforced. The only argument that may be urged on the basis of these provisions is that wherever the Legislature intended that the personal acts of a Director should affect the company; it has been so provided. ( 14 ) IN my view the provisions of section 326 have to be interpreted on its own language. I cannot come to any conclusion other than this that the context or the background against which the Company Law Board has to examine the question of appointment or re-appointment of the Managing Agent is the interest of the managed company and the affairs and activities of the Managing Agent itself qua the managed company. It is possible that one of the Directors may have a sweeping influence over the other Directors in a Managing Agent Company, as has been contended in this case that V. H. Dalmia has. If this sweeping influence reflects itself in the affairs or activities of the Managing Agent Company or of the Managed Company. then the reflection becomes the act of the Managing Agent Company itself and it is as the act of the Managing Agent Company that it will be considered while deciding whether or not to appoint or re-appoint the Managing Agent ( 15 ) IT is the admitted case of the respondent that alt the circumstances which pursuaded the Company Law Board to refuse the extension are incorporated in its letter dated June 6, 1967 I have no doubt in my mind that those considerations are entirely personal to V. H. Dalmia and they are completely irrelevant in so far as the affairs of the Managing Agent Company or of the petitioner company are concerned. The result, therefore, is that the conclusion of the Company Law Board as incorporated in its letters dated January 23, 1967 and June 6, 1967 has been arrived at by taking into consideration irrelevant and extraneous facts and there is no option but to quash the action of the Company Law Board in refusing the extension. ( 16 ) I would, therefore, allow the petition and order that a writ of certiorari be issued quashing the orders of the Company Law Board contained in their letters dated January 23. 1967 and June 6. ( 16 ) I would, therefore, allow the petition and order that a writ of certiorari be issued quashing the orders of the Company Law Board contained in their letters dated January 23. 1967 and June 6. 1967 and a writ of mandamus be issued to respondent No. 1 to extend the term of Managing Agency of Messrs. Govan Brothers (Rampur) Private Limited till August 14. 1970 The petitioners will have their costs of this petition Counsels fee is assessed at Rs 200. 00. ( 17 ) I may add that apart from the point upon which I have decided this Writ Petition, the petitioners argued other points raised in the petition but I have not discussed these points because I have not heard the learned Solicitor General thereon ( 18 ) THE learned Solicitor General makes an oral request for stay of the operation of this order as he says that the respondents will be filing an appeal against this judgment. I think it is a case for stay and. therefore, I grant stay of the operation of this order for a period of 15 days from today.