JUDGMENT 1. - This application relates to the main Company Petition No. 10 of 107 filed by the applicants under sections 397 and 398 of the Companies Act, 1956. That petition is pending trial and, in the meantime, the present application has been mad, under section 403 of the Companies Act, and rule 9 of the Companies (Court) Rules, 1959, etc. for certain interim reliefs in addition to the interim reliefs granted by the then Companies Tribunal when the case was under consideration there. 2. An occasion for the filing of the present application arose on the institution of a suit (No. 3211 of 1969) on 23rd September, 1969, in the ordinary original civil jurisdiction of the High Court at Calcutta by Messrs. Arvind Finance Company Private Limited, Calcutta, against the Edward Mills Company Limited, Beawar, respondent No. 1, hereinafter called the "the Company". The claim in the suit is for the recovery of Rs. 6,01,235 and Rs. 53,127 from the Company. An application was made in the suit for the appointment of a Receiver and it was allowed by an order of the Hon'ble Court, dated 31st October, 1969, after notice to the Company. The applicants have taken the occasion to reiterate their grievances against the Company and some of its directors and have alleged, inter alia, that the aforesaid suit has been instituted as a result of collusion between the so-called Tatia Group of the respondents and Messrs. Arvind Finance Company Private Limited, Calcutta. It has been pointed out in this connection that information regarding the filing of the suit was withheld from the applicants and the matter was not even put up for the consideration of the Board of Directors. A number of prayers have therefore been made for interim relief. 3. The Company and the Arvind Finance Company Private Limited have filed replies to the application and I have heard the learned Counsel. 4. It has been argued by Mr. Khanna on behalf of the applicants that in the present state of affairs, when the mills of the Company have been closed and the Company has shown recurring losses, it will be proper for this Court to suspend the Board of Directors and appoint a receiver or an administrator to takeover charge of the assets of the Company so that they may be put under proper protection. He has also argued that I should prevent the repayment of loans by the directors for the time being and stay further proceedings in the suit in the Calcutta High Court. 5. I do not think, however, that there is any occasion for me to make an order for the suspension of the Board of Directors and appointment of a receiver or an administrator simply because the mills of the Company have closed down. Any such order will have serious consequences and may be said to over-reach the reliefs asked for in the main petition under section 391 and 398 of the Companies Act which is pending trial. So also, I am not satisfied that I should make an order, at this stage, suspending the repayment of loans by the directors. And there can be no question at all of staying the suit which is pending in the Hon'ble High Court at Calcutta. 6. Mr. Khanna has however argued that the applicants have reasons to believe that the aforesaid suit is not being defended with the necessary care and attention and that it is being conducted on behalf of the Company by a person in which the applicants have no confidence at all. The learned Counsel has pointed out that Shanti lal Jain, who is one of the directors of the Company,was chosen on behalf of the Company to file an affidavit in September, 1969, in answer to the application for the appointment of a receiver in the aforesaid suit even though he once held a registered general power- of-attorney on behalf of the plaintiff, the Arvind Finance Company Private Limited. That power is dated 26th August, 1963, and has been marked Exhibit P.5/55 in the main petition. Then Mr. Khanna has pointed out that this Shantilal Jain actually filed a suit on behalf of the Arvind Finance Company Private Limited on 7th October, 1963, in the Court of the Civil Judge, Beawar, against the Company, even though he was functioning as director of the Company on that date. The copy of the plaint in that suit has been marked as Exhibit R. 1/36 in the main petition. They are two facts have not been controverted on behalf of the Company or Messrs. The copy of the plaint in that suit has been marked as Exhibit R. 1/36 in the main petition. They are two facts have not been controverted on behalf of the Company or Messrs. Arvind Finance Company Private Limited, and it appears to me that the management of the Company was not well advised in entrusting the defence of such an important suit to Shantilal Jain. The apprehension of the applicants that the present arrangement for defending the suit is not satisfactory, is therefore well founded. 7. I have gone through the affidavit of Shantilal Jain in the aforesaid suit. It is surprising that he did not care to bring it to the notice of the Hon'ble High Court at Calcutta that a petition under sections 397 and 398 of the Companies Act was pending in this Court and that it was a serious point in controversy in those proceeding; whether Messrs. Arvind Finance Company Private Limited had a separate identity at all or was in fact and substance a concern of the so called Tatia Group against whom oppression and prejudicial activities have been alleged by the petitioners. This lends support to the apprehension that the defence of the aforesaid suit is not in proper hand. 8. Then it appears that those responsible for the management of the Company did not care to inform the Board of Directors that a notice and a telegram, dated 15th September, 1969, had been received from the Arvind Finance Company Private Limited cancelling the agreement on the basis of which the loan had been advanced to the Company. Even the facts that the suit had been instituted, and an application had been moved for the appointment of receiver forthwith, were not brought to the notice of the Board of Directors. In the strained financial position of the Company a demand for the recovery of more than Rs. 6 lakhs of rupees and the institution of a suit for that purpose was a matter of great consequence and should have been placed for the consideration of all the directors. As this has admittedly not been done, there is justification for the apprehension of the applicants that it is necessary for this Court to make some satisfactory and dependable arrangement for the conduct of the defence in the aforesaid suit. 9. As this has admittedly not been done, there is justification for the apprehension of the applicants that it is necessary for this Court to make some satisfactory and dependable arrangement for the conduct of the defence in the aforesaid suit. 9. I am therefore persuaded to take the view that it is necessary for me to make an interim order under section 403 of the Companies Act for the proper conduct of the defence in the said suit against the Company. Shri Ashim Chatterjee, I.A.S. has been nominated by the Central Government to be one of the directors of the Company and I think that it will be proper to direct that the defence of the aforesaid suit should be entrusted to him and that a direction should be given that the other directors and the officers of the Company shall render full and faithful assistance to him in the discharge of this duty. It will also be proper to direct that Shri Chatterjee shall, whenever possible, give an opportunity to Shri Sajam Kumar Raniwala (Petitioner No. 5 in the main petition) to suggest possible lines of defence if he so desires. Shri Chatterjee is a part-time director of the Company and may not find it possible to devote full attention to the case or to bear the entire burden of conducting it himself It will therefore be proper to direct further that he will be assisted in his task by the Official Liquidator attached to this Court. It is ordered accordingly. The expenditure incurred in pursuance of this order shall be borne by the Company. The application fails in other respects and is rejected. No order as to costs.Application rejected. *******