Ispat Industries Ltd challenged the Centre's decision to order a probe against the company for alleged exposure to Rs 8,500 crore (Rs 85 billion) of public funds, erosion of net worth and high accumulated losses in the Calcutta high court.
The government had ordered an investigation under Section 235 of the Companies Act, which permits investigation into a company's affairs. Ispat filed a writ challenging the order, dated February 13, 2004, and sought a stay on the investigation.
Govt orders probe against Ispat
Somnath Chatterjee, Ranjan Deb, Pratap Chatterjee and Gautam Mittra, counsel for Ispat Industries, moved the petition and argued Ispat was one of the biggest steel manufacturing companies with annual sales of above Rs 3,400 crore (Rs 34 billion).
It is alleged that the government order was passed on February 13 but the matter was published in newspapers on February 11 and 12. This proved the vindictiveness of the government against Ispat.
It was further alleged that before passing such illegal order no opportunity was given to the company to defend itself. Justice Girish Gupta directed the central government counsel to produce the relevant papers before the court on February 27.
The petition sought an order of injunction restraining the Centre from taking any step with regard to the notice dated February 13. It sought an order for withdrawal of the notice and stoppage of further investigations.
It also asked for an injunction barring the authority from disclosing any information or data to any media in connection with the investigation against the company.
The government investigation has been referred to by the department of company affairs to the serious frauds investigation office.
