P L D 2000 Lahore 461 (PLP)

"An examination of the aforesaid sections brings out two aspects; first, the very wide power conferred on the Court, and secondly the object that is sought to be achieved by the exercise of such? power, with the result that the only limitation that could be impliedly read on the exercise of the power would be that nexus must exist between. the order that may be passed thereunder and the object sought to be achieved by those sections and beyond this limitation which arises by necessary implication it is difficult to read any other restriction or limitation on the exercise of the Court's power."

17. In Shahbazud Din v. Service Industries Textile Ltd. PLD 1988 Lahore 1, it was held as under: "...Section 290 of the Companies Ordinance, 1984 confers power on the Court to give appropriate order and to initiate corrective measures wherever a company is acting in a manner prejudicial to the public interest. The receiving of interest on the money lent and investment made in view of the clear and unequivocal injunctions of the Holy Qur'an and Sunnah is not conducive to public interest and as such corrective measures are required to be taken by the respondent‑company . . . . "

18. Mr. Abdul Hafeez Pirzada, the learned counsel for respondent No. 1 contended that the power under section 290 is only available in those cases where it is shown that the grounds for winding up under section 305 of the Companies Ordinance, 1984 exist but to wind up the company would unfairly prejudice it. There is no warrant for this contention so far as this country is concerned. It will be seen that section 397(2)(b) of the Indian Companies Act, 1956 clearly states that to wind up the company would unfairly prejudice such member or members "but that otherwise facts would justify making of winding up order on the ground that it was just and equitable that the company should be wound up". These words are missing in section 290 of our law. Consequently, it cannot be said that in order to succeed in an application under section 292 of the Companies Ordinance, 1984 the petitioner must show that there are grounds for winding up of company under the doctrine of just and equitable. On the other hand, if it is demonstrated by the petitioner that the affairs of the company are being conducted in an unlawful or illegal manner or in a manner prejudicial to the public interest or oppressive to the members or creditors the Court can interfere under section 290 of the Companies Ordinance, 1984. .

19. In the case of N.R. Murty v. I.D. Corpn. of Orissa Ltd. (1977) 47 Com. Cas. 389, the Court observed as follows:‑‑ " It was contended that on the averments in the petition, no case for winding up on just and equitable grounds was made out and so long as a case for winding up was not made out, no other relief could be granted in this petition. The power of the Court under sections 397 and 398 of the Act can be invoked in different circumstances. Under section 397, unless facts justify the making of a winding up order, jurisdiction cannot be exercised. No such facts, however, are necessary to be proved for the application of section 398; it is enough if the affairs of the company are conducted in a manner prejudicial to the public interest to vest power in the Court to make an order in terms of statutory provisions ...."

20. The next question is as to what is the public interest. This aspect has been the subject‑matter of discussion in various cases. In Shahbazud Din's case (supra) PLD 1988 Lahore 1, at page 42 the Court held as under:‑‑ " ....A matter of public and general interest is that in which a class of community have a pecuniary interest or some interest by which their legal rights and liabilities are effected.." In N.R. Murty's case supra (1977) 47 Com. Cas. 389, the Court at page 391 observed as follows:‑ "...The expression 'public interest' in section 397 takes the company outside the conventional sphere of being a concern in which the share holders alone are interested. I emphasize the idea of the company functioning for the public good or general welfare of the community; at any rate, not in a manner detrimental to the public good ...."

21. In Killick Nixon Ltd. and others v. Bank of India and others (1985) 57 Com. Cas. 831, the Court at page 832 observed as follows:‑‑ " ....Under section 397 and 398 any personal grievance of a member himself is not contemplated ....It merely stipulated minimum qualifications which members should possess such as their numerical strength or the extent of their share capital. Under these provisions, . therefore, any personal prejudice to the members for coming before the Court is not required."

22. In English Law the new concept of unfairly prejudicial conduct was introduced by Companies Act, 1980 through section 75, now consolidated in Companies Act, 1989 as section 459, which provides that a member may petition, the Court for a remedy if the company's affairs have been conducted in a manner unfairly prejudicial to members' interest. The expression unfair prejudice is wider than, and replaced the concept, oppression in the old Companies Act, 1948 (section 210). The Courts have now taken new approach in dealing with minority shareholders complaints and is prepared to look at any alleged prejudicial conduct from any objective point of view, to take into account any relevant circumstances to give the section its natural meaning without any technical gloss.

23. In re: Cumana Ltd. (1986) CLC 430, (Court of Appeal) Lawton L.J observed as follows:‑‑ "...(d) The last of the acts of unfair prejudicial conduct found by the judge was that, during a period of 14 months .. ..Mr. Bolton had taken or received from Cumana the sum of 3,56,000 pounds‑‑ 160,000 pounds purporting to be by way of bonus and 1,90,000 pounds by way of 9 contribution to his pension fund. The judge decided that these sums were excessive. They were. (e) it follows in my judgment, that there are no grounds for upsetting the judge's findings that Mr. Bolton had conducted the affairs of Cumana in a manner which was unfairly prejudicial to Mr. Lewis interests..."

24. As mentioned earlier, the petitioner is a statutory corporation having been set up by Pakistan Water and Power Development Authority Act, 1958. In the present cage it has three capacities; firstly it is shareholder to the extent of 64% of the shares in respondent No.l company; secondly it is creditor to the extent of Rs.223 billion and thirdly it has entered into Power Purchase Agreement with respondent No.2 company. According to the petitioner, the Power Purchase Agreement and the Share Holders Agreement which it was obliged to enter into under the instructions of the Privatization Commission and Government of Pakistan are not only illegal and unlawful 'but are also contrary to public interest.. It is to be seen that in order to facilitate the privatization of power units section 8 of WAPDA Act, 1958 was amended by providing that the authority may frame scheme or schemes for privatization of various units. It is common ground between the parties that the scheme for privatization of Kot Addu Power Station did not emanate from WAPDA and as a matter of fact, it did not frame any scheme for privatization. Instead the Government of Pakistan took the decision to privatize the shares which was done through Privatization Commission.

25. The stipulations in the Power Purchase Agreement and Share Holders Agreement which have strongly been objected to by the learned counsel for the petitioner are sale of electricity, at the rate of Rs.3.44 per unit and right of respondent No.2 to manage the unit .notwithstanding that it does not own majority shares and is also a debtor to the tune of Rs.22 billion. So far as the price of the electricity sold is concerned, it has been pointed out by the learned counsel for the petitioner and is not denied by the learned counsel for the respondents that Muzaffargarh Power Station is producing electricity at the cost of Re. 1.98 while the respondents are charging the petitioner exorbitant rate of Rs.3.44 per unit.

26. Mr. Abdul Hafeez Pirzada, the learned counsel for respondent No. l submitted that the circumstances of the two units are not the same inasmuch as in the case of Muzafargarh Power Station there is no debt‑servicing involved while in the case of Kot Addu Power Station the petitioner has to service debt to the tune of Rs.25 billion. However, it has rightly been pointed out by the learned counsel for the petitioner, that so far as repayment of the principal amount is concerned it. cannot be debited to the account of the company and it is not covered by head debt‑servicing as by paying off the principal amount the value of the shares increases. Be that as it may there is much stronger evidence available on the record to show that the power rates fixed in the Power Purchase Agreement are highly exorbitant and inflated. Before the unit was privatized, it was run for a period of five years by the petitioner itself. The petitioner has placed on the record material to show that the electricity was being produced at‑ much lesser cost than the one being charged by the respondents. The chart is as under:‑‑ Years Total Units Cost per Unit 1990‑91 1,922,077,000 KWH Rs.1.66 1991‑92 2,812,568,000 KWH Rs.1.41 1992‑93 3,243,248,000 KWH Rs.1.29 1993‑94 3,776,956,000 KWH Rs.1.21 1994‑95 3,957,743,000 KWH Rs.1.70 1995‑96 5,270,012,000 KWH Rs.1.28 (up to 27th June, 1996). As against the above, in the agreement there was, a sudden jump and rate of Rs.3.44 per unit was fixed which can by no stretch of imagination be considered to be justifiable return on equity and it virtually amounts to fleecing WAPDA and in turn the public at large. Prima facie the Power Purchase Agreement is clearly contrary to public interest.

27. There is no merit in the contention of the learned counsel for the respondents that the Power Purchase Agreement cannot be interfered with in the proceedings under section 290 of the Companies Ordinance, 1984 for` various reasons; firstly that apart from being purchaser the petitioner is also a shareholder rather majority shareholder in the company; secondly the Power Purchase Agreement is not to, be read in isolation but is one of series of the agreements arrived at as a consequence of the privatization and thirdly the Power Purchase Agreement itself refers to other agreements and also to various acts of management which are to be performed by the parties.

28. Another illegality which prima facie appears to have been committed by the respondent No.2 is that it has entered into agreement with one of its subsidiary companies for managing and operating the plant and the said subsidiary company is being paid a 'sum of US $ 3 million every year. The position of that company is virtually that of the managing agents. There cannot be any gainsaying that the institution of managing agents was done away with in Pakistan as far as back 1972 and is specifically prohibited by section 209 or the Companies Ordinance, 1984.

29. Mr. Abdul Hafeez Pirzada, the learned counsel for respondent No. l submitted that sum of US $ 3 million is minimal and constitutes a fraction of the total expenditures. Even if that be so, the fact remains that the respondent "has incurred unauthorised expenditure to the extent of US $ 3 million every year which amounts to mismanaging the company. The contractor appointed by respondent No.2 for the operation and maintenance of the plant namely National Power International has also been paid bonus of Rs.10,470,000 in addition to the fixed fee, cost and expenses.

30. It is also to be seen that the maintenance cost of Muzaffargarh Power Unit which is of similar capacity and is of similar nature is Re.0.8 per unit which comes to Rs.27 crore. The maintenance cost which the contractors/managing agents are charging is 0.26 paisa per unit which comes to Rs.1.27 billion which shows that the managing agents are siphoning off about one billion per year. It may be mentioned that at the time when the plant was handed over, it was of international standards as mentioned in the Memorandum of Information filed by the respondents themselves along with their reply.

31. So far as the Share Holders Agreement is concerned, again it is to be seen that admittedly the petitioner is a majority shareholder. According to section 90(2) of the Companies Ordinance, 1984 the voting power of each shareholder must be equal to the paid value or his shares. Section 90 is G departure from the previous law. The law in England and India is different where different classes of shares are recognized. So far as Pakistan is concerned, there is only one class of shares and every shareholder is given the right to vote proportionately. In this view of the matter, prima facie no R restriction could be placed on the right of the petitioner to take any decision by voting in proportion to the, shares held by it and it cannot be prevented M from exercising that right. The agreement to the contrary is therefore prima facie void.

32. The learned counsel for the respondents have cited certain judgments from the English jurisdiction to show that the agreement between the shareholders to vote in a particular manner is valid. These judgments do not have any applicability in our country because it has not been shown that there is any provision like section 90(2) of the Companies Ordinance, 1984 in England:

33. It has also been mentioned above that respondent No.2‑ company has maneovred to hire one of its affiliated company namely National Power I International Ltd. for operation and maintenance of the plant. In addition to the arrangement being illegal; since it amounts to appointment of managing agents, it is to be seen that hefty fee amounting to US $ 3 million per annum along with cost, expenditure and bonus is being paid to the aforesaid company. The cost of maintenance which the contractor is charging is much I more than the cost which other unit is incurring and in this connection about one billion has been paid to the contractor. These excessive payments clearly constitute acts of mismanagement. The management of respondent No.1 company is mismanaging its affairs for its gains while oppressing the major shareholders i.e. the petitioner.

34. In terms of Power Purchase Agreement, Initial Dependable Capacity Tests (IDC tests) were to be performed at the earliest possible date. .The invoices for the payment of power purchase were to be prepared by respondent No.1 in terms of the result of IDC tests. These tests are essential since in their absence no mechanism exists to determine as to at what capacity the plant is operating. For a long time these tests were not performed and in the meantime respondent. No. l kept on, and still is, invoicing the petitioner on provisional basis. When finally the tests were performed by the petitioner the management of the respondent No.l maneovred to delay verification and confirmation of the results. In fact, the results have not yet been confirmed, and the only inference which could be drawn for this attitude is that the management of the respondent No.1 by over‑invoicing is rewarding its own affiliate by siphoning away the money which the petitioner is forced to make in the absence of final results of IDC. tests. Due to this oppressive and illegal omission on the part of management of the respondent No. l the petitioner is made to pay billions of rupees which are legally not due to respondent No. l The delay in getting the result of IDC tests verified and confirmed is a blatant example of the way the affairs of the respondent No. l are being mismanaged by its management.

35. The Power Purchase Agreement requires the. installation and maintenance of System Control and Data Acquisition systems (hereinafter referred to as "SCADA"). SCADA is a system which, amongst other things, monitors the accurate supply of electricity supplied to the National Grid. The system not only monitors but also records all the information received by it. Any fluctuation howsoever minor is instantly monitored and simultaneously recorded by SCADA. Here it is pertinent to note that the net electrical output varies with the kind of fuel used consumed to produce it. Therefore, the analysis of data recorded by SCADA sets forth the accurate information. regarding which type and when a certain kind of fuel is used to produce‑the electricity. This fact is evident from respondent No. 1 s own statement made in the counter‑affidavit to C.M. No.1393‑L/98 (at page 36) whereby it is conceded that the SCADA system was disconnected by respondent No. l due to serious and genuine concern. that the information would be used inappropriately and unjustifiably for fiscal metering. It is interesting to note that if SCADA is not designed for 'the abovestated purpose then why there was a dire need of committing such an illegal act of disconnecting the system. Article 8.6 of the Power Purchase Agreement reads as under:‑‑ "8.6. Telecommunication Circuit.‑‑The Company, at its sole and expense, shall maintain‑‑ (a) the telecommunication system of the Company for‑‑ (A) telecommunication and tele‑protection facilities at WAPDA's grid stations at Kot Addu, Muzffargarh, D.I.Khan, Multan and the control centre; and (B) telemetering and date interface for WAPDA's System Control and Data Acquisitions Systems, as more fully described on Schedule 12: .....

36. It follows from the above that it was respondent No. l which had to maintain SCADA and its act of disconnecting the same amounts not only to mismanagement but is also oppressive to the petitioner since such an act was done in order to obtain some favourable gains.' The fact of the matter is that by ill‑maintenance of SCADA respondent No. l has given a free‑hand to respondents to over‑invoice the petitioner according to their whims and caprice. In the absence of SCADA and with the unverified and unconfirmed results of IDC tests, there is no way the petitioner could verify the invoices prepared by respondent No.

1. In this state of affairs, the only possible inference is that respondent No. 1 is pocketing huge sums by over‑invoicing, which the petitioner has to pay owing to the oppressive attitude of the management of respondent No.

1. This attitude is a clear manifestation of flagrant mismanagement.

37. The Power Purchase Agreement was executed for the purchase by the petitioner of Dependable Capacity and the entire Net Electrical Output produced by respondent No.

1. In terms of Article IX of the Power Purchase Agreement, the petitioner is to make payments under two heads namely Capacity Payments, section 9.1, and Energy Payments, section 9.2. Under section 9.1, the petitioner makes per month Capacity Payment in arrears equal to the product of the Capacity Purchases Price. While under section 9.2 payments are to be made according to Energy Payment Price for each MWH. or Net Electrical Output, the Capacity Purchase Price and Energy Payment Price are calculated, in accordance with Schedule 6 of the Power Purchase Agreement. The Capacity Purchase Price comprises of two components; (i) the Escalable Component; and (ii) the Non‑escalable Component. The Escalable Component includes (a) fixed O&M costs; (b) administrative costs; and (c) return on equity, while the Non‑escalable includes debt servicing, the Energy Purchase Price includes (a) fuel costs; and (b) variable O&M costs.

38. The Power Purchase Agreement as structured is clearly against public interest for the reasons that under the Power Purchase Agreement respondent No.l is also charging the petitioner the principal interest and other fees payable under the Note Agreement i.e. under the head of debt servicing. Resultantly, not only that the debt is being written off, but also the value of respondent No. 1's share is increasing at the cost of the petitioner, whereas the petitioner is financing itself the increase in the value of its shares. The net effect of this illegal act is that the petitioner is being forced to pay 84 paisas per unit under the head of debt servicing i.e. of an amount which belongs to the petitioner in the first instance. The petitioner is under a statutory duty to develop the water and power resources of Pakistan and to provide electricity to the public at large at rates which are affordable by the people of Pakistan. In view of the provisions contained in the Power Purchase Agreement whereby the petitioner has to finance the` payment of debt owed to itself, the cost of electricity purchased by the petitioner is dearer by 26 % of the total unit price. This illegal burden has to be borne by the public which is clearly not in its interest.

39. Moreover, it is the duty of the petitioner under the WAPDA Act, 1958 to develop the water and power resources of the country. Since the petitioner has been illegally burdened with the payment of the abovereferred amounts, its statutory duties of developing the Power Sector have been totally compromised. The financing of the principal which obviously constitute the bulk of debt service charge, should come from the resources of respondent No. l itself, resulting reduction in the profit being made by it. Even the position of the petitioner as the creditor or respondent No. l is in jeopardy since the petitioner is being repaid money owed to it by charging the petitioner itself. This arrangement is against the public interest since the petitioner is a public sector organization and the money it is being forced' to pay actually belongs to the public at large. Therefore, such an arrangement seriously prejudices the interest of public.

40. Under the Operation and Maintenance Agreement, the management of respondent No. l is dishing out huge sums of money to one of its affiliate. The money it received from the petitioner is a part of purchase price of electricity. AS stated above, the money belongs to ‑the people and by siphoning away the funds the management of respondent is conducting its affairs in a manner prejudicial to the public interest.

41. The intention of law is that a Company should work not only for the i benefit of its shareholders but also for general good of the community/public K at large. Whenever the question of public interest has arisen, the Courts have not only upheld the concept but have also strengthened it by giving widest F possible interpretation to it. In Shahbazud Din's case supra PLD 1988 Lahore 1 at page 42, the Company Bench of this Court observed as under:‑‑ '...What is then the connotation of the expression 'public interest used in section 290 of the Ordinance? Obviously the context in which the term has been used would provide the guideline. One of the meanings assigned to it is to the following effect:‑‑ 'A matter of public or general interest does not mean that which is interesting as gratifying curiosity or a love of information or amusement but that in which a class of community have a pecuniary interest, or some interest by which their legal right or liabilities are affected. Under Company Law in cases of reconstruction of companies, Court has to consider and ascertain amongst other matters, the question whether the proposed scheme will serve the public interest .. .. one of the principal items on which the Court has to receive satisfaction is, whether considerations of public interest ought, in the opinion of the Court, to override the decision of the creditors or shareholders . . . . " Similarly, in N.R. Murty's case supra (1977) 47 Com. Cas. 389, at page 391, it was observed as follows: "...The expression 'public interest' in section 397 takes the company outside the conventional sphere of being a concern in which the shareholders alone are interested. I emphasize the idea of the 'company functioning for the public good or general welfare of the community; at any rate, not in a manner detrimental to the public good...'

42. The petitioner being a public sector organization utilises the funds which actually belong to the public. The payments which the petitioner is forced to make under the agreements are intact made from the money which belongs to public at large. By making such arrangements in the form o‑f various agreements whereby the petitioner is tied down to make undue payments amounts to misappropriation of public funds.

43. The learned counsel for the petitioner has referred to section 23 of the Contract Act, 1872 to show that the agreements entered into between the parties, in addition to being against public interest, are also opposed to public policy. Section 23 reads as under:‑‑ "

23. What considerations and objects are lawful, and what not: The consideration or object of an agreement is lawful, unless‑ it is forbidden by law; or is of such nature that, if permitted, it would defeat the provisions of any‑law; or is fraudulent; or involves or implies injury to the person; or property of another; or. the Court regards it as immoral, or opposed to public policy. . In each of these cases, the consideration of object of an agreement is said to be unlawful. Every agreement of which the object or consideration is unlawful or void. "

44. The expression 'public policy' or opposed to public policy has not been defined in the Contract Act, 1872. Public policy would mean that no man can lawfully do that which has a tendency to be injurious to the public welfare. Public policy comprehends only the protection and promotion of public welfare. It is that principle under which the freedom to contract or private dealings is restricted by law for the good of the community. Therefore, it can be inferred that the meaning of public policy is the interest of persons other than the parties. In Central Inland Water Transport Corporation Limited and others v. Brojo Nath Ganguly and others (AIR 1986 SC 1571), in para. 93 of the report it was observed as follows:‑‑ "...Contract Act does not define the expression "public policy" or "opposed to public policy". From the very nature of things, the expressions "public policy", "opposed to public policy", or "contrary to public policy" are incapable of precise definition. Public policy, however, is not the policy of a particular Government. It connotes some matter which concerns the public good and the public interest. The concept of what is for the public good or in the public interest or what would be injurious or harmful to the public good or the public interest has varied from time to time. As new concepts take place of old, transactions which were once considered against public policy are now being upheld by the Courts and similarly where there has been a well‑recognized head of public policy, the Courts have shirked from extending it to new transactions and .changed circumstances and have at times not even flinched from inventing a new head of policy. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the Court must in consonance with public conscience and in keeping with public good and public interest declare such 'practice to be opposed to public policy. Above all, in deciding any case which may not be covered by authority Courts have before them the beacon light of the Preamable to the Constitution. Lacking precedent, the Court can always be guided by that light and the principles underlying the Fundamental Rights and the Directive Principles enshrined in the Constitution ...." It was further observed as follows:‑‑ " ....The clause in the rule was struck down by the High Court and the Supreme Court also approved the decision of the High Court by observing that considering the inequality. in the bargaining power of the parties the clause in the contract of employment was void under section 23 of the Contract Act as opposed to public policy " "....It is thus clear that the principles governing public policy trust be and are capable on proper occasion, of expansion or modification. Practices which were considered perfectly normal at one time have today become obnoxious and oppressive to public conscience. If there is no head of public policy which covers a case, then the Court must in consonance with public good and public interest declare such practice to be opposed to public policy .... " Similarly in Rattan Chand Hira Chand v. Askar Nawaz Jung and others ((1991) 3 SCC 67) the Court came to the conclusion that what is against public interest is against public policy. The relevant observation of the report is as follows. "...I am in respectful agreement with the conclusion arrived at by the High Court. It cannot be disputed that a contract which has a tendency to injure public interest or public interests or public welfare, is one against public policy "

45. A contract opposed to public policy .of the State is unlawful. Neither the State Government nor the subject can lawfully be allowed to do that which has tendency to be injurious to the public or against the public good. No doubt, there cannot be any comprehensive formula or classification to determine what is against public policy but the concept keeps on varying and does not remain stable.

46. In M/s. Abdul Razzak & Co. v. Assistant Collector of Customs and another PLD 1993 Karachi 227, the Court came to the conclusion that betel nuts have none of the properties which will. make them fell in the category of food. They neither nourish the body nor sustain or promote growth nor maintain life. At page 236 of the report, it was observed as under:‑‑ "...Having regard to the fact that the only use of betel nuts, established in the case, is that for human consumption, the sale of such betel nuts, as may be unfit for human consumption, by a Government Department would neither be proper nor desirable for that would be putting public health in jeopardy by encouraging the nefarious trade of selling for human consumption, sub-standards articles, prepared from rotten betel nuts. This would undoubtedly be opposed to public policy. This being so the alleged agreement to purchase the disputed goods would be void for being opposed to public policy and consequently under section 65 of the Contract Act the plaintiff will be entitled to the refund of the said amount of Rs.2,00,000 deposited by the plaintiff ...."

47. As mentioned earlier, during the entire process of privatization the petitioner was not allowed to act independently rather it was tied down to put its consent on the series of contracts that were executed in pursuance of privatization of the Complex. The WAPDA Act, 1958 clearly and unambiguously postulates that scheme for privatization must first emanate from the petitioner side. The foremost reason being that it is only the petitioner which has the expertise which can chalk out projects that require state‑of‑the‑art technical know‑how. However, while privatization was being carried out the petitioner was rendered impotent under undue pressure. Now that the so‑called arrangements in the form of Power Purchase Agreement, Share Holders Agreement and Share Purchase Agreement are effected and their aftermath are causing prejudice to not only the petitioner but also the public interest. The effect of. these agreements has resulted in artificial swelling in the prices of electricity at which the petitioner has to buy it from the respondent No.

1. Consequently, this burden will trickle down to the consumers i.e. public at large. ' .

48. Respondent No.2 as minority shareholder took over and acquired the effective control of respondent No.

1. Despite having the majority shareholding of 64 % the petitioner in terms of Share Holders Agreement to which it was forced to be a consenting party, has been put into a straitjacket. Respondent No.2 is conducting the affairs of the company in a manner which is not only oppressive to its member and creditor (the petitioner) but also prejudicial to the public interest. The management of respondent No. l is siphoning away billions of rupees to its affiliates by raising the price exorbitantly. Under the terms of Power Purchase Agreement, the petitioner has to pay high price. All these funds belong to the public while in return they are getting expensive electricity. By mismanaging the affairs of respondent No.l, respondent No.2 is fleecing the company. As already stated, respondent No. l produced approximately 15% of the entire electricity produced in the country.

49. Before parting with the case, a reference may be made to Amal Kumar Mukharjee and another v. Clarian Advertising Service Ltd. and another (1982) 52 Com. Cas._

315. In that case admittedly the company had extensive business and was making high profits at the time of filing of petition and the Court came to the conclusion that it was a fit case to appoint a special officer to supervise and control the business and management of the company. A reference may also be made to Richardson and Crudas Ltd. v. Haridas Mundhra and others (AIR 1959 Cal. 695), the Court observed as follows:‑‑ " ....Constitution of an Advisory Board by order of Court in a proper case of company management is within the competence of the Court under section 402 of the Companies Act, 1956. The pattern of Court's power of managing under section 402 has to be worked out. The section is an innovation in‑ company administration by the Court‑..'."

50. It follows, therefore, that prima facie respondent No.2 is conducting the affairs of respondent No. 1 company in a manner prejudicial to public interest as also oppressive to the petitioner itself and in order to ensure the smooth running of respondent No. l and restrain respondent No.2 from acting in Y manner prejudicial to the public interest and detriment to that of the petitioner, the appointment of Provisional Manager is essential. In view of what has been stated above, the temporary injunction already granted is confirmed and Chaudhry Muhammad Siddiq retired Chief Engineer, Thermal is appointed as Provisional Manager to manage the affairs of respondent No. l company pending decision of the main petition. So far as C.M. No 1601‑L‑1998 moved by respondent No.l is concerned; as the temporary injunction has been confirmed, this application has become infructuous and is dismissed as such. Q.M.H./M.A.K./P‑I1/L Order accordingly.