A survey of the provision of the Companies Act would reveal the truth of the statement that concept of ‘Public interest’ has been making rapid inroads into the Company Law. Some of such provisions are stated below very briefly:
(i) Section 396 empowers the Central Government to provide for compulsory amalgamation of companies into a single company in the public interest. Such a provision was made in the Company Law for the first time by the Companies Act, 1956.
(ii) Section 211 (3) empowers the Central Government to exempt any class of companies from compliance requirements in Schedule VI pertaining to form and contents of Balance-sheet and Profit & Loss Account, if it deems fit for public interest.
(iii) Regarding transfer of shares which is likely to change the composition of the Board of Directors prejudicial to public interest, Central Government is now empowered under the 1956 Act [section 250 (3) & (4) to impose restriction on such transfer, i.e., for voting right, upto 3 years, without its sanction].
(iv) Under Section 397 the members can file application to the CLB for appropriate relief where the affairs of the company are being conducted in a manner prejudicial to public interest, provided the requirements of Section 399 are fulfilled.
(v) Again, under Section 398, shareholders can file an application to the CLB for
relief for public interest.
(vi) Under Section 408, the Central Government, on recommendation of CLB may
appoint directors to the Board for safeguarding public interest.
(vii) Qnder Section 394(1) the Court is empowered to refuse its sanction to any
compromise or arrangement, when a company is being wound-up, when the
Court feels that the scheme is prejudicial to public interest.
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