ROHTAS INDUSTRIES LTD. vs S.D. AGARWAL & ANR.

The Supreme Court held that under Section 237(b)(i) and (ii) of the Indian Companies Act, 1956, the appointment of an inspector is contingent upon the existence of circumstances suggesting fraud or misconduct in the company's affairs. The Court clarified that while the Government's opinion is subjective, the existence of such circumstances is a condition precedent to forming that opinion, allowing judicial review of the Government's decision. The High Court's dismissal of the writ petition was overturned, affirming the need for factual existence of the alleged circumstances before an investigation can be initiated.