Delay and laches defeat a Section 388B reference when material facts were already known and no explanation for lateness was given.

A reference under Section 388B of the Companies Act, 1956 was held not maintainable where the material facts were already known to the applicant, yet the reference was made after gross and unexplained delay. The explanation that the delay should be excused in the name of public interest was rejected because no satisfactory basis was shown for the late formation of opinion or the delayed reference. The proceeding therefore failed at the threshold on maintainability, and the allegations were not examined on merits.

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Issues: (i) Whether the reference under Section 388B of the Companies Act, 1956 was maintainable in view of gross and inordinate delay and laches.

Analysis: The proceedings were founded on alleged acts said to have occurred over a long span of years, but the reference was instituted much later. The materials showed that the Central Government was already aware of the relevant facts when the alleged incidents occurred or when the FIRs and charge-sheets were filed. No satisfactory explanation was offered for the long delay in forming the opinion under Section 388B or in making the reference. In these circumstances, the plea that delay should be ignored in the name of public interest was not accepted.

Conclusion: The reference was not maintainable and was liable to be dismissed for gross and inordinate delay.

Final Conclusion: The proceeding failed at the threshold on maintainability, and the merits of the allegations were not examined.

Ratio Decidendi: A reference under Section 388B of the Companies Act, 1956 can be rejected where the applicant, though aware of the material facts, approaches after gross and unexplained delay and laches.

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