Inspection of company records cannot be met with a blanket bar on later use of disclosed information before other forums.

Shareholders seeking inspection of a company's statutory records in oppression and mismanagement proceedings could not be subjected to a blanket condition that information obtained on inspection be used only before the Company Law Board and not before any other forum without prior approval. The Court held that any restraint on later use of the material could be considered only after inspection, once the actual disclosure and proposed use were known. It also noted that the issue of whether the Company Law Board could bar use before a non-subordinate forum was not properly addressed, and that any use of material revealing a cognizable offence would have to be examined under the Companies Act, 1956. The blanket restraint was therefore unsustainable.

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Issues: Whether shareholders seeking inspection of statutory records of a company in proceedings for oppression and mismanagement can be subjected to a blanket restraint that the information so obtained may be used only before the Company Law Board and not before any other forum without prior approval.

Analysis: The dispute centred not on the right to inspection itself, which was not seriously denied, but on the additional condition restricting the use of information gathered on inspection. The Court held that the propriety of any restraint on subsequent use of information could arise only after inspection had taken place and the nature of the proposed use was disclosed. The impugned orders did not address the appellants' contention that the Company Law Board lacked jurisdiction to prevent use of information before a forum not subordinate to it. The Court further observed that if the material disclosed a cognizable offence, the question whether such information could be restrained from use would have to be examined in the light of the powers under the Companies Act, 1956.

Conclusion: The blanket condition imposed on inspection was unsustainable and the appellants were entitled to inspect the statutory records; any question of restricting subsequent use of the information had to be considered afresh by the Company Law Board after disclosure of the intended use.

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