Interconnected undertakings test under MRTP law requires concrete proof before prior approval can be insisted on in amalgamation matters.

Prior Central Government approval was not required for a proposed amalgamation because the objecting party failed to prove that the companies were interconnected undertakings attracting section 23 of the Monopolies and Restrictive Trade Practices Act, 1969. The court held that interconnection under section 2(g) and the statutory conditions in section 20 had to be established by concrete facts, including actual control or customary obedience, before the approval requirement could arise. A director's separate role in another concern was insufficient by itself, and mere presumptions could not substitute for proof. The objection to sanction on that basis was therefore rejected.

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Issues: Whether a scheme of amalgamation under the Companies Act, 1956 required prior approval of the Central Government under section 23 of the Monopolies and Restrictive Trade Practices Act, 1969 on the footing that the undertakings concerned were interconnected undertakings having an aggregate asset value attracting Part A of Chapter III of that Act.

Analysis: The objection under the Monopolies and Restrictive Trade Practices Act depended on proof that the petitioning companies, together with other alleged connected concerns, constituted interconnected undertakings within section 2(g) and that the statutory conditions in section 20 were met so as to bring section 23 into operation. The material placed by the Union did not establish that the companies were interconnected on the basis suggested. A director's separate role as chief executive of another concern did not, by itself, show that he was accustomed to act in accordance with the directions of the other company's directors, nor did it show that one company controlled not less than one-third of the board membership of the other. Mere presumptions were insufficient to establish interconnection, and no concrete instances or factual foundation were shown to support the asserted control or customary obedience. The court also repelled the preliminary objection that it lacked jurisdiction to examine whether the statutory approval requirement arose at all.

Conclusion: The scheme did not require prior approval of the Central Government under the Monopolies and Restrictive Trade Practices Act, 1969, and the objection to sanction on that ground was rejected.

Ratio Decidendi: A mere allegation of interconnection is insufficient to attract section 23 of the Monopolies and Restrictive Trade Practices Act, 1969; the statutory tests of interconnection and control must be established by concrete facts before prior governmental approval can be insisted upon in amalgamation proceedings.

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