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1973 (3) TMI 149
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....y at Patan, District Sikar in the State of Rajasthan for the manufacture of cement. Central Government made a reference under Section 22(3)(b) of the said Act to the said commission to make necessary inquiries and report its opinion such application. On February 4, 1971 the said commission issued a notification inviting informations from all concerned over such reference and then started its inquiries. Obviously in its endeavour to find out whether the undertaking proposed to be established would be "interconnected" undertaking within the meaning of the said Act with the present petitioner the Hindusthan Motors Limited, the commission first issued a summons under Rule 12 of the said Act on December 29, 1971, for production of certain documents referred to in the summons. Though the petitioner first objected production of such documents on the ground of irrelevancy, it produced certain documents in answer to the summons. Then followed certain correspondence between the said commission and the petitioner -- the commission either asking for disclosure of more documents and informations or seeking more clarifications and the petitioner complying with the same but not without protest. ....
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.... petition and obtained the Rule. Petitioner's prayer in substance is for issue of an appropriate writ for quashing the summons and the order of the said Commission. 5. It appears from the order of the Commission that the issue of relevancy was debated more with a reference to the scope of the inquiry than on the documents themselves before the Commission. In this Court however, the learned Counsel for the petitioner has raised a serious dispute about the relevancy of the documents irrespective of the scope of the inquiry and I shall deal with the same hereinafter. The principal point raised and contended before the said Commission was that when Keshoram Industries as also the petitioner company are both corporate bodies, interconnection, if any, must be within the meaning of Section 2(g)(iii) and not otherwise; it was further contended that in order to attract Section 2(g)(iii) the control contemplated must be de jure control capital wise, finance wise or management wise; accordingly it was argued that the said Commission must limit itself in its inquiries on the reference with reference to the above aspect and the documents asked for would be wholly relevant if the inquiry ....
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....n great pains to point out the fundamental difference in the basis of the grouping by the Monopolies Inquiries Commission (hereinafter referred to as Monopolies Commission) and that by the later committee, namely, Dutta Committee. With reference to this difference he has argued very strongly that when the said Act under which the inquiry is now being conducted by the Commission is now based on the report of the Monopolies Commission the respondent Commission was in error in relying on the report of the Dutta Committee furnishing an irrelevant basis altogether. Lastly, Mr. Roy Choudhury has contended that the documents asked for are so grossly irrelevant that they can have no bearing on any inquiry whatsoever under the said Act. 7. Apart from contesting the points raised by Mr. Roy Chowdhury, the learned Additional Solicitor General appearing for the respondents raised an objection against the maintainability of the present application -- not on the ground of lack of any jurisdiction of this Court, but on the ground of impropriety of entertaining such an application against an interlocutory order of the commission in the facts and circumstances of the case. According to the learn....
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....ary to refer to the object of the Statute, its scheme and some of the provisions thereof reference to which would be necessary in deciding the points. The object recited in the preamble is as follows:-- "An Act to provide that the operation of the economic system does not result in the concentration of economic power to the common detriment, for the control of monopolies, for the prohibition of monopolistic and restricted trade practices and for matters connected therewith or incidental thereto." To achieve this object the Act provides for a scheme of control over expansion of existing and establishment of new undertakings. The Statute makes a distinction between ordinary undertakings and dominant undertakings. Subject to certain exceptions dominant undertaking bears a statutory definition to mean an undertaking which either by itself or along with "inter-connected" undertakings either produces, supplies, distributes or controls one-third of total goods of any description or provides or otherwise controls one-third or more of any services. Chapter III provides measures for avoidance of concentration of economic power: This chapter applies to ordinary undertakings who....
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....r 6 empowers the commission set up under Section 5 to enquire into restrictive trade practices and if they are prejudicial to public interest to direct their discontinuance or to declare void any agreement relating thereto. Other provisions are ancillary. Chapter 7 provides for power to obtain information and appointment of inspectors to investigate into the affairs of an undertaking to find out whether any such undertaking is indulging in any monopolistic or restrictive trade practices. Chapter 8 provides for offences and penalties for contravention of certain provisions of the Act or the orders made under the Act. Chapter 9 provides for miscellaneous provisions. Before concluding the study of the provisions of this Act one more thing has to be noted. Section 5 provides for establishment of an important but powerful commission consisting of a Chairman and not less than two and not more than eight other members to be appointed by the Central Government. As pointed out earlier the Chairman shall be a person who is or has been or is qualified to be a Judge of the Supreme Court or of a High Court and the members shall be persons of ability, integrity and standing conversant with econo....
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....of persons, (vii) if one is connected with the other either directly or through any number of undertakings which are inter-connected undertakings within the meaning of one or more of the foregoing sub-clauses." "22. (1) No person or authority, other than Government, shall, after the commencement of this Act, establish any new undertaking which, when established, would become an inter-connected undertaking of an undertaking to which Clause (a) of Section 20 applies, except under, and in accordance with, the previous permission of the Central Government. (2) Any person or authority intending to establish a new undertaking referred to in sub-section (1) shall, before taking any action for the establishment of such undertaking, make an application to the Central Government in the prescribed form for that Government's approval to the proposal of establishing any undertaking and shall set out in such application information with regard to the inter-connection, if any, of the new undertaking (which is intended to be established) with every other undertaking, the scheme of finance for the establishment of the new undertaking and such other i....
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....relevant. The learned Additional Solicitor General has relied on Section 12, Order 16 Rules 14 and 15 of the Code of Civil Procedure and the Proviso to Section 165 of the Indian Evidence Act in contending that where a court on its own need calls for a particular document from a witness, the witness has no right to challenge the decision of the court. He has also drawn my attention to Section 30(2)(3) in submitting that the Statute contemplates expeditious disposal of a proposal like the one under consideration both by the Central Government and by the commission which would be frustrated if this Court starts interfering with interlocutory orders like the present one passed by the commission. 11. Mr. Roy Chowdhury, on the other hand, in meeting this objection has submitted that a person in the position of the petitioner has no remedy under the Act. Tt is not the applicant nor a person interested within the meaning of Section 29: It has got no right of appeal under Section 55. Mr. Roy Chowdhury points out that Section 165 of the Evidence Act authorises only a Judge in contradistinction to the court to ask an irrelevant question; this again according to him does not sanction any fo....
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....n hardly be pinpointed and this Court in exercising its powers under Article 226 should be extremely cautious in the matter of interfering with the decisions of the commission in this respect particularly when such decisions are considered decisions as in the present case. It should always be remembered that the requirement of the document is of the commission for forming its opinion and making a report and this Court cannot substitute its own decision as to requirement for that of the commission. The scope of interference by this Court, therefore, must necessarily be very limited being limited to reasons which must be compelling. This position also follows from the scheme of the Act. The learned Additional Solicitor General is right in contending that unless such a view is taken the entire object of the time schedule provided by Section 30 (2) (3) would be frustrated and even the proposal under enquiry may be defeated by the resultant delay. Mr. Roy Chowdhury may be right that in the present case the time schedule was infringed even earlier by the commission. But in finding the true intention behind the Statute we must look into its scheme and not the particular facts of an indivi....
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....on contended for by him can be the only construction; sub- Clause (vi), in his view, applies to cases where undertakings are not owned or controlled by any corporate body, but by an individual or an association of persons, but not constituting a partnership which comes within sub- Clause (ii). He suggests that on existing terms Sub-clause (vi) can have no application to this undertaking owned and controlled by corporate bodies and if it is to be so applied its terms are to be materially altered by reading into it words like "by owning or controlling corporate bodies" who, in their turn, own or control the undertakings. He has taken me through the different sub-clauses and has submitted that each sub-clause contemplates different circumstance and one cannot overlap the other. 14. This contention of Mr. Roy Chowdhury is, however, not considered acceptable by me as it was not by the commission. In my view such a construction is neither in consonance with the object of the Statute nor does it follow from the language of the section. I think the statute thought of inter-connection in the widest range and such a concept is in consonance with the object of avoidance of economic powers ....
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..... Reliance is also placed on the decisions in the cases of (1) Inland Revenue Commr. v. Harton Coal Co., 1960 (1) Ch 563; (2) Inland Revenue Commr. v. J. Bibly and Sons, 1945 (1) AH ER 667; (3) British American Tobacco Co. v. Inland Revenue Commr., 1943 AC 335 and (4) Barclays Bank Ltd. v. Inland Revenue Commr., 1961 AC 509, the learned Additional Solicitor General, however, has contended that in the Statute under consideration the concept of control should not be taken to be limited to de jure control only; it should be given a wider meaning as given by the commission. 16. Before I go on to consider the points so raised by Mr. Roy Chowdhury and controverted by the learned Additional Solicitor General, I must refer to a much debated controversy raised before me which, however, appears to me not to merit the importance given to it by the learned counsel for the petitioner. The controversy is over the contention of Mr. Roy Chowdhury that the ratio of the Bench decision of this Court in the case of AIR1972Cal105 (supra) is what he contends to be the meaning of the concept of control and that such decision is now binding on me. The learned Additional Solicitor General has contended ....
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....cie case Section 22 of the said Act prima facie could have no application as the new undertaking was established prior to the said Act. (c) Prima facie Section 22 calls for State intervention and not at the instance of an aggrieved shareholder. (d) Prima facie infringement of Section 22 does not render the contract or the undertaking illegal. (e) Omission to include in the notice or the explanatory statement an information as to whether permission under Section 22 of the said Act had been taken or not would not render the notice illegal. Mr. Justice Mitra, in his separate judgment agreed with the learned Chief Justice in holding that the balance of convenience was not in favour of granting an injunction; that prima facie the new company was established -before the said Act and as such Section 22 was not attracted at all and above all there was no material infringement of Section 173(2) of the Companies Act by the alleged omission of the disputed information. 19. Although the ultimate decision rested on the above findings, Mr. Justice Mitra in dealing with an argument of the counsel for the respondents made an observation which has bee....
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....eport which is yet to be made by the commission and subject to an appeal as provided by the Statute to the Supreme Court. It is very embarrassing that on an interlocutory proceeding raised before the commission, the petitioner wants this Court to decide the legal aspect of the issue. 21. Moreover, apart from the fact that the observation of Mr. Justice Mitra relied on by Mr. Roy Chowdhury has no binding effect as suggested, it must be said that he merely observed that control must be in respect of management, finance or capital. But, he never went into the question as to whether such control as is contemplated by Section 2(g) must be restricted to de jure control and cannot be extended to include de facto control. Though I hold that the observations relied on have no binding effect I agree with Mr. Roy Chowdhury that those observations are entitled to greatest respect from me even sitting singly and for reasons given hereinafter Jt will be clear that the view which I am now taking does not derogate in any manner even from the said observation. 22. In considering the different decisions of the House of Lords it must be noted that those were cases where the term "control" or "c....
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....will depend upon the degree of its completeness. The statutory definition is undoubtedly right to place the emphasis which it does on the power to control the board, for, as we have seen, the board is the company's head and brains. But de facto control over the board cad exist without any legal power at all. Thus, it is well known that in a company with a large and dispersed membership, a comparatively small proportion of the total shares, if held in one hand, may enable actual control to be exercised." (See Gower on the Principles of Modern Company Law, Third Edition, Chapter X page 197). It is exactly this point which the commission is trying to ascertain whether the real control lies in the hands of one or more wielding powers over the Board of Directors. 23. Therefore, I am unable to accept the contention of Mr. Roy Chowdhury that in interpreting Section 2(g) the control must be taken to mean de jure control only which can be effected by the majority of voting rights. In my view on the object and scheme of the Statute and in view of the wide and comprehensive nature of the definition clause control means and includes effective control in any manner including de fac....
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....the provisions of the Statute. 25. The last point raised by Mr. Roy Chowdhury is with reference to the relevance of the document. It has been contended that the documents called for are so grossly irrelevant that it only betrays in application of the mind in the matter of issue of summons or collateral use of the powers for some purpose other than any enquiry under the Act. In the petition itself the petitioner had not made out any specific case that the documents had been called for for any purpose other than the ostensible purpose. The learned Additional Solicitor General has rightly pointed out that under the provisions of Section 60 of the Act the documents and information called for cannot be used for any collateral purpose. This part of the submission of Mr. Roy Chowdhury is his inference from the alleged irrelevancy of the document so that if relevancy be found the submission would lose its foundation. On the complaint of in application of mind it must be said that when the commission passed a speaking order overruling the objection or irrelevancy it can no longer be said that the commission had not applied its mind on the question of relevancy. Mr. Roy Chowdhury may chal....