TMI Blog1976 (8) TMI 104X X X X Extracts X X X X X X X X Extracts X X X X ..... July 19, 1969, with the result that the directors of the said bank were required to decide the course which they would adopt in the circumstances facing them. The only right of the said bank was to receive compensation under the said Act which was assessed at Rs. 14.70 crores. The bank had to express its preference as regards different courses of payment. The directors of the said bank, it appears, decided to amalgamate with some other undertaking which may in the long run prove beneficial to the shareholders of the bank. With that end in view the bank negotiated with the directors of the respondent No. 1-company herein for a possible scheme of amalgamation. The outline of the said scheme of amalgamation was broadly worked out between the two companies and it was disclosed in its annual general meeting held on September 29, 1970. The scheme as envisaged by the board of directors of the bank met with the approval of the members where upon a detailed agreement between the respondents Nos. 1 and 2-companies was worked out. Respondent No. 2-bank herein applied for necessary section by an application under section 391 of the Companies Act, 1956, in the High Court of Bombay, praying for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, 1956, for sanction of the scheme as approved and adopted by the general meeting of the shareholders of the company. Pursuant to the notice issued by this court to the Central Government as required under section 394A of the Companies Act, 1956, the Regional Director, Company Law Board, Western Region, has filed his appearance and objected before this court to the grant of sanction as prayed for, inter alia, on the ground that the scheme of merger in question requires the approval of the Central Government as required under section 23(1)( a ), inasmuch as the Bank of India (hereinafter referred to as "the transferor-company") was for all intents and purposes an undertaking as defined under section 2( v ) of the Monopolies and Restrictive Trade Practices Act, 1969. This objection, as it appears from the affidavit-in-reply filed on behalf of the Union of India, is based on four-fold grounds. In the submission of the Regional Director, the transferor-company is capable of carrying on non-banking business and for that matter is not prevented from carrying on banking business, provided it applies for and obtains licence under the Banking Companies Act, 1949. The second ground was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess activities in praesenti at the material time of making application and the precise content of the definition should be read in the context of the section concerned. In the proper context, section 23(1) and (2) do not want the restriction of the business activities to the present and in given cases there may be stoppage or cesser of business on the grounds which may be beyond the control of the company, and the court should not while reading the definition clause of the term "undertaking" restrict its meaning to the projects which have been fructified and actually went into production but also must consider all the "ante-production points" which may comprise of "the series of steps" culminating in production. We are afraid, we cannot accept such a broad contention urged on behalf of the Union of India, obviously for two reasons. In the first place, a similar question arose before the Bombay High Court in Union of India v. Tata Engineering and Locomotive Co. Ltd. [1972] 42 Comp. Cas. 72 (Bom.), where the Division Bench was concerned with an exactly similar contention like the one before us and was called upon to sanction the scheme of amalgamation of the Central Bank of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a sugar manufacturing unit floated another company under the name and style of Shahjahanpur Sugar Pvt Ltd., inter alia , with the object of taking over the sugar manufacturing unit in consideration of the appellant-company being allotted 100% shares in the new company partly in payment of the consideration of the purchase of the sugar manufacturing unit. The Central Government in the Department of Company Affairs by its order of June 30, 1973, rejected the appellant-company's application under section 23(4) of the Monopolies and Restrictive Trade Practices Act, 1969, for the aforesaid proposed scheme of transfer of the sugar manufacturing unit to the new company. The appellant-company, therefore, under section 55 of the Monopolies Act of 1969, preferred an appeal before the Supreme Court. On behalf of the appellant-company it was urged before the Supreme Court that before an enterprise may become an undertaking within the definition of the said term in section 2( v ) of the aforesaid Monopolies Act, it is necessary that the enterprise must be engaged in production, supply, distribution or control of goods of any description or the provision of service of any kind in praesenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tata Engineering Locomotive's case [1972] 42 Comp. Cas. 72 (Bom.), the very fact that the directors of the transferor-company decided to amalgamate itself with the transferee-company gives us a clear indication that it had no intention to pursue any business activity so as to continue as an undertaking. We do not think that there are any justifying reasons for us to interfere on the grounds which have been dealt with by the learned single judge in detail in his order. The broad contention urged on behalf of the Union Government is to be rejected obviously for the second reason, namely, that the majority view of the Supreme Court in Carew and Company Ltd. v. Union of India [1976] 46 Comp Cas 121, 128, 130 (SC), has clearly rejected this view sought to be advanced on behalf of the Union Government by holding as under : "Section 2 of the Act makes it clear that the definitions given in that section will be attracted only if the context so requires. The word ' undertaking ' is a coat of many colours, as it has been used in different sections of the Act to convey different ideas. In some of the sections the word has been used to denote the enterprise itself while in many ot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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