TMI Blog1982 (9) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Ltd. was engaged in the business of raising iron ore and manganese ore. From the profit loss account of the company for the year ended 31st July, 1981, it appears that the company also manufactured iron clad switches, starters, cutouts, distribution board/boxes and lighting equipments, wireless receivers (valves transistors), electrical accessories, casein and dicalcium phosphate. 3. It also appears from the profit loss account of Karam Chand Thapar Ltd. for the year ended 31st March, 1981, that it was engaged in the production of iron and manganese ores, agricultural farm products, building and construction materials and equipments. 4. The admitted position is that although each of the two companies is engaged in production of a number of goods, both the companies produced iron and manganese ore. The short point that has come up for consideration in this case is whether the requirements of Section 23(3) of the MRTP Act, 1969, have been fulfilled in this case so that the two companies can amalgamate without the prior approval of the Central Govt. The petitioners have stated in their petition that both Karam Chand Thapar Ltd. and Hindusthan General Electrical Corpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the major items of production of the two companies. 7. Lastly, it has been argued that the two companies were not engaged in production of the same goods at all. The expression as produce the same goods will not cover the case of the two companies in the instant case because the two companies are each producing a number of goods and the common items of production being iron ore and manganese ore only. 8. On behalf of the respondents it has been contended that there cannot be any dispute that the two companies are undertakings within the meaning of the Act. It has been argued that the two companies have been registered under Section 26(2) of the Act as registered undertakings and it is not open to the appellant to argue that the two companies are not undertakings within the meaning of Section 23(3). 9. It has further been argued that the court should not try to find out whether the two companies produce substantially the same goods as suggested by the appellant. It has been argued that this test will not be a workable test at all and a number of practical difficulties will arise if this test is sought to be applied. Thirdly, it has been argued that there cannot be any dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt with the approval of the Central Government. In our opinion, the word undertaking in Section 23(3) cannot be given a restricted meaning. When the expression merger or amalgamation or takeover is used in Section 23, it must be understood in the sense of merger or amalgamation of two companies. Section 24 which deals with imposition of penalty for violation of the embargo placed by Section 23 provides that the Central Government may direct the undertaking to divest itself of the stock or other share capital or assets and Section 25 deals with the position of a director of an undertaking. In the context of all these sections and the scheme of this Act it appears to us that the expression undertaking in Section 23(3) has not been used in the restricted sense of an unit of production but in the sense of a company. Therefore, if these two companies fulfil the other conditions laid down in Sub-section (3) they are entitled to amalgamate without prior sanction of the Central Government. 11. The case of A. W. Figgis Co. P. Ltd., In re: MANU/WB/0139/1978, is not of any relevance for the purpose of the present inquiry. In that case, A. W. Figgis Co. Pvt. Ltd. had two businesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) where it is a single undertaking, the value of its assets, or (ii) where it consists of more than one undertaking, the sum total of the value of the assets of all the inter-connected undertakings constituting the dominant undertaking, is not less than one crore of rupees . 14. There is an Explanation to Section 20 which is not necessary for our purpose. 15. Sections 21, 22 and 23 require that an undertaking to which Part A applied will have to obtain prior approval of the Central Govt. before implementing any scheme for expansion of undertakings (Section 21), establishment of new undertakings (Section 22), merger or amalgamation of two undertakings (Section 23(1) and 23(2)) and purchase or take-over of other undertakings (Section 23(4)). Section 21 which relates to expansion of undertakings has been specifically made subject to Section 23. The object of these provisions appears to be that no scheme of merger or amalgamation, expansion or setting up of a new undertaking as an interconnected undertaking which comes within the mischief of Section 20 can be implemented without prior approval of the Central Government. On this general embargo an exception has been provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permit merger or amalgamation of two undertakings which produce entirely different and dissimilar goods to merge only because there is one common item of production. This appears to run against the object of the provisions contained in Chapter III under the heading 'Concentration of Economic Power'. 18. In this connection it will be instructive to notice the meaning of the word same . The word same has been explained in Black's Law Dictionary, fifth edition, page 1203, as follows : Same, identical, equal, equivalent. The word same , however, does not always mean identical . It frequently means of the kind or species, not the specific thing. When preceded by the definite article, means the one just referred to. 19. The clear wording of the section itself runs counter to the argument made by the respondent. The two qualifying phrases used in Section 23(3) are as are not dominant undertakings and as produce the same goods . The phrase as produce the same goods is descriptive of the two undertakings. We shall have to see the goods that are actually produced by the two companies to decide this question. Only if the goods produced by one undertaking a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore and manganese ore and also iron-clad switches, starters, cut-outs, distribution board/boxes and lighting equipments, wireless receivers (valves and transistors), electrical accessories, casein and dicalcium phosphate. The other company before us, Karam Chand Thapar, does not produce iron-clad switches, starters, cut-outs, distribution board/boxes and lighting equipments, wireless receivers (valves and transistors), electrical accessories, casein and dicalcium phosphate. But it produces a number of goods like agricultural farm products, building construction materials and equipments which are not produced by Hindustan General Electrical Corporation Limited, It, however, also produces iron and manganese ore, It is very difficult to accept the contention that both the companies produce the same goods. It is true that both the companies produce iron ore and manganese ore. It is equally true that each of the two companies produces a number of goods which are not produced by the other. It is one thing to say that the two companies are engaged in production of goods some of which are the same and quite another thing to say that the two companies produce the same goods. Sameness must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking of the petitioner-company as well as the undertaking of the transferor-company were engaged in the production of coal, the two undertakings were regarded as producing the same goods and it was held that the third condition was satisfied. 25. Again, Padmanabhan J. held (at pages 643-644) that On an independent consideration of the language of Section 23(3) of the MRTP Act, I have come to the conclusion that to be eligible for exemption under Section 23(3), apart from being not dominant undertakings, the amalgamating companies should be engaged in the production of the same goods and not different goods . 26. Neither the Bombay High Court nor the Madras High Court were called upon to decide the question that has been raised in this case. Here, we have to consider the argument that when some of the goods produced by the two companies are the same and some of the goods produced are entirely dissimilar, can the two companies be described as undertakings as produce the same goods . 27. In Kril Standard Products P. Ltd., In re, MANU/GJ/0001/1973 : (1974)0GLR810 , the transferor-company was producing blow moulding machine and injection moulding machine and the transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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