LexCAREW AND COMPANY LTD. versus UNION OF INDIA
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CAREW AND COMPANY LTD,
V,
UNION OF INDIA
August 22, 1975
[A N, RAY, C.J-, K K MATHEW, V, R KRISHNA !YER AND
S. M. FAZAL A.LI, JJ.]
379
Monopolies and Restrictire Trade Practices Act, 1969, Sections 2(v). 22 a1ul
23 ( 4 )-Undertaki{1g, 111eani11g of-Appellant proposing to for11i new conzpany
for taking over suf?ar unit owned bv it-New co1npa11y, if can be said to be en~
~aged in production.
Section 2(v) of the Monopolies and Restrictive Trade Practices Act. 1969,
defines an "undertaking" as an undertaking which is engaged in the production,
supp1y, distr~bution or control of goods of any description or the provision of
service of anv kind.
Section 22 provides for the establishment of new under-
takings. It says that no person or authority, other than government, shaU, after
the co~ncement of this Act, establish anv new undertaking which. when esta-
blished would become an inter-connected undertaking of an undertaking to which
clause (a) of s. 20 appl!.es, except under, and in accordance 'vith the previous
oermission of the Central Government, Sub-section (2) of the section provides
for an application for that purpose to the Central Government. Section 23 ( 4)
Jays down that if an undertaking to which Part A of Ch. III applies proposes to
acquire by purchase, take over or otherwise the whole or part of an undertaking
which will or mav result ehher (a) in the creation of an undertaking to which
Part A would apply; or (b) in the undertaking becoming an inter-connected
undertaking of an undertaking to which Part A applies. it shall, before giving any
effect to its proposals, make an appEcation in writing to the Ceritral Government
in the prescribed form of its intention to make such acquisition. stating therein
information regarding its inter-connection with other undenakings the scheme of
finance with regard to the proposed acquisition and such other information as
may be prescribed.
The appellant is a public limited company and is a subsidiary of Un:.ted
Breweries Ltd. and other comoanies interconnected with it.
The appeIIant's
undertaking consists of a sugar factory and a distillery for manufacture of liquor
at Rosa, Shahjahanpur and another d~stillery at AsansoI. The appellant's sugar
factory at Rosa had been facing difficulties for some years on account of inade-
quate supply of sugarcane and to ensure regular and adequate supply of sugar-
cane, the appellant prooosed to float a company with a share capital of Rs. 50
lakhs for the puroose of taking over the sugar unit of the aonellant and for work-
ing it as arr ·undertaking of the company to be formed. The proposal was that
the ;ppellant would be entitled to an allotment of 100 per cent shares in the nelv
companv and a further sum of Rs. 15.77.093/~ as consideration for transfer of
the sugar unit. The aope11ant apolied to the respondent for perm'.ssion under
s. 372 of the Companie". Act to acquire the 100 oer cent shares of the new com-
pany uoon its incorooration. The ~wellant was told by the Central Government
in ito letter dated 5-1-1972 that sections 22 and 23 of the Monopolies and Res-
trictive Trade Practices Act, 1969, would vrhna facie be atlracted and that the
appellant should file a separate application under the relevant section. The
appellant fil»<l an application dated 5-5-1972 purporting to be under S. 23(4) of
the Act. The new cornnany proooc;ed to be set uo by the apoellant was incor-
porated on June 15, 1973 under the name of Shahiahannur Sugar Private Limit-
ed.
'By order dated July, 2, 1973, tha Central Government, in the Department of
Comoanv Affairs reiected the apoeltant"S anplication under s. 372(4) of th"' Com-
panies Act for inveS.tinl! R". 50 Iakhs in the equity shares of the Canital of <::bnh-
jahanpur Sugar Private Limited.
Bv another order dated 30-6-1973, the Central
Government, in the Department of Company Affairs also rejected the annellant'~
aoolication under s. 23 ( 4) of the Act. This appeal is against the order dated
30-6-1973 under s. 55 of the Act.
It was contended for the appellant that, (i) in order that an enterprise may
become an 'undertaking' within the definition of the word 'undertaking' in s.
2(v) of the Act, it !s necessary that the enterprise must be engaged in produc-
380
SUPREME C.OURT REPORTS
. [1976} 1 S.C.R.
•
tion,. supply, distribution Or control of goods of any descriptiod or ihe -provis\on
of service of any kind and that wheExcerpt shown. Read the full judgment & AI analysis in Lexace.