R.D. GOYAL AND ANR. versus RELIANCE INDUSTRIES LTD.

Citation: [2002] SUPP. 4 S.C.R. 231 · Decided: 20-11-2002 · Supreme Court of India · Bench: G.B. PATTANAIK · Disposal: Dismissed

Judgment (excerpt)

R.D. GOY AL AND ANR. 
V. 
RELIANCE INDUSTRIES LTD. 
NOVEMBER 20, 2002 
[G.B. PATTANAIK, CJ., H.K. SEMA AND S.B. SINHA JJ.] 
Monopolies and Restrictive Trade Practices Act, 1969; Ss.2(e), 2(o)(ii), 
33(/)(b) and 33(g): 
A 
B 
Equity Shares linked with redeemable non-convertible debentures-Before C 
allotment-Whether goods-Held, debentures before allotment cannot be 
considered as goods-It is simply acknowledgment of debt whereby issuing 
con1pany undertakes to pay specified an1ount and interest thereon-Sale of 
Goods Act, 1930-Goods-Companies Act, 1956-Share-Debentures. 
Shares and Debentures-Distinction between-Discussed. 
D 
Interpretation of Statutes: 
Inclusion of issue of share before allotment in the definition of goods by 
M.R. T.P. (Amendment) Bill, 1991-Applicabi/ity thereof-Held, since E 
arnend1nent is neither explanatory nor clarificatory in nature and mischief in 
the definition was brought to be ren1edied, it rvould have prospective operation. 
The question which arose in these appeals was whether shares or 
convertible debentures, even before they are allotted, can be considered 
to be goods within the meaning of Section 2(e) of the Monopolies and F 
Restrictive Trade Practices Act, 1969. 
It was contended for the appellants that the Commission did not 
properly construe the definition of goods and service as in the !lale of 
Goods Act, vis-a-vis, in the M.R.T.P. Amendment Act, 1991 and committed 
a manifest error of law in arriving at the judgment. 
Dismissing the appeals, the Court 
HELD: I.I. Debentures, as ordinarily understood, would not come 
within the purview of definition of goods as it is simply an instrument of 
231 
G 
H 
232 
SUPREME COURT REPORTS (2002] SUPP. 4 S.C.R. 
A acknowledgment of debt by the company whereby it undertakes to pay 
the amount covered by it and till then it undertakes further to pay interest 
thereon to the debenture-holders. 1237-G I 
B 
c 
A Report by Company law Committee and Company law by Palmer, 
referred to. 
1.2. Debentures having regard to the definition of 'actionable claim' 
as defined in Section 3 of the Transfer of Property Act would constitute 
actionable claims except where they are secured by mortgage of 
immovable property or hypothecation or pledge of immovable property. 
(238-D] 
1.3. It is true that when there exists a statutory definition in respect 
of an expression, the dictionary meaning thereof cannot be applied. It is 
also true that when a statutory definition uses the word 'includes', it 
provides an extended meaning thereto but it is equally well-settled that 
the words are required to be construed in terms of the legislative intent. 
D It is further more a well-settled principle of law that if the words are 
general and not precise, their interpretations are to be restricted to the 
fitness of matter. [238-E, F] 
1.4. The expressions 'debentures' and 'shares' convey distinct and 
E separate meaning although they belong to the same genesis. [239-AJ 
F 
"All About Debentures" by Mr. T~M. Sen and Mr. C. Chandrasekhar, 
referred to. 
1.5. Having regard to the provisions contained in Section 36A of the 
M.R.T.P. Act, there cannot be any doubt whatsoever that an inquiry 
proceeding can be initiated when an element of unfair trade practice arises 
in the matter of promoting sale, or use of any goods. [240-B, q 
Sri Gopal Jalan & Co. v. Calcutta Stock Exchange Association ltd, AIR 
( 1964) SC 250, referred to , 
G 
Seliar v. Charles Bright & Co. ltd., reported in 1904, King's Bench 
Division at Page 447, referred to. 
1.6. The act of inviting offer shares of any company does not get 
translated into a kind of service qua the allottee subscriber. Subscription, 
therefore, is not in the nature of valuable consideration for any service. 
H 
1241-GI 
R.D. GOY AL v. RELIANCE INDUSTRIES LTD. 
233 
Lucknow Development Authority v. MK Gupta, 119941 I SCC 243, A 
distinguished. 
1.7. In the instant case, the action on the part of the company does 
not involve any sale of goods or rendition of any service. 1242-DI 
2. The expression 'goods' underwent an amendment in the year 1991. B 
The relevant notes on clauses are contained in the Statement of Objects 
and Reasons of the Monopolies and Restrictive Trade Practices 
(Amendment) Bill, 1991. It is, therefore, evident that the said amendment 
is not explanatory or clarificatory in nature. By reason thereof, the 
definition of goods was sought to be enlarged which will have prospective C 
operation. The very 

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