KRIL STANDARD PRODUCTS PRIVATE LIMITED v. STATE — 1973 DIGILAW 87 (GUJ)

D. A. DESAI, J. ( 1 ) KRIL Standard Products Private Limited petitioner (hereinafter referred to as the transferor company) has filed this petition under sec. 391 (2) read with sec. 394 of the Companies Act praying for an order sanctioning the scheme of arrangement for amalgamation of the transferor company with Art Leather Private Limited Bombay (hereinafter referred to as the transferee company) and for making consequential orders as envisaged by sec. 394. The transferor company was incorporated on 23rd October 1964 with a nominal capital of Rs. 5 lacs divided into five thousand equity shares of Rs. 100. 00 each and the entire nominal capital was issued and subscribed and the equity shares are fully paid shares. The transferor company was formed with the principal object of manufacturing producing assembling preparing converting repairing etc. injection Moulding machines apparatus and the accessories spare parts etc. relating thereto. The company also for some time carried on business of preparing and selling artificial leather cloth waterproof cloth etc. The principal activity of the transferor company however was of manufacturing Blow Moulding and Injection Moulding machines. The transferor company is a private limited company and by December 1971 all its equity shares were purchased and held by the transferee company and its nominees with the result that the transferor company has become wholly owned subsidiary company of the transferee company. ( 2 ) THE transferee company was incorporated on 4th September 1948 and at present it is engaged in the manufacture of tracing cloth processing of book binding cloth acting as purchasing agents of Cable Corporation of India Limited and is also doing money lending business for which it has got the necessary licence under the Bombay Moneylenders Act. The transferee company appears to have recently reduced its manufacture of tracing cloth and processing of book binding cloth. It has surplus fund in the amount of about Rs. 13 lacs. The transferee company is also a private limited company. The authorised capital of the transferee company is Rs. 10 lacs divided into 10 0 equity shares of Rs. 100 each. Its issued subscribed and paid up capital is Rs. 6 30 0 consisting of 6300 equity shares of Rs. 100 each fully paid The equity shares of the transferee company are held by the members of Thackersey family. The authorised capital of the transferee company is Rs. 10 lacs divided into 10 0 equity shares of Rs. 100 each. Its issued subscribed and paid up capital is Rs. 6 30 0 consisting of 6300 equity shares of Rs. 100 each fully paid The equity shares of the transferee company are held by the members of Thackersey family. ( 3 ) THE directors of the transferor company at their meeting held on 22nd day of December 1971 unanimously adopted a resolution proposing a scheme of arrangement for amalgamation of transferor company with the transferee company. The purpose sought to be achieved by the proposed amalgamation is to provide liquid funds for the expansion of the production and manufacture of injection and blow moulding machines by the transferor company. The transferor company has been recently able to enter into an agreement with foreign collaborators M/s. U. S. M. Corporation of United States. Pursuant to this collaboration agreement the activities of the transferor company are to be diversified and expanded which would need additional liquid finance. The transferee company has surplus funds to the tune of Rs. 13 lacs and if the transferor company is amalgamated with the transferee company the transferee company would be able to use its surplus liquid finance for expanding the activities of the transferor company. In order to bring cohesion in management and to provide for liquid funds for expanding production which was hitherto undertaken by the transferor company and for diversification of the activity of the transferee company the directors proposed an arrangement for amalgamation. Similarly the directors of the transferee company at the meeting held on 23rd December 1971 unanimously adopted a resolution to put forth the scheme of arrangement for amalgamation of the transferor company with the transferee company. ( 4 ) THE transferor company took out Judges summons in Company Application No. 7 of 1972 under sec. 391 (1) of the Companies Act requesting the Court to give directions for convening meetings of the secured and unsecured creditors of the transferor company for the purpose of considering and if thought fit to approve with or without modification the scheme of arrangement for amalgamation as proposed by the directors of the transferor company and the transferee company. 391 (1) of the Companies Act requesting the Court to give directions for convening meetings of the secured and unsecured creditors of the transferor company for the purpose of considering and if thought fit to approve with or without modification the scheme of arrangement for amalgamation as proposed by the directors of the transferor company and the transferee company. J. B. Mehta J. gave directions by his order dated 24th January 1972 for convening meeting of the secured and unsecured creditors of the transferor company and appointed Mr. M. M. Shastri Deputy Registrar of this High Court to preside over the meetings. The Chairman appointed by the Court submitted the report broadly stating in it that the scheme of arrangement for amalgamation was a)proved by more than statutory majority in the meeting of the secured and unsecured creditors. After the report was received the transferor company filed the present petitioner under sec. 391 (2) of the Companies Act for the aforementioned reliefs. ( 5 ) WHILE admitting the petition Divan J. (as he then was) gave directions for advertising the petition in various newspapers and for serving notice on the Regional Director Company Law Board Western Region Bombay as required by sec. 394a of the Companies Act Mr. I. M. Nanavati learned Advocate who appeared for the petitioner has filed his affidavit stating therein that he has not received any notice disclosing an intention to oppose or support the petition from any creditor of the company or anyone interested in the company. ( 6 ) MR. K. G. Vakharia learned Counsel for Central Government appeared on behalf of the Regional Director. Company Law Board Western Region Bombay and filed an affidavit of Shri S. Rajgopalan Regional Director Company Law Board Western Region contesting the petition. No one else appeared at the hearing of the petition either to support or oppose the petition. ( 7 ) THE scheme of arrangement for amalgamation is set out in Annexure A to the petition. The scheme provides for amalgamation of the transferor company with the transferee company. If the scheme is sanctioned the transferor company will have to be dissolved without winding up and that would be an end of the transferor company. The scheme provides for provisions ancillary and incidental to such amalgamation. It is therefore not necessary to set out the details of the scheme. ( 8 ) MR. If the scheme is sanctioned the transferor company will have to be dissolved without winding up and that would be an end of the transferor company. The scheme provides for provisions ancillary and incidental to such amalgamation. It is therefore not necessary to set out the details of the scheme. ( 8 ) MR. K. G. Vakharia who appeared for the Regional Director Company Law Board Western Region contested the petition inter alia contending that (i) this Court cannot examine the petition and accord its sanction under sec. 391 (2) of the Companies Act in view of the fact that the transferee company has not approached the Court first for getting direction for convening meeting of its members for considering and if thought fit for approving the scheme of arrangement for amalgamation; and (ii) that as part A of Chapter III of the Monopolies and Restrictive Trade Practices Act 1969 (hereinafter referred to as the Act) applies to the transferor company the Court cannot accord sanction to the scheme of arrangement for its amalgamation unless the same has been approved by the Central Government as provided by sec. 23 of the Act. ( 9 ) FIRST ground of attack was that this Court cannot accord sanction to the scheme of arrangement for amalgamation of two or more companies unless each company involved in the scheme of amalgamation approaches the Court under sec 391 (1) of the Companies Act and obtains suitable directions for convening meetings of the members and if the creditors are affected by the amalgamation of the creditors for considering and if thought fit for approving with or without modification the scheme of amalgamation and pursuant to such directions requisite meetings are convened and in each such meeting the proposed scheme of amalgamation is approved by a statutory majority. Mr. Vakharia pointed out that undoubtedly the transferor company had filed Company Application No. 7 of 1972 for obtaining requisite directions and has complied with the directions given by the Court. But urged Mr. Vakharia that the transferee company has neither approached this Court nor the Maharashtra High Court as the registered office of the transferee company is situate in Maharashtra State with art application under sec. 391 (1 ). But urged Mr. Vakharia that the transferee company has neither approached this Court nor the Maharashtra High Court as the registered office of the transferee company is situate in Maharashtra State with art application under sec. 391 (1 ). Therefore it was contended that the Court cannot accord sanction to the scheme of amalgamation at the instance of the transferor company without satisfying itself that those interested in the transferee company have had a chance and opportunity to examine the scheme of amalgamation and if the Court accords its sanction at this stage the Court would be denying such opportunity to those interested in the transferee company to examine the scheme of amalgamation as the scheme would be imposed upon the transferee company without the members of the transferee company having chance to express their opinion on it. Initially Mr. Nanavati was inclined to seriously contend that there is nothing in sec. 391 (1) which impels the transferee company in a scheme of amalgamation to approach the Court under sec. 391 (1) and seek direction to convene meeting at least of the members of the transferee company for examining and according approval to the scheme. However Mr. Nanavati expressly gave up the contention. Therefore it is not necessary to examine the contention on merits. Following my earlier judgment on this point I would hold that where a scheme of amalgamation is proposed for amalgamation or merger of any one company with the other company it would be incumbent both upon the transferor company and the transferee company to approach the Court under sec. 391 (1) of the Companies Act and seek proper directions for convening meetings of those affected by the scheme of amalgamation and to obtain the approval of the scheme by those interested persons examining the scheme in separate meetings and approving it by statutory majority. The view which I have taken in my earlier judgment is in accord with the view expressed by Vimadalal J. of the Bombay High Court in Ahmedabad Manufacturing and Calico Printing Company Limited 1972 Company Cases 211; and of the Madras High Court in Re. Union Services Private Ltd. 1973 (43) Company Cases 319. Therefore before the present proposed scheme of amalgamation takes effect it would be necessary for the transferee company to approach the High Court having jurisdiction with an application under sec. Union Services Private Ltd. 1973 (43) Company Cases 319. Therefore before the present proposed scheme of amalgamation takes effect it would be necessary for the transferee company to approach the High Court having jurisdiction with an application under sec. 391 (1) and to seek appropriate directions and convene the meetings pursuant to the directions and if the scheme is approved by the persons in respect of whom meetings are directed to be convened by statutory majority then alone the scheme can be given effect to. As I am inclined to accord sanction to the scheme of amalgamation I would make it conditional upon the sanction taking effect subject to the sanction of the scheme by the Maharashtra High Court upon an application made by the transferee company. ( 10 ) THE real controversy centred round the second contention of Mr. Vakharia. In was contended that as sec. 20 in Part A of Chapter III of the Act applies to the transferor company the scheme of merger or amalgamation involving the transferor company cannot be sanctioned by this Court unless the scheme of amalgamation has been first approved by the Central Government as required by sec. 23 of the Act. In order to examine this contention in its proper perspective it is necessary to refer to some of the provisions of the Act. ( 11 ) LONG title of the Act shows that it is an Act to provide that 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 restrictive trade practices and for matters connected therewith or incidental thereto. The Act came in force on 1st June 1970. Sec. 2 (d) defines dominant undertaking to mean as under :"an undertaking which either by itself or along with inter-connected undertakings (i)produces supplies distributes or otherwise controls not less than one-third of the total goods of any description that are produced supplied or distributed in India or any substantial part thereof or (ii) provides or otherwise controls not less than one-third of any services that are rendered in India or any substantial part thereof. "sec. "sec. 2 (g) defines inter-connected undertakings to mean as under :"two or more undertakings which are inter-connected with each other in any of the following manner namely : (i) if one owns or controls the other xxx xxx xxx (iii) where the undertakings are owned by bodies corporate :- (a) if one manages the other or (b) if one is a subsidiary of the other or (c) if they are under the same management within the meaning of sec. 370 of the Companies Act 1956 or (d)if one exercises control over the other in any other manner xxx xxx xxx (vi) if the undertakings are owned or controlled by the same person or group of persons (vii) if one is connected with the other either directly or through any number of undertakings which are interconnected undertakings within the meaning of one or more of the forgoing sub-clauses. Sec. 2 (j) defines "monopolistic undertaking "to mean as under : (I) a dominant undertaking which or (ii) an undertaking which together with not more than two other independent undertakings - (a) produces supplies distributes or otherwise controls not less than one-half of the total goods of any description that are produced supplied or distributed in India or any substantial part thereof or (b) provides or otherwise controls not less than one-half of the services that are rendered in India or any substantial part thereof;chapter III is divided into three Parts. In this petition we are concerned more with provisions contained in part A and especially secs. 20 and 23 thereof. Sec. 20 reads as under :-"20 This Part shall apply to- (a) an undertaking if the total value of- (i) its own assets or (ii) its own assets together with the assets of its inter-connected undertakings is not less than twenty crores of rupees; (b) a dominant undertaking- (i) 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. "sec. is not less than one crore of rupees. "sec. 23 reads as under :"23 (1) Notwithstanding anything contained in any other law for the time being in force - (a) no scheme of merger or amalgamation of an undertaking to which this Part applies with any other undertaking (b) no scheme of merger or amalgamation of two or more undertakings which would have the effect of bringing into existence an undertaking to which clause (a) or clause (b) of sec. 20 would apply shall be sanctioned by any Court or be recognised for any purpose or be given effect to unless the scheme for such merger or amalgamation has been approved by the Central Government under this Act. (2) If any undertaking to which this Part applies frames a scheme of merger or amalgamation with any other undertaking or a scheme of merger or amalgamation is proposed between two or more undertakings and if as a result of such merger or amalgamation an undertaking would come into existence to which clause (a) or clause (b) of sec. 20 would apply it shall before taking any action to give effect to the proposed scheme make an application to the Central Government in the prescribed form with a copy of the scheme annexed thereto for the approval of the scheme. (3) Nothing in sub-sec. (1) or sub sec. (2) shall apply to the scheme of merger or amalgamation of such interconnected undertakings as are not dominant undertakings and as produce the same goods. xxx xxx xxx ( 12 ) THE contention is that the transferor company and the transferee company are inter-connected undertakings and the total value of their assets together with the assets of their other inter-connected undertakings is not less than twenty crores of rupees and therefore part A applies to them. And if Part A applies to them any scheme of amalgamation in respect of the undertaking to which Part A applies cannot be sanctioned by the Court unless the scheme has been approved by the Central Government. Undoubtedly if either to the transferor company or to the transferee company part A of Chapter III of the Act applies no scheme of amalgamation in respect of such an undertaking with any other undertaking can be sanctioned by the Court unless the scheme of amalgamation has been approved by the Central Government. Undoubtedly if either to the transferor company or to the transferee company part A of Chapter III of the Act applies no scheme of amalgamation in respect of such an undertaking with any other undertaking can be sanctioned by the Court unless the scheme of amalgamation has been approved by the Central Government. It is an admitted position that neither the transferor company nor the transferee company has approached the Central Government for according approval to the proposed scheme of amalgamation If therefore it is found as a fact that Part A of Chapter III applies either to the transferor company or the transferee company or to both this petition cannot be granted and the Court cannot accord its sanction to the proposed scheme of amalgamation as the Central Government has not been given an opportunity to examine it. ( 13 ) MR. I. M. Nanavati learned Advocate who appeared for the petitioner repelled the contention by putting forth two-fold reply to the contention of Mr. Vakharia. Says Mr. Nanavati that Part A of Chapter III does not apply either to the transferor company or to the transferee company and their other inter-connected undertakings because total value of their assets do not exceed twenty crores of rupees. Second limb of the reply was that even if the Court comes to the conclusion that either to the transferor company or to the transferee company or to any of its inter-connected undertakings Part A of Chapter III applies and therefore the scheme of amalgamation involving such an undertaking would need prior approval of the Central Government before the Court can proceed to accord its sanction to it under the provisions of the Companies Act as envisaged by sec. 23 of the Act yet in view of the provision contained in sub-sec. (3) of sec. 23 the proposed scheme of amalgamation being a scheme of amalgamation of two inter-connected undertakings which are not dominant undertakings and which do not produce the same goods the fetter placed on the Courts power to sanction the scheme is removed and bar is lifted and the Court can proceed to examine the scheme of amalgamation on its merits notwithstanding the fact that neither the transferor company nor the transferee company has approached the Central Government for according approval to the scheme of amalgamation. In other words Mr. Nanavati contended that sub-sec. (3) of sec. In other words Mr. Nanavati contended that sub-sec. (3) of sec. 23 carves out an exception to sub-secs. (1) and (2) and if conditions for attracting application of sub-sec. (3) are satisfied the bar or fetter placed on the power of the Court under sec. 23 (1) and (2) would be lifted. Therefore the first important question to which the Court must address itself is: whether Part A of Chapter III and especially provision contained in sec. 20 applies either to the transferor company or to the transferee company 7 At this stage it is necessary to state some undisputed facts ( 14 ) MR. S. Rajgopalan has annexed a statement to his affidavit-in reply in which he has set out at Sr. Nos. 1 to 26 different undertakings and against the name of each undertaking the value of its total assets; and on the basis of this statement it was contended that the undertakings set out at Sr. Nos. 1 to 26 in the statement are inter-connected undertakings and the value of their total assets is not less than twenty crores of rupees and therefore to each one of the inter-connected undertaking Part A of Chapter III would apply. In the statement Bhor Industries Private Limited is shown at Sr. No. 1. It is an admitted position that Bhor Industries Private Limited is a dominant undertaking to which the Act applies. A Photostat copy of the certificate issued to the Bhor Industries Pvt. Ltd. under the Act has been placed on record and it shows that Bhor Industries Private Limited is an undertaking which has been registered in the register maintained under sub-sec. (2) of sec. 26 of the Act. Register contemplated by sub-sec. (2) of sec. 26 is a register to be maintained under the Act and in which names of the undertakings to which the Act applies have to be registered. It is again an admitted position that Bhor Industries Private Limited is a dominant undertaking meaning thereby that it by itself produces supplies distributes or otherwise controls not less than one third of the total goods which are in its line of manufacture that are produced supplied or distributed in India or any substantial part thereof. It is again an admitted fact that the undertakings shown at Sr. Nos. It is again an admitted fact that the undertakings shown at Sr. Nos. 2 to 20 are inter-connected undertakings amongst themselves as well as with the dominant undertaking namely Bhor Industries Private Limited. Therefore undertakings shown at Sr. Nos. 1 to 20 are admittedly interconnected undertakings. These undertakings are held to be inter-connected undertakings because they are under the same management. The total value of the assets of the undertakings shown at Sr. Nos. 1 to 20 comes to Rs. 9. 82 crores. It may by mentioned that in the statement annexed to the affidavit of Mr. S. Rajgopalan the value of the assets of the undertakings shown at Sr. Nos. 13 to 20 is not shown. The figures were supplied by Mr. I. M. Nanavati and then the totals are made. The total value of the assets of undertakings at Sr. Nos. 1 to 26 comes to Rs. 25. 70 crores after adding the value of the assets of the undertakings shown at Sr. Nos. 13 to 20. The petition vehemently contended that the undertakings shown at Sr. Nos. 21 to 26 are not inter-connected undertakings with the undertakings shown at Sr. Nos. 1 to 20. It was therefore contended on behalf of the petitioner that if the total value of the assets of the undertakings shown at Sr. Nos. 21 to 26 are excluded from the total value of the assets of the undertakings shown at Sr. Nos. 1 to 26 the total value of the assets of the undertakings shown at Sr. Nos. 1 to 20 which are admittedly inter-connected undertakings would come to Rs. 9. 82 crores. And on that reckoning of the factual position sec. 20 (a) will not apply because the total value of the assets of the transferor company or of the transferee company or the total value of the resultant amalgamated company or the total value of the assets of the transferor and transferee company along with the total value of the assets of its inter-connected undertakings would not exceed twenty crores of rupees. This factual position was not disputed by Mr. Vakharia. ( 15 ) MR. Vakharia however contended that according to the Central Government the undertakings shown at Sr. Nos. 21 to 26 in the statement annexed to Mr. S. Rajgopalans affidavit-in-reply are inter-connected undertakings with the dominant undertaking shown at Sr. This factual position was not disputed by Mr. Vakharia. ( 15 ) MR. Vakharia however contended that according to the Central Government the undertakings shown at Sr. Nos. 21 to 26 in the statement annexed to Mr. S. Rajgopalans affidavit-in-reply are inter-connected undertakings with the dominant undertaking shown at Sr. No. 1 and its inter-connected undertakings shown at Sr. Nos. 2 to 20 and if that statement is accepted the total value of the assets of the inter-connected undertaking including the transferor and transferee companies would exceed twenty crores of rupees and sec. 20 in Part A of Chapter III of the Act would apply to the transferor company and the transferee company because they are inter-connected undertakings. In this connection it is worthwhile to examine the case of undertaking mentioned at Sr. No 23 Hindistan Spinning and Weaving Company Limited because the total value of its assets is Rs. 7. 95 crores. If it is shown that Hindistan Spinning and Weaving Company Limited is not an inter-connected undertaking either with the dominant undertaking Bhor Industries Private Limited or with other inter-connected undertakings shown at Sr. Nos. 1 to 20 then the total value of its assets will have to be deducted from the total value of the assets of all 26 undertakings and the total value of the assets of the undertaking other than the one shown at Sr. No. 23 works out at Rs. 17. 75 crores and therefore sec. 20 (a) in Part A would not apply to the transferor company and transferee company. It is not therefore necessary to examine the question whether the undertakings shown at Sr. Nos. 21 22 24 25 and 26 are inter-connected undertakings with the undertakings shown at Sr. Nos. 1 to 20 because even if the value of their total assets is added to the value of the total assets of the undertakings shown at Sr. Nos. 1 to 20 the total value of the assets would not exceed twenty crores of rupees and the outcome would not be different. ( 16 ) ACCORDING to the Central Government Hindustan Spinning and Weaving Company Limited is an inter-connected undertaking with the undertakings shown at Sr. Nos. 1 to 20 because they are under the same management within the meaning of sec. 370 of the Companies Act 1956 Relevant averments on this point in the affidavit in reply of Mr. ( 16 ) ACCORDING to the Central Government Hindustan Spinning and Weaving Company Limited is an inter-connected undertaking with the undertakings shown at Sr. Nos. 1 to 20 because they are under the same management within the meaning of sec. 370 of the Companies Act 1956 Relevant averments on this point in the affidavit in reply of Mr. S. Rajgopalan are as under :" I say that Hindustan Spg. Wvg. Mills Ltd. was formerly comprised of two separate undertakings viz. . Indian Manufacturing Co. Ltd. and Hindustan Spg. and Wvg. Mills Co. Ltd. and both these undertakings were managed by the Thackersey group as their managing agents. In April 1970 Hindustan Spg. and Wvg. Mills Co. Ltd. was amalgamated with Indian Manufacturing Co. Ltd. and the name of Indian Manufacturing Co. Ltd. has been changed to present name of the composite undertaking viz. Hindustan Spg. and Wvg Mills Ltd. This undertaking is even now managed by Thackerseys associated with family of Voras who were interested in the former Managing Agency Firms. Out of 10 directors of. the said undertaking Thackerseys and Voras constitute majority of 7 i. e. 4 directors belonging to Thackersey and 3 to Voras. As a matter of fact this undertaking has been all along managed by Thackerseys in association with Voras and the inference is clear that Voras have been close associates of the Thackerseys in managing this undertaking. It would therefore be obvious that this undertaking is for all the purposes under the control of the same group as the undertakings at Sr. 1 to 20 of the enclosed statement which are managed as well as controlled by the Thackerseys. The Bhor Industries Private Ltd. in its balance sheet as at 31-3-1970 has also shown this company as a company under the same management. "two or more undertakings would be inter-connected undertakings within the meaning of the Act if amongst other things where undertakings are owned by a body corporate if they are under the same management within the meaning of sec. 370 of the Companies Act 1956 Sec. 370 (1b) of the Companies Act provides that two bodies corporate shall be deemed to be under the same management if any one of the conditions therein set out is satisfied. Mr. Vakharia was specially invited to put his finger on the sub clause of sub-sec. (1b) of sec. 370 of the Companies Act 1956 Sec. 370 (1b) of the Companies Act provides that two bodies corporate shall be deemed to be under the same management if any one of the conditions therein set out is satisfied. Mr. Vakharia was specially invited to put his finger on the sub clause of sub-sec. (1b) of sec. 370 which is attracted in this case so as to come to the conclusion that Hindustan Spinning and Weaving Company Limited was under the same management as Bhor Industries Private Limited. After going through various sub-clauses of sub-sec. (1b) of sec. 370 Mr. Vakharia with some hesitation placed his finger on clause (v) a bare perusal of which would be sufficient to negative his contention. In order to attract sub-clause (v) of sub-sec. (1b) of sec. 370 it must be shown that one or more directors of one body corporate while holding whether by themselves or together with their relatives the majority of shares in that body corporate also hold whether by themselves or together with their relatives the majority of shares in the other body corporate. The essential requirement would be holding of majority of shares by same individuals in two different companies and those individuals must be so related as to fall in Schedule IA referred to in sec. 6 of the (Companies Act. Schedule IA refers to 22 different categories of relations and only those relations must be shown to be holding shares as required by clause (v) in sub-sec. (1b) of sec. 370 of the Companies Act. There is no factual averment to that effect. In fact there is no averment showing holding of shares of Hindustan Spinning and Weaving Mills Ltd. and Bhor Industries Private Limited or any of its inter-connected undertakings. In fact this difficulty was present to the mind of Mr. Vakharia while putting forth this contention because in para 7 of the affidavit-in reply Mr. S. Rajgopalan has averred that: the term Thackersey Persons refers to the members and relatives of the family of Thackerseys among whom Shri K. M. D. Thackersey his brothers and Lady Premlila V. Thackersey are the leading members though the relationship of K. M. D. Thackersey and Lady Premlila Thackersey is not covered by Schedule IA to sec. S. Rajgopalan has averred that: the term Thackersey Persons refers to the members and relatives of the family of Thackerseys among whom Shri K. M. D. Thackersey his brothers and Lady Premlila V. Thackersey are the leading members though the relationship of K. M. D. Thackersey and Lady Premlila Thackersey is not covered by Schedule IA to sec. 6 of the Companies Act 1956 their unity of interest due to their close family relationship cannot be ignored for the purpose of management control by Thackersey group of persons. If sub-clause (v) of sub-sec. (1b) of sec. 370 clearly provides for holding majority of shares by relations in both the companies and the relations must be only those relations set out in Schedule IA shown in sec. 6 of the Companies Act any further extension of the provision by including some other relations as is understood in popular vocabulary cannot attract application of the section. Therefore the contention will have to be rejected on two specific grounds: (i) that share holding of different individuals in two concerned companies is not disclosed and (ii) it is not shown that majority holders of shares in both the concerns are relations within the degree of relationship as set out in Schedule IA referred to in sec. 6 of the Companies Act. However when the case of Hindustan Spinning and Weaving Mills Limited is examined from the stand point of majority directors being common both to that company and Bhor Industries Private Limited fallacy of the argument becomes evident. An attempt was made to urge that Thackerseys are in control and management of Bhor Industries Private Limited. This is not disputed. It was stated that Hindustan Spinning and Weaving Mills Limited is controlled and managed by Thackerseys. This was seriously disputed. Now Hindustan Spinning and Weaving Mills Company Limited and Indian Manufacturing Company Limited were managed by the Managing Agents and the managing agents were a firm. By efflux of time the managing agency agreement expired and it was not renewed. In the mean time in April 1970 Hindustan Spinning and Weaving Mills Company Limited was amalgamated with Indian Manufacturing Company Ltd. and the name of the composite undertaking was given as Hindustan Spinning and Weaving Mills Limited. This Hindustan Spinning and Weaving Mills Limited is being managed by a board of directors. There are ten members of the Board of Directors. This Hindustan Spinning and Weaving Mills Limited is being managed by a board of directors. There are ten members of the Board of Directors. Their composition is in the ratio of 4: 3: 3 meaning thereby that four of them belong to Thackersey group three of them belong to Vora group and three are outsiders. Therefore neither Thackerseys nor Voras each by themselves are in majority in the Board of Directors and none can be said to be controlling or managing in the technical sense of the term the Hindustan Spinning and Weaving Mills Limited. But quite an ingenious yet interesting argument was put forward by Mr. Vakharia that Thackerseys and Voras have been jointly managing and controlling the Hindustan Spinning and Weaving Mills Limited for such a long time that one can say that in the commercial parlance they constitute one management. Thackerseys and Voras are not shown to be inter-related. They are two different commercial houses. Both may have their nominees in the Board of Directors. Both may be quite close and intimate friends. But these facts are not sufficient to constitute single entity which can be described as in management or control of Hindustan Spinning and Weaving Mills Ltd. In fact Thackerseys alone cannot carry forward their proposal if the remaining directors aligned against them; so would be the position of Voras. It is those three independents unconnected and uncommitted directors who would be holding balance of power. These three individuals probably may be having almost a veto over both Thackerseys and Voras. But the submission that Voras and Thackerseys constitute one composite management because in the past they had aligned themselves together cannot be accepted. ( 17 ) IN this connection reference may be made to the affidavit in rejoinder of Mr. These three individuals probably may be having almost a veto over both Thackerseys and Voras. But the submission that Voras and Thackerseys constitute one composite management because in the past they had aligned themselves together cannot be accepted. ( 17 ) IN this connection reference may be made to the affidavit in rejoinder of Mr. K. M. D. Thackersey wherein he has averred that Thackerseys and Voras were not partners in any other firm nor are they related in any manner whatsoever and therefore to try to rope in Voras with Thackerseys is not warranted by law in any manner particularly because the whole question in this matter is to what extent Thackerseys are controlling the Board of Directors of the Hindustan Spinning and Weaving Mills Limited and on that basis out of the 10 directors Thackerseys are having only 4 directors and they do not constitute majority of the Directors and have no control over the Hindustan Spinning and Weaving Mills Limited and therefore it cannot be urged that it is an inter-connected undertaking for the purposes of the Act with the other undertakings listed in the statement annexed to the affidavit of Mr. S. Rajgopalan. Therefore the contention of Mr. Vakharia must be negatived on the facts disclosed in this affidavit. ( 18 ) MR. Vakharia had also drawn the attention of the Court to a statement made in the Balance sheet and Statement of Account of the Bhor Industries Private Limited for the year 1970. Under the heading Sundry Debtors there is the following entry:"a. Due from the following companies under the same management and/or Pvt. Cos. Wherein some of the Directors and/or members : indian Mfg. Co. Ltd. "from this entry in the Balance sheet and statement of accounts an argument was spelt out that the dominant undertaking namely Bhor Industries Pvt. Ltd. has admitted that Indian Mfg. Co Ltd. whose name after amalgamation is changed to Hindustan Spg. and Wvg. Mills Ltd. is admittedly under the same management as Bhor Industries Pvt. Ltd. This admission would have been quite relevant but for the fact that proper explanation in this behalf is offered by Mr. K. M. D. Thackersey in his affidavit in rejoinder and his explanation is borne out by the relevant correspondence. and Wvg. Mills Ltd. is admittedly under the same management as Bhor Industries Pvt. Ltd. This admission would have been quite relevant but for the fact that proper explanation in this behalf is offered by Mr. K. M. D. Thackersey in his affidavit in rejoinder and his explanation is borne out by the relevant correspondence. It is stated in the affidavit in rejoinder that the said statement was made in the balance sheet and statement of accounts of Bhor Industries Pvt. Ltd. through inadvertence and subsequently Bhor Industries Pvt. Ltd. by its letter dated 20th September 1972 in reply to the Senior Research Officer Department of Company Airs Government of India have stated so. Copies of the correspondence bearing on the subject have been annexed to the affidavit in rejoinder. It was also pointed out that in the Balance sheet and statement of accounts of the subsequent year the entry is deleted. It was also pointed out that in the application made by Bhor Industries Private Limited for its registration under sec. 26 it did not show that the Hindustan Spinning and Weaving Mills Limited was a company under the same management or was an inter-connected undertaking. Therefore it is not possible to attach any importance to this inadvertent statement in the Balance sheet and Statement of Accounts of Bhor Industries Private Limited for the year 1970. In fact apart from anything else it would not bind Hindustan Spinning and Weaving Mills Limited. There is therefore nothing to show that Hindustan Spinning and Weaving Mills Limited is under the same management as Bhor Industries Private Limited or that they are under the same management within the meaning of sec. 370 of the Companies Act. As a necessary corollary while finding out the value of the total assets of the dominant undertaking namely Bhor Industries Private Ltd. and its other inter-connected undertakings shown at Sr. Nos. 1 to 20 and adding to it the total value of the assets of the undertakings shown at Sr. Nos. 21 to 26 except No. 23 the total value of the assets comes to Rs. 17. 75 crores. Now it is not for a moment suggested that the Court accepts the statement that the undertakings shown at Sr. Nos. Nos. 1 to 20 and adding to it the total value of the assets of the undertakings shown at Sr. Nos. 21 to 26 except No. 23 the total value of the assets comes to Rs. 17. 75 crores. Now it is not for a moment suggested that the Court accepts the statement that the undertakings shown at Sr. Nos. 21 22 24 25 and 26 are inter-connected undertakings with Bhor Industries Pvt. Ltd. They are left out of consideration because even if the total value of their assets is added to the total value of the assets of undertakings shown at Sr. Nos. 1 to 20 they do not exceed twenty crores of rupees. Therefore the conclusion is inescapable that sec. 20 (a) of Part A in Chapter III of the Act does not apply either to the transferor company or to the transferee company. ( 19 ) NEXT point to be considered is: whether sec. 20 (b) applies either to the transferor company or to the transferee company. Bhor Industries Private Limited by itself is a dominant undertaking. The transferor company and transferee company along with other undertakings are interconnected undertakings with the dominant undertaking. But neither the transferor company nor transferee company by itself is a dominant undertaking. Therefore sec. 20 (b) (i) will not be attracted. It will however have to be found out whether the total value of the assets of the transferor company and transferee company exceed one crore of rupees to eliminate applicability of sec. 20 (b) (ii ). The total value of the assets of the transferor company is Rs. 0. 32 crore and that of the transferee company is Rs. 0. 49 crore. The total value of their assets would be Rs. 0. 81 crore. It does not exceed the limit of one crore of rupees. In fact sec. 20 (b) would not be attracted because first condition is not satisfied in that in order to attract sec. 20 before the total value of the assets of the undertaking is examined it must be a dominate undertaking. Neither the transferor company nor the transferee company by itself is a dominant undertaking. Therefore for this additional reason also sec. 20 (b) would not be attracted in the ease of transferor company and transferee company. 20 before the total value of the assets of the undertaking is examined it must be a dominate undertaking. Neither the transferor company nor the transferee company by itself is a dominant undertaking. Therefore for this additional reason also sec. 20 (b) would not be attracted in the ease of transferor company and transferee company. ( 20 ) THIS is thus a scheme of amalgamation of two undertakings to none of which either sec. 20 (a) or sec. 20 (b) would apply. . ( 21 ) IF sec. 20 would not apply either to the transferor company or to the transferee company sec. 23 (i) (a) would not be attracted. If the scheme of amalgamation is sanctioned the composite company would not be one to which either clause (a) or clause (b) of sec. 20 would apply. In this view of the matter sec. 23 (1) (b) would not be applicable. If such be the position it would not be necessary for the transferor company to approach the Central Government for prior approval of the scheme of amalgamation before the Court examines it under the provisions of the Companies Act 1956 ( 22 ) ASSUMING that the Court is not right in coming to the conclusion that no part of sec. 20 applies to the transferor company or to the transferee company and further assuming that either clause (a) or clause (b) of sec. 20 applies to the transferor company or to the transferee company of it would apply to the composite company which would come into existence after the scheme of amalgamation is sanctioned the question is: whether the transferor company should have obtained the prior approval of the proposed scheme of amalgamation in view of the fact that the proposed scheme of amalgamation is in respect of two inter-connected undertakings none of which is a dominant undertaking and both of them are not producing the same goods. In other words would the exception carved out in sub-sec. (3) of sec. ( 23 ) BE attracted in this case ?23. The scheme of sec. 23 postulates that if a scheme of merger or amalgamation involves an undertaking to which Part A of Chapter III applies with any other undertaking or on the scheme of amalgamation of two or more undertakings being sanctioned the new composite undertaking is one to which clause (a) or clause (b) of sec. The scheme of sec. 23 postulates that if a scheme of merger or amalgamation involves an undertaking to which Part A of Chapter III applies with any other undertaking or on the scheme of amalgamation of two or more undertakings being sanctioned the new composite undertaking is one to which clause (a) or clause (b) of sec. 20 would apply the Court cannot proceed to accord sanction to such a scheme of amalgamation unless the scheme for amalgamation has been first approved by the Central; Government under the Act. I would for the present leave out of consideration sub-sec. (2) of sec. 23. Sec. 23 (3) opens with a non-obstinate clause and carves out an exception not only to sub-sec. (1) but to sub-sec. (2) also. In other words the effect of the provision contained in sub-sec. (3) is that if a scheme of amalgamation is such as would otherwise require the prior approval of the Central Government as envisaged by sec. 23 (1) or sec. 23 (2) the same can none-the-less be examined by the Court without prior approval of the Central Government and sanctioned if conditions set out in sub-sec. (3) are satisfied On analysis of sub-sec. (3) the conditions requisite for attracting its application appear to be: (i) that scheme of merger pr amalgamation is in respect of two inter-connected undertakings: (ii) the inter-connected undertakings are not dominant undertakings; and (iii) they do not produce the same goods. Mr. Vakharia urged that in order to attract sub-sec. (3) the scheme of amalgamation must be in respect of two inter-connected undertakings none of them being a dominant undertaking and they must be producing the same goods. Says Mr. Vakharia that Parliament has clearly manifested its intention by using plain language which unmistakably reveals the purpose behind enacting the exception. He did not dispute that sub-sec. (3) carves out an exception to sub-secs. (1) and (2) of sec. 23. But it was urged that the exception would apply if conditions requisite for its application are established and they appear to be that scheme of amalgamation must be in respect of two interconnected undertakings none of which is a dominant undertaking but both of which are producing the same goods. Says Mr. (1) and (2) of sec. 23. But it was urged that the exception would apply if conditions requisite for its application are established and they appear to be that scheme of amalgamation must be in respect of two interconnected undertakings none of which is a dominant undertaking but both of which are producing the same goods. Says Mr. Vakharia that only such a scheme may be examined by the Court under the provisions of the Companies Act without the prior approval of such a scheme by the Central Government. Thus a clear case of construction of the language used in sub-sec. (3) arises. Now it must be made distinctly clear that both the sides agree that of the three conditions requisite for attracting the application of sub-sec. (3) there is no dispute about the first two conditions having been fulfilled. Both Mr. Nanavati and Mr. Vakharia agree that in order to attract sub-sec. (3) it must be established that (i) there is a scheme of amalgamation in respect of two inter-connected undertakings and (ii) that none of the two inter-connected undertakings is a dominant undertaking. The dispute centres round the third condition. Mr. Nanavati says that the undertakings covered by the scheme of merger or amalgamation must not be producing the same goods. On the other hand Mr. Vakharia says that the language of sub-sec. (3) is clear and unambiguous and it only means that the undertakings covered by the scheme of amalgamation must be producing the same goods. This is the only point of divergence of opinion between them. ( 24 ) THE cardinal rule for the construction of the Acts of Parliament is that they should be construed according to the intention expressed in the Acts; themselves. The Court has to determine the Intention as expressed by the words used. And in order to understand these words it is material to inquire what is the subject matter with respect to which they are used and the object in view. A certain amount of common sense must be applied is construing statutes. The object of the Act has to be considered (vide Barner v. Javies (1953) 1 W. L. R. 649 ). A certain amount of common sense must be applied is construing statutes. The object of the Act has to be considered (vide Barner v. Javies (1953) 1 W. L. R. 649 ). If the words of the statute are themselves precise and unambiguous then no more can be necessary than to expound those words in their ordinary and natural sense for in that case the words of the statute speak the intention of the legislature. ( 25 ) IN order to give effect to the directive principle of State policy as enunciated in sub-clause (c) of Article 39 of the Constitution this particular wholesome piece of legislation has been enacted by the Parliament. Article 39 (c) provides that the State shall in particular direct its policy towards securing that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. In order to give effect to this directive principle this Act having far reaching consequences has been enacted by the Parliament. Political independence was but a means to achieve the end of economic salvation. For speedy transformation of the backward feudal society of an under-developed country into highly advanced industrialised society and to develop economy the State resorted to economic planning. Mixed economy ruled the root of economic planning. Consequently the private sector reservation got a fillip and it undertook rapid industrialisation. The evils flowing there from became immediately visible. For the time being it was a price paid to achieve faster and higher growth rate. Soon it became evident that the cartels and giant industrial combines grew side by side and had a stangle hold on the market price structure distribution and supply of goods. They started playing ducks and drakes with availability of goods and services at fair and reasonable price and the ultimate consumer became a pawn in their game. Concentration of wealth and the power flowing there from became a menace and threatened to destroy the basic concept of socio-economic justice on the foundation of which we in Constitution intended to build up an egalitarian society. Concentration of wealth and the power flowing there from became a menace and threatened to destroy the basic concept of socio-economic justice on the foundation of which we in Constitution intended to build up an egalitarian society. The Government set up the Monopolies Inquiry Commission and the present Act is more or less drafted on the report of this Commission with such additions and alterations as were considered expedient for the effective implementation of the declared economic policy of the State in conformity with Article 39 (c) of the Constitution. The Act seeks to guard against acquisition of dominant position by one or more industrial units so as to be able to control the market by regulating prices or output or eliminating competition. It seeks also to cure such practices which restrain competition and thereby deprive the community of the beneficent effects of healthy rivalry between different producers of the same commodity. This is sought to be done in public interest. If the growth of monopolies is not checked abated or controlled the common man in the society or the ultimate consumer would be a victim or a pawn in the game of these big industrial empires. Whenever therefore a question of construction of any of the provisions of this Act comes up before the Court every attempt must be made to advance the purpose of the Act so that the policy underlying it can be given effect to. ( 26 ) IT must also be made distinctly clear that the Act does not wholly prohibit amalgamation of undertakings. It frowns upon the expansion of giant undertakings so as not to permit them to acquire power to put strangle-hold both on the market as well as on the consumer and further industrial expansion of the country. The object behind enacting sec. 23 (3) manifests the legislative intent that there are certain schemes of amalgamation which the Court may proceed to examine albeit without the prior approval of the Central Government. In fact amalgamation of undertakings itself is not prohibited. In the case of certain types of amalgamation or merger of undertakings the Central Government wants to look into it before the Court undertakes to examine it the idea being that the Central Government is in a better position to know how this concentration of economic power would work to the common detriment. In the case of certain types of amalgamation or merger of undertakings the Central Government wants to look into it before the Court undertakes to examine it the idea being that the Central Government is in a better position to know how this concentration of economic power would work to the common detriment. But at the same time it cannot be disputed that the Act does envisage a scheme of amalgamation of undertakings for examination by the Court without the prior approval of the scheme by the Central Government. Sub-sec. (3) of sec. 23 clearly exposes the legislative intent. ( 27 ) IF one can envisage such a scheme of amalgamation of undertakings which the Court can examine without the prior approval of the scheme by the Central Government within the meaning of sub-sec. (3) of sec. 23 it must be ascertained with reasonable certainty which are those schemes. These schemes must fulfil three essential conditions set out in sub-sec. (3 ). It is not disputed that two of the three conditions are fulfilled in this case. Both the transferor company and the transferee company are inter-connected undertakings. Second condition that none of them must be dominant undertaking is also fulfilled. ( 28 ) CONTROVERSY centres round the third condition. On a plain reading of section Mr. Vakharia contended that two undertakings must be producing the same goods and only then sub-sec. (3) can be attracted. On the other hand Mr. Nanavati contended that the concerned two undertakings must not be producing the same goods and in that event alone third condition is satisfied. On a plain grammatical meaning of the language employed in sub-sec. (3) it appears that this condition must be that both the undertakings must not be producing the same goods. The word not need not have been used twice over. The expression as are not dominant undertakings and produce the same goods would on a plain grammatical reading of the language employed in the expression would mean that none of the undertakings is a dominant undertaking and undertakings sought to be amalgamated are not producing the same goods. ( 29 ) EVEN the policy underlying the Act would support the construction I am inclined to put on the language of sub-section. If definition of dominant undertaking is recalled at this stage it has reference to the production supply and distribution of goods. ( 29 ) EVEN the policy underlying the Act would support the construction I am inclined to put on the language of sub-section. If definition of dominant undertaking is recalled at this stage it has reference to the production supply and distribution of goods. Now an undertaking would be a dominant undertaking if it produces supplies distributes or controls not less than one third of the total goods of any description that are produced supplied etc. in India. If the last condition were to mean that they must be producing the same goods then it is quite possible that on amalgamation composite unit may become a dominant undertaking and in that event the exception sought to be carved out would become meaningless. The legislature never wanted to allow more dominant undertakings to come into existence by merger or amalgamation. Therefore the legislature permitted the scheme of merger or amalgamation in respect of undertakings none of which is a dominant undertaking and composite undertaking would not become a dominant undertaking. The last condition can only be satisfied if the undertakings sought to be amalgamated are not producing the same goods. If they are producing the same goods the composite undertaking may as well become a dominant undertaking and by the very exception what is sought to be prohibited by the substantive section would be achieved. Therefore both from the point of view of plain grammatical meaning of the language employed in sub-sec. (3) as well as the object sought to be achieved by the provision contained in Part A of Chapter III the meaning that can be assigned to the expression as are not dominant undertakings and as produce the same goods would be that none of the undertakings sought to be amalgamated is a dominant undertaking and they are not producing the same goods. In order therefore to attract sub-sec. (3) three conditions which must be satisfied are that (i) the scheme of amalgamation is in respect of inter-connected undertakings (ii) that none of them is a dominant undertaking; and (iii) the undertakings sought to be amalgamated are not producing the same goods. If these three conditions are satisfied sub-sec. (3) will be attracted. ( 30 ) AS stated earlier first two conditions are satisfied. If these three conditions are satisfied sub-sec. (3) will be attracted. ( 30 ) AS stated earlier first two conditions are satisfied. And the third condition is equally satisfied because it is not in dispute that the transferor company and the transferee company are not producing the same goods. In fact the transferor company is producing blow moulding machines and injections moulding machines and the transferee company is manufacturing tracing cloth processing book binding cloth etc. Therefore all the conditions for attracting sub-sec. (3) of sec. 23 are satisfied. If the case falls under sub-sec. (3) nothing contained in sub-sec. (1) or (2) of sec. 23 would apply to the scheme of amalgamation of such inter-connected undertakings as are not dominant undertakings and do not produce the same goods and the Court can examine the scheme on merits even if the prior approval of the Central Government is not obtained in respect of the scheme of amalgamation of such inter-connected undertakings. Therefore the proposed scheme did not require prior approval of the Central Government. ( 31 ) NOW having disposed of the contentions raised by Mr. Vakharia under the Monopolies and Restrictive Trade Practices Act 1969 the Court must proceed to examine whether the Court would accord sanction to the scheme of amalgamation under the provisions of the Companies Act 1956 The principles governing the Courts discretion for according sanction to the scheme of arrangement for amalgamation are by now well settled. Before the Court accords sanction to such a scheme it will normally expect to be satisfied on three matters: (i) statutory provisions must have been complied with (ii) classes must have been fairly represented; and (iii) the arrangement must be such as a man of business would reasonably approve. ( 32 ) THERE is enough material on record to come to the conclusion that the statutory provisions have been complied with. The Board of Directors of the transferor company adopted a resolution in which the scheme of amalgamation was proposed. Directions of the Court were sought under sec. 391 (1 ). Full disclosures were made at the time of seeking directions of the Court under sec. 391 (1 ). There were no averment in the petition that the requirement of proviso to sec. 391 (2) have been complied with. Mr. Nanavati agreed to file an affidavit of the Director Mr. Directions of the Court were sought under sec. 391 (1 ). Full disclosures were made at the time of seeking directions of the Court under sec. 391 (1 ). There were no averment in the petition that the requirement of proviso to sec. 391 (2) have been complied with. Mr. Nanavati agreed to file an affidavit of the Director Mr. K. M. D. Thackersey to which he would annex the latest balance sheet of the transferor company and the affidavit would contain express statement that no investigation is pending against the transferor company either under sec. 235 or any other section of the Companies Act. It would thus appear that the statutory provisions have been properly complied with. ( 33 ) THE report of the Chairman shows that at the meeting of the secured creditors three secured creditors were present and all of them unanimously voted in favour of the scheme of amalgamation. It further shows that at the meeting of unsecured creditors 9 unsecured creditors were present having total claim of Rs. 97 545 and all the nine voted in favour of the scheme of amalgamation. As the transferor company is wholly owned subsidiary company of the transferee company meaning thereby all the equity shares of the transferor company are held by the transferee company or its nominees no question arises of convening a meeting of the members of the transferor company. Their consent is implied in their conduct of moving for sanction of the scheme of amalgamation of the transferor company with the transferee company. Thus the statutory provisions are properly complied with. ( 34 ) AT the meeting of the secured creditors all the secured creditors attended the meeting. There were in all 214 unsecured creditors and nine attended and unanimously voted in favour of the scheme and therefore classes were fairly represented. ( 35 ) LAST question is whether this Court should accord sanction to the scheme of amalgamation. The matter is within the discretion of the Court. In exercising this discretion the Court will examine the scheme as a man of business would reasonably evaluate it. I have been often told that the Court should not try to substitute its judgment for the commercial judgment of those interested in the company as expressed in various meetings. The matter is within the discretion of the Court. In exercising this discretion the Court will examine the scheme as a man of business would reasonably evaluate it. I have been often told that the Court should not try to substitute its judgment for the commercial judgment of those interested in the company as expressed in various meetings. That apart the Court still has a discretion in the matter and the Court is not a mere rubber stamp because the scheme has been approved by a statutory majority in various meetings. The zeal with which attempt is made to acquire controlling block of shares in companies it is not difficult for the industrialists to push through the scheme with the majority at their beck and call but the Court cannot abrogate the discretion in favour of such a majority. Therefore the Court must and should examine the scheme on its own merits. I would however not dilate upon this for this reason that by the scheme of amalgamation a wholly owned subsidiary company merges into the holding company. The factual merger is now being converted into a legal and total merger. Further both the companies are private limited companies meaning there by that they are something like a family concern. In this background I need not examine the scheme in all its details. ( 36 ) HAVING given my anxious thought to the scheme I would accord sanction to the scheme of arrangement for amalgamation of the transferor company with the transferee company with this condition that the scheme shall not take effect and be operative until and unless it is sanctioned in an appropriate proceeding to be taken by the transferee company in the High Court having jurisdiction to be invoked by the transferee company. Subject however to this specific reservation the consequential orders as are required to be made under sec. 394 prayed for in prayers (i) to (iv) of paragraph 12 of the petition including the one that on the scheme of amalgamation becoming effective transferor company should be deemed to have been dissolved without winding up are hereby made. Subject however to this specific reservation the consequential orders as are required to be made under sec. 394 prayed for in prayers (i) to (iv) of paragraph 12 of the petition including the one that on the scheme of amalgamation becoming effective transferor company should be deemed to have been dissolved without winding up are hereby made. ( 37 ) AS the Central Government is entitled to statutory notice and as the Court is keen to examine the contentions under the Monopolies and Restrictive Trade Practices Act 1969 I think even if the petitioner succeeds justice demands that the petitioner who can well afford must pay Rs. 1000. 00 to the Central Government as and by way of costs. Scheme sanctioned. .