CANARA BANK LTD Vs. LARSEN AND TOUBRO LTD

JUDGEMENT

(1.) This is a petition filed under Ss.391 and 394 of the Companies Act, 1856. by Canara Bank Ltd. (hereinafter referred to as the Company) praying for the sanction of this Court to a special resolution passed by the Company providing for amalgamation of the Company with M/s. L & T. Ltd. The Company had made earlier an application under S.391 of the Companies Act requesting the Court to issue directions for the purpose of holding a meeting of the members of the Company to consider and approve the scheme providing for amalgamation. On 1-10-1971 the said application was granted, a meeting of the members of the Company was accordingly held on 15-11-1971 and the report of the Chairman has been duly filed into Court. Thereafter the above petition was filed on 3-1-1972. The above matter was duly published in three news papers, namely, Deccan Herald, Indian Express and Nav Bharath. Sri M. Papanna, the Central Government Pleader, took notice on behalf of the Central Government on 28-1-1972. He was asked to file any represenattton which the Central Government might make with regard to the above petition by 18-2-1972 The Central Government has filed through its Regional Director, Company Law Board, Madras, its representation.

(2.) Sri S.G.Sundaraswamy for the Company, Sri T.V.Govindaraj Iyengar for M/s.Lsrsen & Toubro Ltd., and Sri B.Ramachandra Rao for the Central Government, appeared when the case was heard to-day. The above petition was opposed by the Central Government. Two objections which were urged on behalf of the Centra] Government were, (i) the petition could not be granted by the Court unless the scheme for merger or amalgamation in question had been approved by the Central Government under S.23(1) of the Monopolies and Restrictive Trade Practices Act 1969 (hereinafter referred to as the Act), and (ii) that the amalgamation in question without the approval or sanction of the Central Government would be violative of S.21 of the Act. In support of the first submission reliance was placed by Sri Ramachandra Rao on S.23(1) of the Act which reads as follows :

(3.) A perusal of the clauses in the Act defining the expressions 'undertaking' and "dominant undertaking" would show that in order to be either an Undertaking or a dominant undertaking, an undertaking must be one which is engaged in the production, supply or distribution or control of goods of any description or provision of service of any kind or one which either by itself or along with inter-connected undertakings 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 01 any substantial part thereof. The Company was carrying on the business of banking until its entire banking business was taken over by the Central Government under the provisions of the Banking Companies (Acquisition and Transfer of Undertakings) Ordinance, 8 of 1969 i.e. 19-7-1969. It is not disputed that the Company has not been carrying on any business at all from 19-7-1969. In company petition No.7 of 1971, the Company applied to the Court for confirmation of a special resolution passed by the Company for amending the object clause of its Memorandum of Association permitting it to amalgamate itself with another company carrying on business other than banking business also. This Court confirmed the said resolution and the order passed in that petition was confirmed, subject to a slight modification, in OSA.No.2 of 1971 by this Court on 4-2-1972. The Company is, therefore, authorised to amalgamate itself with M/s. Larsen & Toubro Ltd. or any other company. In the instant case, the resolution of the Company is to merge or amalgamate itself with M|s. Larsen Toubro Ltd. It is unnecessary for the purpose of this case to consider whether M/s. Larsen & Toubro Ltd. is an undertaking within the meaning of the Act or not. For the purpose of this case it is enough if a decision is given on the question whether the Company is an undertaking or not. When once it is not disputed that the Company is not carrying on any business or is not engaged in any trade or rendering any service, then it cannot come within the definition of the expression 'undertaking', under the Act. It cannot also be a 'dominant undertaking'. Hence, neither S.20 of the Act nor S.23(1) of the Act would be applicable to the Company. S.23(1) deals with the amalgamation or merger of an undertaking to which Part 'A' of Chapter III applies with any other undertaking as defined by the Act. It does not apply to amalgamation or merger of an undertaking which is not an 'undertaking' as defined in the Act with an undertaking which falls within the definition of that expression in the Act. The dictionary meaning of the undertaking may be wider than the definition of that expression under the Act. But for purposes of deciding whether S.23(1) is applicable to the Company, we have got to apply the definition given in the Act unless it is otherwise repugnant to the context. No reason is given on behalf of the Central Government to apply the ordinary dictionary moaning to that expression in this case. The decision on this question has, therefore, to rest on the definition given in the Act. Viewed in that way, it is very difficult to accede to the contention urged on behalf of the Central Government that S.23(1) would be applicable to this case.