R K MALHITRA Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioners who number four have filed this petition under Article 226 of the Constitution seeking a writ of certiorari or any other appropriate writ, order or direction quashing the order dated 13 October 1993 by which order the Central Government in the Ministry of Industry, Department of Industrial Development (Secretariat for Industrial Approvals) granted approval to M/s. Gillette International, respondent No.6, in investing upto a maximum 49% of the equity capital of M/s. Harbans Lal Malhotra & Sons, Ltd. (HLM), the fifth respondent, subject to certain conditions. The petitioner respectively hold 4.17%, 2.29%, 2.25% and 22.78% shareholding in the HLM. There are eight respondents - respondents 1, 2, 3 and 4, respectively, the Union of India in the Ministry of Industry; Secretariat for Industrial Approvals; Principal Secretary to the Prime Minister, Chairman, FIPB - Foreign Investment Promotion Board; and Union Finance Minister, and the seventh and eighth respondents N.V.I. Engineering Company Pvt. Ltd. (NVI) and Malhotra International Pvt. Ltd, respectively.

(2.) The impugned approval was granted on 13 October 1993 on an application dated 18 August 1993 of the sixth respondent (Gillette), admittedly a world leader in razor blade industry. The application was addressed to the Chairman, FIPB, and was filed in terms of the industrial policy dated 24 July 1991 of the Central Government. Gillette in this application had sought for the approvals as under :-

(3.) The respondents, however, said that in whole body of the petition there was not even a whisper if provisions of section 29 of FERA had been violated and that the Central Government could take no decision in the face of these provisions. It was submitted that by mere grant of approval the RBI had not been divested of any of its powers under FERA. It was then submitted that it was not section 29 and rather it would be section 19 of FERA which would be applicable in the present case. Respondents said that Gillette was not acquiring the whole or any part of the undertaking in India of any person or company and that section 29 was inapplicable. If we refer to section 19 it deals with regulation of export and transfer of securities. Under this section, notwithstanding anything contained in section 81 of the Companies Act, 1956, "no person shall, except with the general or special permission of the Reserve Bank - .... (b) transfer any security, or create or transfer any interest in a security, to or in favour of a person resident outside India; .... (d) issue, whether in India or elsewhere, any security which is registered or to be registered in India, to a person resident outside India". We need not refer to other sub-sections of section 19 as no argument was based on those provisions. Ms. Jaising said that in para 6 of the approval it had been clearly stated that the approval "shall be binding on the Government of India or Reserve Bank of India." Reference was made to a decision of the Supreme Court in Commissioner of Police, Bombay v. Gordhandas Bhanji (AIR 1952 Supreme Court 16) where the court observed as under:-