APEEJAY P LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) This Rule is directed against an order of the Government of India dated 23rd Nov. 1977 by which the Government of India were unable to give their approval to the proposed transaction to sell to the petitioner the net assets of the Ludlow Jute Company Limited, the respondent No. 3, a non-resident Company in terms of the assets purchase Agreement dated the 8th June, 1977 between the said two parties.

(2.) The petitioner company on June 8, 1977 entered into an agreement for purchase of assets of M/s. Ludlow Jute Company Limited. The said Agreement provided that after March, 31, 1977 M/s. Ludlow will work as caretaker of the petitioner company. In para 9.4 of the said Agreement there is a provision for obtaining approval of the Government of India. The said para 9.4 reads as follows : Government Approval : Approval satisfactory to the purchaser and its council to the consumption of the transaction contemplated by this Agreement shall have been obtained from the Government of India pursuant to the provisions of the Foreign Exchange Regulation Act, 1973 and any other applicable laws, rules or regulations of India, and such approval shall be and remain in full force and effect at all relevant times. At para 10.4 of that Agreement similar provisions were made for obtaining Government approval satisfactory to the Seller. On 8th of June, 1977 Mr. A. B. Mason, President of Ludlow Jute Company Ltd. addressed a letter to Mr. Mohan Dharia, Minister of Commerce, Govt. of India, submitting the copy of the said Agreement and requesting him for consideration of their pending application for approval of the sale of the assets and to hold a meeting te discuss the matter at the early convenience of the Ministry. Thereafter, on or about Sept. 8, 1977 Sri Jit Paul who was acting on behalf of the petitioner company, received a letter from the Vice President of M/s. Ludlow Jute Company Ltd. to the effect that they have been acting as a caretaker of the petitioner company with effect from 1st of April, 1977. Subsequently a communication was received on or about Oct. 19, 1977 wherein it was indicated that the Government of India had discussed the questions of approval and it was expected to take a decision under the Foreign Exchange Regulation Act. Neither the petitioner nor any of its representatives was ever heard by the Central Government The petitioner had an apprehension the the Central Government might not (sic) prove the purchase Agreement between the parties. On Nov. 15, 1977 the petitioner company wrote to the respondent No. 2, the Controller of Capital Issues, making it clear that the assets of the petitioner company was much below 20 crores. It was pointed out that the provisions of Section 20 (a) of Monopolies and Restrictive Trade Practices Act, 1969 did not apply to the petitioner company, Subsequently, the petitioner company received a copy of the communication dated Nov. 23, 1977 of the Central Government to M/s. Ludlow Jute Company Ltd. informing them that the Agreement, dated 8th June, 1977 between the petitioner company and M/s. Ludlow was not approved by the Central Government. No communication was, however, sent directly by the Central Government to the petitioner company. The petitioner being aggrieved by the said decision of the Central Government disapproving the Agreement for purchase dated 8th June, 1977 entered by and between the petitioner company and M/s. Ludlow moved this Court under Article 226 of the Constitution and obtained the present Rule.

(3.) Two affidavit-in-oppositions were filed by the respondent No. 3. One is dated 20th Dec. 1977 and and the other dated 9th of Jan. 1978. Both of the said affidavits were affirmed by T. J. Dineen, the Managing Director of the respondent No. 3. In 9th Jan. 1978's affidavit it is stated that under the Foreign Exchange Regulation Act, 1973 and other applicable laws and regulations, it was necessary for the petitioner and the respondent No. 3 respectively to take permission from the appropriate authorites for the petitioner to make payment and for the respondent No. 3, to transfer its business and assets in India. As advised and directed by the Reserve Bank of India, the respondent No. 3 made an application inter alia, to the Director of Investment, Department of Economic Affairs, Government of India for clearance of the respondent No. 3's proposal to transfer its Indian business to the petitioner and pursued the same with them. The petitioner Apeejay (Pvt.) Ltd. also met the Government Authorities and represented its case and participated on or about June 28, 1977 in a point meeting with the representatives of the Government of India and of the respondent No. 3. The petitioner was also in terms of Clause 10.4 of the Agreement under the obligation to obtain all approvals as were necessary under all applicable laws and regulation for consummation of the trans- actions contemplated by the Agreement dated the 8th June, 1977 between the petitioner and the respondent No. 3. In view of the Government's decision the Agreement between them had become inoperative and null and void.