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PETITIONER: CAREW AND COMPANY LTD.

       Vs.

RESPONDENT: UNlON OF INDIA

DATE OF JUDGMENT22/08/1975

BENCH: MATHEW, KUTTYIL KURIEN BENCH: MATHEW, KUTTYIL KURIEN RAY, A.N. (CJ) KRISHNAIYER, V.R. FAZALALI, SYED MURTAZA

CITATION:  1975 AIR 2260            1976 SCR  (1) 379  1975 SCC  (2) 791

ACT:      Monopolies and  Trade Practices Act,1969,Sections 2(v). 23(4)-Undertaking, meaning  of-Appellant proposing  to  form new company  for taking  over sugar  unit  owned  by  it-New company, if can be said to be engaged in production.

HEADNOTE:      Section 2(v)  of the  Monopolies and  Restrictive Trade Practices  Act,   1969  defines   an  "undertaking"   as  an undertaking which  is engaged  in  the  production,  supply, distribution or  control of  goods of any description or the provision of  service of  any kind.  Section 22 provides for the establishment  of new  under takings.  It says  that  no person or authority, other than government, shall, after the commencement of  this Act.  establish  any  new  undertaking which, when  established  would  become  an  inter-connected undertaking of  an undertaking  to which clause (a) of s. 20 apples, except  under, and  in accordance  with the previous permission of the Central Government, Sub-section (2) of the section provides  for an application for that purpose to the Central Government.  Section 23(4)  lays  down  that  if  an undertaking to  which Part  A of Ch. Ill applies proposes to acquire by  purchase, take  over or  otherwise the  whole or part of  an undertaking  which will or may result either (a) in the  creation of  an undertaking  to which  Part A  would apply; or (b) in the undertaking becoming an inter-connected undertaking of  an undertaking  to which  Part A applies, it shall, before  giving any  effect to  its proposals, make an application in  writing to  the Central  Government  in  the prescribed form  of its  intention to make such acquisition. stating therein  information regarding  its inter connection with other undertakings the scheme of finance with regard to the proposed  acquisition and  such other information as may be prescribed.       The  appellant is  a public  limited company  and is a subsidiary of  United Breweries  Ltd.  and  other  companies interconnected with it. The appellant’s undertaking consists of a  sugar factory  and a  distillery  for  manufacture  of liquor at  Rosa,  Shahjahanpnr  and  another  distillery  at Asansol. The  appellant’s sugar  factory at  Rosa  had  been

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facing difficulties  for some years on account of inadequate supply of  sugarcane and  to  ensure  regular  and  adequate supply of  sugarcane, the  appellant  proposed  to  float  a company with  a share  capital of‘  Rs.  50  lakhs  for  the purpose of  taking over  the sugar unit of the appellant and for working  it as  an undertaking  of  the  company  to  be formed.  The  proposal  was  that  the  appellant  would  be entitled to  an allotment  of 100  percent shares in the new company  and   a  further   sum  of   Rs.   15,77,093/-   as consideration for  transfer of the sugar unit. The appellant applied to the respondent for permission under s. 372 of the Companies Act  to acquire the 100 per cent shares of the new company upon  its incorporation.  The appellant  was told by the Central  Government in  its letter  dated 5-1-1972  that sections 22  and 23  of the Monopolies and Restrictive Trade Practices Act’.  1969, would  prima facie  be attracted  and that the  appellant should file a separate application Under the relevant  section. The  appellant filed  an  application dated 5  5 1972  purporting to be under S. 23(4) of The Act. The new  company proposed  to be set up by the appellant was incorporated  on   June,  15.   1973  under   the  name   of Shahjahanpur Sugar  Private Limited.  By order dated July 2, 1973. the  Central Government,  in the Department of Company Affairs rejected the appellant’s application under s. 372(4) of the Companies Act for investing Rs.50 lakhs in the equity share of  the Capital of Shahjahanpur Sugar Private Limited. By another order dated 30-6-1973, the central Government. in the  Department   of  company   Affairs  also  rejected  the appellant’s application  under s.  23(4) of  the  Act.  This appeal is  against the  order dated 30-6-1973 under s. SS of the Act.      It was  contended for  the appellant that. (i) in order that an  enterprise may  became an  ’undertaking’ within the definition of  the word  ’undertaking’ in s. 2(v) of the Act it is  necessary that  the enterprise  must  he  engaged  in produc- 380 tion, supply,  distribution  or  control  of  goods  of  any description or the provision Or service of any kind and that when the  appellant proposed  to form  the new  company  for taking over the sugar unit of the appellant in consideration of 100  per cent shares in the new company, that company had not acquired  the sugar  unit of  the appellant  nor was  it engaged in  the production,  supply, distribution or control of goods,  etc.  as  an  enterprise  of  Shahjahanpur  Sugar Privato Limited  and so  There was no proposal to acquire by purchase, take over or otherwise of the whole or part of any undertaking within  the the meaning of s. 23(4). and (ii) in any event  the proposal  to acquire  100 per  cent shares in Shahjahanpur Sugar  Private Limited  by the  appellant would not involve a proposal to acquire an undertaking to be owned or even  owned by Shahjahanpur Sugar Private Limited, as the acquisition of  100 per  cent shares  would only vest in the appellant, the  right to  control and  manage the affairs of Shahjahanpur Sugar Private Limited.      Accepting the contentions and allowing the appeal, ^      HELD: (Per  Ray C.J.  and Mathew 1.) (i) The Sugar unit of the  appellant was  no doubt  engaged  in  production  of goods. etc.,  when the  proposal was made and was, therefore an undertaking  but  it  was  only  an  undertaking  of  the appellant. as  the sugar  unit had  not been transferred and had not  become an  enterprise of Shahjahanpur Sugar Private Limited. The  sugar unit  did not  become an  undertaking of Shahjahanpur Sugar  Private Limited  ac it was not and could

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not be  engaged in  the production  of goods,  etc., on  its behalf before  it was  transferred to it. Sub-section (4) of s. 23  is confined  to the  case of a proposal to acquire an undertaking by  purchase, take  over or  otherwise  but,  to become an  undertaking, it  must presently be engaged in the production of  goods, etc. The mere fact that the Memorandum of  Association   of  Shahjahanpur   Sugar  Private  Limited contained an  object clause which provided for production of sugar would  not necessarily  mean that the company would go into production  and thus become the owner of an undertaking as defined in s.2(v) of the Act. Even if the phrase ’engaged in  business’   in  the  definition  conveys  thc  idea  of’ embarking on  it, it is not correct to say that Shahjahanpur Sugar Private  Limited  had  embarked  on  the  business  of production  of   sugar  merely  because  its  memorandum  of association provided  that the  object of the company was to produce sugar. [387B-C, E-F]      The Union  of India  v. Tata Engineering and Locomotive Co. Ltd.,  [1972] 74 Bombay Law Reporter, 1 and In re Canara Bank Ltd., A.I.R. 1973 Mysore, 95 referred to.      (ii) It  is well  settled that  a company  has seperate legal personality apart from its shareholders and it is only the company  as a  juristic person  that  could  1  own  the undertaking. Beyond  obtaining  control  and  the  right  of management  of   Shahjahanpur  Sugar  Private  Limited,  the purchase of  100 per  cent shares  had not  the effect of an acquisition of the undertaking owned by it. [388F-G       Per  Krishna Iyer. J. (concurring) (1) An ‘undertaking is defined  as an undertaking.... which itself disclosed the difficulty felt  by the draftsmen in delineating the precise content. Obviously,  a dynamic  economic concept cannot be , imprisoned  into   ineffectualness  by   a   static   strict construction. ‘Is  engaged in  production’, in  the  context takes in  not merely  projects which have been completed and ,one into production but also blue-prints. It is descriptive of the  series of’  steps culminating  in production. One is engaged in  an undertaking  of production  of certain  goods when he  seriously set  about the job of getting every thing essential lo  enable production.  Economists, administrators and industrialists  understand the  expression in that sense and  often   times  projects   in  immediate   prospect  are legitimately  set   down  as  undertakings  engaged  In  the particular line.  Not the  tense used but the integration of the steps  is what  is decisive.  What will  materialse as a productive enterprise  in futureo  can be regarded currently as as undertaing, in the industrial sense. [391F-H]      Massachusetts B  & Insurance Co. v. U.S. 352, U.S. 128, 138, and Gymkhana Club, [1968] 1 S.C.R. 742 referred to. 381      (2)  Sections   22  and   23  (4),   when   placed   in juxtaposition suggest  that the  appellant’s operation is to establish a  new undertaking  (out of  its old  sugar  unit, though) which, in view of the share-holding, will inevitably become an  inter connected  undertaking of  Carew & Co. (the original undertaking,  i.e. the  appellant). Not  so much to acquire an  existing  undertaking  as  to  establish,  by  a concealed expansionist  objective, a  new  undertaking  with sugar manufacture  is the  core of the operation. Therefore, it is  not s. 23(4) that magnetizes the appellant’s proposal but, prima facie, Sec. 22. [395EF]      Per Fazal  Ali, J.  (Concurring) The  object of the Act appears to  be to  pre vent  concentration of  wealth in the hands of  a few  and  to  curb  monopolistic  tendencies  or expansionist industrial endeavours. This objective is sought to be  achieved by  placing three-tier  curb  on  industrial

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activities  to   which  the   Act  applies,  namely:-(1)  By providing that if it is proposed to substantially expand the activities of  a Company  by issue  of fresh  capital or. by installation of  new machinery,  then notice  to the Central Government and its approval must be taken under s. 21 of the Act. (2)  In the  case of  establishment of a new Company by insisting  on   the  previous   permission  of  the  Central Government under  s. 22  of the  Act. (3)  In  the  case  of acquisition of  an existing  Company by  another Company  by requiring the sanction of the Central Government to be taken by such Company under s. 23 of the Act. The present case may fall within the second category. [1398-H, 399AB]

JUDGMENT:      CIVIL APPELLATE  JURISDICTION: Civil Appeal No. 1308 of 1973.      From the order dated the 30th June, 1973 of the Central Government, Ministry  of Law,  Justice and  Company Affairs, Department of Company Affairs.      S. V. Gupte and Vinoo Bhagat, for the appellant.      P. P. Rao and S. P. Nayar, for respondent.      Shri Narain, for interveners.      The Judgment  of A.  N, Ray, C.J., and K. K. Mathew, J. was delivered  by Mathew,  J. V.  R. Krishna Iyer, J. and S. Murtaza Fazal Ali, J. gave separate Opinions.      MATHEW, J. This appeal is from an order dated 30-6-1973 passed by  the Government of India dismissing an application filed by  the appellant  on 5-5-1972  under s.  23(4) of the Monopolies  and   Restrictive  Trade   Practices  Act,  1969 (hereinafter referred to as the ’Act’) for acquiring 100 per cent share capital of Shahjahanpur Sugar Private Ltd.      The appellant  is a  public limited  company and  is  a subsidiary of  United Breweries  Ltd.  and  other  companies interconnected with it. The appellant’s undertaking consists of a  sugar factory  and a  distillery  for  manufacture  of liquor at  Rosa,  Shahjahanpur  and  another  distillery  at Asansol The  appellant’s sugar  factory  at  Rosa  had  been facing difficulties  for some years on account of inadequate supply of  sugarcane and  to  ensure  regular  and  adequate supply of  sugarcane, the  appellant  proposed  to  float  a company with a share capital of Rs. 50 lakhs for the purpose of taking  over the  sugar unit  of the  appellant  and  for working it  as an  undertaking of  the company to he formed. The proposal  was that the appellant would be entitled to an allotment of  100 per  cent shares  in the new company and a further sum of Rs. 15 ,77,093/- as  consideration for  transfer of the sugar unit. According to  the appellant,  its object  in getting 100 per cent shares  in the  new company  was to offer the shares to cane growers later on.      11-L839 Sup CI/75 382      The appellant  wrote a  letter to  the Secretary of the Company Law A Board on 15-10-1971 stating that since the new company would be a subsidiary of the appellant, the approval of the  Company Law  Board under s. 372 of the Companies Act would not  be necessary, in view of the provisions of clause (d) of  sub-section 14  of the  said  section.  The  Central Government in the Ministry of Industry and Company Affairs . 3, replied  by a  letter dated  November 1,  1971, that  the provisions of  f s.  372(2) of  the Companies  Act would  be applicable to the acquisition of the shares by the appellant in  the  company  proposed  to  be  formed.  The  appellant,

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therefore, applied  for  permission  under  s.  372  of  the Companies Act  to acquire the 100 per cent shares of the new company upon  its incorporation. The appellant was also told by the  Central Government in its letter dated 5-1-1972 that sections 22 and 23 of the Act would prima facie be attracted and that  the appellant  should file  a separate application under  the  relevant  section.  The  appellant  had  already intimated the  Central  Government,  Department  of  Company Affairs on 17-11-1971 that the provisions of sections 21, 22 and 23 of the Act would not apply to its proposal to acquire the shares  of the  company proposed to be formed for taking over the sugar unit of the appellant. However, the appellant filed an  application dated 5-5-1972 purporting to be under- s. 23  (4) of the Act. The new company proposed to be set up by the appellant was incorporated on June 15, 1973 under the name of  Shahjahanpur Sugar  Private Limited. By order dated July 2,  1973, the  Central Government, in the Department of Company Affairs  rejected the  appellant’s application under s. 372(4) of the Companies Act for investing Rs. 50 lakhs in the equity  shares of  the  capital  of  Shahjahanpur  Sugar Private Limited.  By  another  order  dated  30-6-1973,  the Central Government,  in the  Department of  Company  Affairs also rejected  the appellant’s application under s. 23(4) of the Act.  As already  stated, this  appeal  is  against  the latter order, Under s. 55 of the Act.      The point  for consideration  in this  appeal lies in a narrow compass  viz., whether  s. 23(4) was attracted to the facts of the case. To decide the question it is necessary to refer to certain provisions of the Act.      The object  of the Act as is clear from the preamble is that the  operation of the economic system should not result in  the  concentration  of  economic  power  to  the  common detriment, for  prohibition of  monopolistic and restrictive trade practices  and  for  matters  connected  therewith  or incidental thereto.      "Undertaking" is defined under s. 2(v):           "undertaking"  means   an  undertaking   which  is      engaged in  the  production,  supply,  distribution  or      control of goods of any description or the provision of      service of any kind".      Chapter IlI is concerned with concentration of economic power and  s. 20  occurring in Part A of that chapter states that this  part shall  apply to  an undertaking if the total value of-           (i)  its own assets, or 383           (ii) its own  assets together  with the  assets of                its inter  connected undertaking  is not less                than twenty crores of rupees; and, to 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   dominating                undertaking, is  not less  than one  crore of                rupees. Section 21 deals with expansion of undertakings. It provides that  where  an  undertaking  to  which  this  Part  applies proposes to substantially expand its activities by the issue of fresh  capital or by the installation of new machinery or other equipment  or in  any other  manner, it  shall, before taking any  action to  give effect  to the proposal for such expansion, give  to the  Central Government  notice  of  its

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intention to  make such expansion stating therein the scheme of finance with regard to the proposed expansion, whether it is connected  with any  other under  taking Of  undertakings and, if  so, giving  particulars relating  to all the inter- connected undertakings  and such other information as may be prescribed. Section 22 provides for the establishment of new undertakings. It  says that  no person  or authority,  other than government,  shall, after the commencement of this Act, establish any new under taking which, when established would become an  inter-connected undertaking  of an undertaking to which clause  (a) of  s. 20  applies, except  under, and  in accordance with  the  previous  permission  of  the  Central Government. Sub-section  (2) of that section provides for an application for  that purpose  to  the  Central  Government. Section 23 provides:           "23. Merger,  amalgamation and  take-over-(1) Not-      withstanding anything  contained in  any other  law for      the time being in force,-           (a)  no scheme  of merger  or amalgamation  of  an                under taking  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 s. 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 of  amalgamation  with  any      other  under   taking  or   a  scheme   of  merger   or      amalgamation is proposed 384 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 s. 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-section (1) of sub-section (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.      (4) If  an  undertaking  to  which  this  Part  applies proposes to  acquire by purchase, take over or otherwise the whole or  part of  an undertaking  which will  or may result either-      (a)  in the  creation of  an undertaking  to which this           Part would apply; or      (b)  in the  undertaking  becoming  an  inter-connected           undertaking of  an undertaking  to which this Part           applies, it shall, before giving any effect to its proposals, make an application in  writing to  the Central  Government  in  the prescribed form  of its  intention to make such acquisition, stating therein  information regarding  its inter-connection with other undertakings the scheme of finance with regard to the proposed  acquisition and  such other information as may be prescribed.      (5) No  proposal referred  to in  sub section (4) which has been approved by the Central Government and no scheme of finance with  regard to  such  proposal  shall  be  modified

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except with the previous approval of the Central Government.      (6) on  receipt of an application under sub-section (2) or sub-section (4), the Central Government may, if it thinks fit, refer  the matter  to the Commission for an inquiry and the Commission  may, after  such hearing  as it  thinks fit, report to the Central Government its opinion thereon.      (7) on  receipt of  the Commission’s report the Central Government may pass such orders as it may think fit.      (8) Notwithstanding anything contained in any other law for the  time being  in force,  no proposal  to  acquire  by purchase, take-over  or otherwise of an undertaking to which this part  applies shall  be  given  effect  to  unless  tho Central Government  has made an order according its approval to the proposal.      (9) Nothing  in sub-section  (4)  shall  apply  to  the acqusition. by undertaking which is not a dominant under- 385      taking, of  another undertaking  which is  not  also  a      dominant undertaking, if both such undertakings produce      the same goods:           Provided that  nothing in  this sub-section  shall      apply,  if,   as  a  result  of  such  acquisition,  an      undertaking comes into existence to which clause (a) or      clause (b) of section 20 would apply. Section  28   states  that  the  Central  Government  before according approval  in the exercise of its powers under Part A or Part of Chapter III shall take into account all matters which appear  in the particular circumstances to be relevant and  enjoins   that  regard   shall  be   had  to  the  need consistently with  the  general  economic  position  of  the country to  achieve the production, supply and distribution, by most  efficient and  economical means,  of goods  of such types  and   qualities  and   several  other  considerations specified therein.      The submission  of the  counsel for  the appellant  was that in order that an enterprise may become an ’undertaking’ within the  definition of  the word ’undertaking’ in s. 2(v) of the  Act, it  is necessary  that the  enterprise must  be engaged in  production, supply,  distribution or  control of goods of  any description or the provision of service of any kind and  that when  the appellant  proposed to form the new company for  taking over  the sugar unit of the appellant in consideration of  100 per  cent shares  in the  new company, that  company  had  not  acquired  the  sugar  unit  of  the appellant nor  was it  engaged in  the  production,  supply, distribution or  control of  goods, etc. as an enterprise of Shahjahanpur Sugar  Private Limited  and  so  there  was  no proposal to  acquire by  purchased take over or otherwise of the whole  or part  of any undertaking within the meaning of s.  23(4).   According  to  counsel,  it  is  only  when  an ’undertaking’ to  which Part III applied proposes to acquire by purchase, take over or otherwise, the whole or part of an undertaking  which  would  result  in  the  creation  of  an undertaking to  which that Part applies that s. 23 (4) would be attracted.  In other  words, the argument was that as the proposal was  only for  acquirising 100  per cent  shares in Shahjahanpur Sugar  Private Limited, the proposal was not to acquire the  whole or  any  part  of  an  undertaking  since neither Shahjahanpur  Sugar Private  Limited had  become the owner of the sugar unit of the appellant as there was only a proposal to  transfer it to it, nor was that unit engaged in production, supply.  distribution or  control of goods as an enterprise owned  by Shahjahanpur Sugar Private Limited. The further submission  was that  in any  event the  proposal to acquire 100  per cent  shares in  Shahjahanpur Sugar Private

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Limited by  the appellant  would not  involve a  proposal to acquire  an  undertaking  to  be  owned  or  even  owned  by Shahjahanpur Sugar  Private Limited,  as the  acquisition of 100 per  cent shares  would only  vest in the appellant, the right to  control and  manage the  affairs  of  Shahjahanpur Sugar Private Limited.      Section  2   of  the   Act  makes  it  clear  that  the definitions ,given in that section will be attracted only if the context so requires. The word 386 undertaking’ is  a coat of many colours, as it has been used in different  A sections  of the  Act  to  convey  different ideas. In  some of  the sections,  the word has been used to denote the enterprise itself while in many other sections it has been  used  to  denote  the  person  who  owns  it.  the definition of  the word  ’undertaking’ in s. 2(v) of the Act would indicate  that ’undertaking’ means an enterprise which is engaged in production, sale or control of goods, etc.      We think  that the question to be asked and answered in this case in terms of s. 23 (4) is: Did the appellant make a proposal to  acquire any  undertaking of  Shahjahanpur Sugar Private Limited  by purchase,  take over  or  otherwise?  To answer this  question, it  is necessary  to see  whether the sugar  unit   which  was   proposed  to  be  transferred  to Shahjahanpur Sugar  Private Limited  had been engaged in the production of goods, etc., as an enterprise of that company; It is  clear that on the date of the proposal the sugar unit of  the   appellant  had   not  become   an  undertaking  of Shahjahanpur Sugar  Private  Limited  as  it  had  not  been engaged in  the production  of goods, etc., as an enterprise owned by  that company. It is only possible to visualize two possibilities when  the proposal  was made: either the sugar unit remained  an undertaking  of the appellant, although it was proposed to be transferred to Shahjahanpur Sugar Private Limited or  that the  sugar unit  became  an  enterprise  of Shahjahanpur  Sugar  Private  Limited.  If  the  sugar  unit remained part  of the  undertaking of the appellant when the proposed was  made to  take the  100 per  cent  shares,  the proposal cannot  be one  to acquire  an undertaking,  as  ex hypothesi  the  undertaking  had  not  been  transferred  to Shahjahanpur Sugar  Private Limited. But, if the proposal to take 100  per cent  shares involved an acquisition in future by the  appellant of  the  sugar  unit  after  it  has  been transferred to  the new  company, there  was no  proposal to acquire  by   transfer,  take   over  or   otherwise  of  an ’undertaking’ as  the sugar  unit was not at the time of the proposal  engaged   in  production  of  goods,  etc.  as  an enterprise of Shahjahanpur Sugar Private Limited.      An enterprise  can be characterized as an undertaking,, within the definition of the term only when it is engaged in the production  supply, distribution  or control of goods of any description  or the provision of service of any kind. In The Union  of India  v Tata  Engineering and  Locomotive Co. Ltd.(1), the  Court held  that a  mere capacity  or  a  mere intention by  an undertaking  to carry  on  an  activity  as referred to in clause (v) of s. 2 of the Act in future alone without its  being so  done in  the present,  i.e.,  at  the material date,  or some  time in  the past  i.e., before the material date,  cannot mean  that the undertaking is engaged in an  activity as  contemplated in  s. 2(v)  of the Act. No doubt, a  temporary  cessation  of  the  activity  will  not detract an  enterprise from its character as an undertaking, if the  animus to resume the activity as soon as possible is there. If  a factory has had to close Down its operations on account of  a strike,  lock out,  shortage of raw materials,

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shortage of  power, or  even want  of finance,  it cannot be said      (1) [19721 Bombay Law Reporter 1. 387 that it  is not  engaged in  the production of goods, if the intention of the owner is to resume its activities. The view taken in  In re Canara Bank Ltd. (l) is much the same. There the Court  followed the  decision of  the Bombay  High Court referred to  above and  said that  until a concern goes into the  actual   production,  it   cannot  be  said  to  be  an ’Undertaking’.      The sugar unit of the appellant was no doubt engaged in production of  goods, etc.,  when the  proposal was made and was,  therefore,   an  undertaking;   but  it  was  only  an undertaking of  the appellant as the sugar unit had not been transferred and had not become an enterprise of Shahjahanpur Sugar Private  Limited. The  sugar unit  did not  become  an undertaking of  Shahjahanpur Sugar Private Limited as it was not and  could not  be engaged  in the  production of goods, etc., on  its behalf  before it  was transferred to it. Sub- section (4)  of s.  23 is confined to the case of a proposal to  acquire   an  undertaking  by  purchase,  take  over  or otherwise but,  to become  an undertaking, it must presently be engaged  in the  production of  goods, etc. The more fact that the  Memorandum of  Association of  Shahjahanpur  Sugar Private Limited  contained an  object clause  which provided for production  of sugar would not necessarily mean that the company would  go into  production and thus become the owner of an undertaking as defined in s. 2(v) of the Act. Take for instance the  case of an individual or a firm. Does he or it become an  ’undertaking’ merely  because he or it entertains an object  to produce  goods unless  he or  it  is  actually engaged in production of goods, etc.? Certainly not. If that is so  in case  of an individual or a firm, we see no reason why a  different standard should be applied in the case of a company merely  because the  object or one of the objects of the company is to produce goods, etc., if it is not actually engaged in  production  of  goods.  Reference  was  made  to Stroud’s Judicial  Dictionary, 4th  edition, Vol.  1, p. 909 where it is stated that the phrase "engaged in any business" is apt  to  include  employment  at  a  salary  as  well  as embarking on  a business  or in partnership. We do not think that even  if the  phrase ’engaged  in business‘ conveys the idea of  embarking on it, Shahjahanpur Sugar Private Limited had embarked  on the  business of production of sugar merely because its  memorandum of  association  provided  that  the object of  the company was to produce sugar. It is therefore difficult to  imagine how  when the  proposal was made there was an  enterprise engaged  in the  production or  sugar and owned by  Shahjahanpur Sugar  Private Limited which could be acquired.      To put the matter in a nutshell: The sugar unit. Of the appellant was  an undertaking  of the appellant. Even if the proposal to  acquire 100  per cent  shares  in  Shahjahanpur Sugar Private  Limited is  considered to  be a  proposal  to acquire either  Shahjahanpur Sugar  Private Limited  or  its sugar unit, since neither Shahjahanpur Sugar Private Limited nor its  sugar unit  as an  enterprise owned  by it had gone into production  of goods,  the proposal did not involve the acquisition if  an undertaking.  Until  the  object  in  the memorandum of association      (1) A. 1. R. 1973 Mysore 95. 388 Of Shahajahanpur  Sugar Private  Limited was realized by the sugar A  unit going  into production  on behalf  of the  new

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company, it  cannot be  said that  either Shahjahanpur Sugar Private Limited  or the  sugar unit transferred to it was an ’undertaking’. An  entity which  is not  engaged  in  actual production of  goods or supply of services is of no economic significance and  has to be excluded from the purview of the Act. Hence,  what may  be done  by an  individual,  firm  or company in  future has  no ppresent  economic  significance. ’therefore, even  if it  be assumed  that acquisition of 100 per cent  shares could  result in the acquisition of the new company  or   of  an  undertaking,  the  appellant  was  not acquiring an  ’undertaking’ as defined in the Act as the new company would  not be engaged in production of goods etc. at the the  of the  acquisition of  the shares by the appellant and s. 23 (4) of the Act would not be attracted.      We also  think that  by the proposal to acquire the 100 per cent  shares in Shahjahanpur Sugar Private Limited or by the actual acquisition of the shares, the appellant acquired only the  control and  the right  to manage the company. The word ’undertaking’ in the latter part of s. 23(4) denotes an enterprise which  is considered  as an entity engaged in the production of  goods, etc. By setting 100 per cent shares in Shahjahanpur Sugar  Private  Limited,  the  appellant  never acquired that  undertaking  owned  by  the  new  company  by purchase take  over or  otherwise. The  undertaking remained the undertaking  of‘ Shahjahanpur  Sugar Private Limited. In other  words,  the  purchase  of  100  per  cent  shares  in Shahjahanpur Sugar  Private Limited cannot be equated to the purchase of  the undertaking  owned  by  Shahjahanpur  Sugar Private Limited.  What s.  23(4) requires is the acquisition by purchase, take over or otherwise of an undertaking. As we said, by  getting the  100 per  cent shares  in Shahjahanpur Sugar Private  Limited,  the  appellant  only  acquired  the control and  the right  of management  of Shahjahanpur Sugar Private Limited;  but that  will not amount to a purchase of the undertaking  owned by  that company  It is  well settled that a company has separate legal personality apart from its shareholders and it is only the company as a juristic person that could  own the,  undertaking. Beyond  obtaining control and the  right of  management of  Shahjahanpur Sugar Private Limited, the  purchase of  100 per  cent shares  had not the effect of  an acquisition of the undertaking owned by it. No doubt, on  a dissolution  of the  company, the  shareholders would be  entitled to  a distributive share of the assets of the company.  But it  does not follow that while the company is a  going concern,  the shareholders are the owners of its assets including  any undertaking.  It is  the company  as a separate entity  which alone can own the undertaking and the purchase by  the appellant  of 100  per cent  shares did not make it  the owner  of the undertaking. We are aware that we are dealing  with an economic legislation calculated to give effect to  the Directive  Principles of State Policy set out in clauses (b) and (c) of Article 39 of the Constitution and that the  purpose of  the legislation should be kept in mind in interpreting  its provisions;  but we are not prepared to assume that  the legislature  has, by a sidewind, swept away the well  established fundamental  legal concepts of the law of corporation in making the legislation. We do not pause 389 to consider  whether the  circumstances  which  the  Central Government took  into account  in  passing  the  order  were germane in  the light  of the provisions of s. 28 of the Act as we  hold that  s. 23 (4) has no application at all to the facts of the case.      No arguments  were addressed  at the  bar as to whether the facts of the case would attract the provisions of s. 22.

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We, therefore,  think it  not proper to express any definite opinion about  the applicability  of  that  section  and  we refrain from  doing so.  If, however,  the facts of the case attract the provisions of s. 22, it goes without saying that the appellant  will have to apply and obtain the approval as visualized in that section.      We allow the appeal but make no order as to costs.      KRISHNA IYER,  J.-I have  had the advantage of perusing the judgment  of my  learned brother,  Mathew J.  but, while concurring in  the conclusion,  desire to  append a separate opinion since  the strands  of my  reasoning differ. Mathew, J.’s judgment  presents the  necessary facts in the simplest form, sets  out the  scheme and the object of the Monopolies and Restrictive  Trade Practices  Act (for  short, the  Act) whose construction  falls for decision, but perhaps tends to petrify the  pivotal concepts of ’undertaking’ defined in s. 2(v) and acquisition in the context of Part A of Chapter III of the  Act, if  I may  say so  with respect. Perhaps we are hearing the  first case  in this Court under this ’economic’ legislation, although  three rulings  from two  High Courts, having some bearing on the controversy before us, were cited at the bar      Shri Gupte,  appearing for  the  appellant,  posed  the issue in  a neatly simplistic way when he assailed the order of the  Central Government  under s. 23(4) of the Act on the score that,  absent acquisition of an ’undertaking’ in terms of s.  2(v), the  order was  devoid  of  jurisdiction.  This provision deals  with concentration  of economic power whose inhibition is  one of the paramount purposes of the statute. Section 23  falls within  Chapter III,  Part A,  of the Act. Section 20 states that that Part shall apply only to certain types of  undertakings. Admittedly,  the appellant is a big, plural undertaking  falling within this Part and proposes to make over the sugar unit (which is one of the enterprises of this large  multi-production concern) to a new company to be floated. This  latter company  is to have 100% of its shares owned by  the appellant  and, what  is more, by a process of inflated valuation  of the  assets of  the  sugar  unit  the appellant will also appear to be advancing a loan of several lakhs of  rupees to  it. According  to the  respondent  (the Union of  India) and  the State of U. P., this new scheme is dubious in  many ways  and more  sinister than  seems on the surface. We  need not  go into  the details  except to state that if  the facts  urged by counsel for the respondent were true, it  is a  high risk to the community to approve of the proposed scheme  from the  point of  view of the purposes of the Act  and the Directive Principle enshrined in Art. 39(c) of the Constitution. 390 It is  unfortunate that  in cases  where the economic object and A  impact of  special  types  or  legislation  call  for judicial  interpretation,   the  necessity  for  a  detailed statement of the background facts and supportive data, apart from some  sort of  a Brandeis brief illuminating the social purpose of  the statute,  is not being fully realised by the State. In  the present  appeal materials  were read out from the files  which disturbed me but no comprehensive affidavit marshalling the  social and  economic facts  relevant to the case and  the statute  was filed.  (At least  copies of  the Monopolies Inquiry  Commission’s Report,  extracts from  the draft Bill,  Notes on Clauses and the objects and Reasons of the Act  were made  available while arguments started). Even so,  the   Court  should   hesitate  to  upset  the  Central Government’s order without a strong case of glaring error on the merits and clear excess or absence of jurisdiction being

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made out by the appellant.      Shri Gupte,  has, however,  by-passed the controversial area of  facts  by  a  line  of  legal  reasoning  which  is attractive but  specious. He  contents that  s. 23(4) cannot apply save where the dominant undertaking (in this case, the appellant) proposed  to acquire  ’the whole  or part  of  an undertaking which  will or may result either in the creation of a  undertaking to  which Part  A will  apply  or  in  the undertaking becoming  an inter-connected  undertaking of  an undertaking to  which Part  A applies’.  Therefore, runs the argument,  what   is  sought  to  be  acquired  must  be  an undertaking. In  the present  case the sugar unit is already an asset  of the appellant’s concern and what is proposed is nothing more  than to  float a new company whose shares will be acquired in toto by the appellant. Only when that company goes into  production it  becomes an  ’undertaking’ and only then can  s 23(4)  possibly cover the case, the reason being that an  ’undertaking’, by  definition in s. 2(v). ’means an undertaking  which  is  engaged  in  the  production....  Of goods....’. The accent placed by counsel is upon ’is engaged in the production’. He submits that the new company does not become an  ’undertaking’ until is ’engaged in the production of goods’.  What is  not in esse but only in posse is not an undertaking. So  much so  the application  of  s.  23(4)  is premature and  the Central  Government’s order  is  illegal. Moreover, no acquisition of the new company is contemplated, the owning  of 100%  shares thereof  not  being  in  law  an acquisition of  the undertaking  as such by the appellant. I concede there is force in this argument.      The crucial  submissions of  counsel for the appellant, however, stand  exposed to  the criticism made by Shri P. P. Rao for the respondent that they turn more or less on a play of words  in the  definition of  undertaking ill s. 2(v) and legal  ingenuity   about  acquisition   thereof.  Is   there substance in these contentions or are they legal subterfuges to escape from the statutory meshes ?      The law  is not ’a brooding omnipotence in the sky’ but a pragmatic instrument of social order. It is an operational art controlling  economic life,  and  interpretative  effort must be  imbued with the statutory purpose No doubt, grammar is a good guide to meaning but a bad 391 master to dictate. Notwithstanding the traditional view that grammatical  construction   is  the   golden  rule,  Justice Frankfurter  used   words  of   practical  wisdom   when  he observed:(1)           "There is  no surer way to misread a document than      to read it literally".      Indeed, this case really turns on the Court’s choice of the  correct   canon  of   construction   as   between   two alternatives. Is  an ’undertaking’  an  economic  enterprise which is  actually producing goods ? Here we over-stress the ’in praesenti’  aspect and thereby undermine the legislative object. On  the contrary,  is an  ’undertaking’ used  in its economic sense and in its wider connotation of embracing not merely factories  which have  been commissioned but projects which are  embryonic and  designed  to  go  into  production immediately  formal   legal  personality   is  acquired  and statutory approval  under the  Act secured  ? In the present case there is already a sugar unit which is working and this mill is  being transferred  as the asset of the new company. The new  company,  immediately  it  is  registered  and  the Central Governments  approval under  s. 23(4) obtained, will go on  stream since  the mill’s wheels will continue to turn regardless of the legal metempsychosis of ownership. In such

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a case  it would  be  abandoning  commonsense  and  economic realty to  treat the  proposed undertaking  as anything less than an  ’undertaking’ (as defined in the Act) because it is only in  immediate prospect.  For certain  purposes, even  a child in the womb is regarded as in existence by the law and I cannot  bring myself to an understanding of the definition which  will   clearly  defeat   the   anti-concentration-of- economic-power objective  of the  legislation. Moreover, ’to undertake’ is  to set about; to attempt to take upon oneself solemnly or  expressly;  to  enter  upon;  to  endeavour  to perform (see  Black’s Law Dictionary). If what the appellant intends to  acquire or  establish is  as undertaking in fact and therefore  in law,  the transformation  device  and  the refuge in  grammar cannot  help him,  the  expression  being capable of  taking in  not merely what is, but what is about to be.  An ’undertaking’  is defined as an undertaking...... which itself  discloses the difficulty felt by the draftsmen in delineating  the precise  content. Obviously,  a  dynamic economic concept  cannot be  imprisoned into ineffectualness by a static strict construction. ’Is engaged in production’, in the context, takes in not merely projects which have been completed  and  gone  into  production  but  also  blueprint stages, preparatory  moves and  like ante-production points. It is  descriptive of  the series  of steps  culminating  in production. You are engaged in an undertaking for production of certain  goods when  you seriously  set about  the job of getting   everything   essential   to   enable   production. Economists, administrators and industrialists understand the expression  in   that  sense   and  oftentimes  projects  in immediate prospect are legitimately set down as undertakings engaged in  the particular  line. Not the tense used but the integration of  the steps  is what  is decisive.  What  will materialise as  a productive  enterprise in  futuro  can  be regarded currently  as an  undertaking,  in  the  industrial sense. It  is not distant astrology but imminent futurology, and the phrases 392 of the  statute are  amenable to  service of the purposes of the law,  liberally understood.  Likewise, acquisition of an undertaking is  to be  viewed not in a narrow sense but as a broad business  operation. Surely,  the new  company  is  an undertaking which,  by the  vesting of  100% of  its  share- holding in  the appellant, is going to belong to the latter. It is  either acquiring  or establishing  the new adventure. That is  the plain  truth and law must accord with it. After all, a  broadened, sophisticated  and spectral sense must be given to  these words  of economic connotation without being hide-bound by  lexicography  or  legalism.  Of  course,  any infant in law knows that holding shares is not acquiring the company with  its distinctive  personality. But any adult in corporate economics knows that controlling the operations of an industrial  unit is  to acquire  or establish  it for all economic purposes-depending  on whether  that one  is new or pre-existing.      The  word   ’undertaking’  takes  in  also  enterprises attempted (See  Webster’s Dictionary  on ’undertaking’,  the meaning having  received judicial  approval in AIR 1960 Bom. 22 at  p. 24,  paragraph 4).  This Court in Gymkhana Club(1) has accepted  the  meaning,  given  in  Webster.  Similarly, ’engaged in’  takes within  its wings  ’embarking on’ (Vide: Stroud’s Judicial Dictionary, 4th Edn. Vol. 2, p. 909).      If the  language used  in a  statute can  be  construed widely so  as to  salvage the remedial intendment, the Court must adopt  it. Of  course, if  the language  of the statute does not  admit of the construction sought, wishful thinking

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is no substitute and then, not the Court but the Legislature is to  blame for  enacting a damp squib statute. In my view, minor definitional  disability, divorced  from the realities of industrial economics, if stressed as the sole touchstone, is sure  to prove disastrous when we handle special types of legislation like  the one  in this case. I admit that viewed from one standpoint the logic of Shri Gupte is flawless, but it also  makes the  law lifeless,   since  the appellant  is thereby enabled  neatly  to  nullify  the  whole  object  of Chapter III  which is  to inhibit  concentration of economic power. To  repeat for emphasis, when two interpretations are feasible, that  which advances the remedy and suppresses the evil, as  the legislature  envisioned, must find favour with the Court.  Are there  two interpretations  possible ? There are, as  I have tried to show and I opt for that which gives the law its claws.      I am  alive to  and have kept within the limitations of judicial  options   indicated  by  Cardozo  in  a  different context:           "The Judge,  even when  he is  free, is  still not      wholly free.  He is  not to innovate at pleasure. He is      not a  knight-errant roaming  at will in pursuit of his      own ideal  of beauty  or of goodness. He is to draw his      inspiration from  consecrated principles.  He is not to      yield to  spasmodic sentiment, to vague and unregulated      benevolence. He is to exercise a discretion informed by      tradition, methodized by 393      analogy, disciplined  by system,  and  subordinated  to      ’the primordial necessity of order in the social life’.      Wide  enough   in  all   conscience  is  the  field  of      discretion that remains." (Benjamin Cardozo’s  ’The Nature  of the  Judicial Process’- Yale University  Press (1921).  While  judicial  review,  at least on  processual issues, is the hallmark of fair dealing with rights  of persons  in a  Republic, there are expanding areas  of   economic  and   technological  codes  where  the adjudicator has  to trend  warily and  pause  circumspectly, especially  because  the  expertise  needed  to  unlock  the statute is  ordinarily unavailable  to the  judicial process and the  subject matter is too sensitive and fundamental for the  uninstructed  in  the  special  field  to  handle  with confidence. The  Constitution, in its essay in building up a just society,  interdicting concentration  of economic power to the detriment of the community, has mandated the State to direct its  policy towards  securing that  end. Monopolistic hold on  the  nation’s  economy  takes  many  forms  and  to checkmate these  manoeuvres, the  administration has  to  be astute enough. Pursuant to this policy and need for flexible action, the  Act was  enacted. A  variety of  considerations (set  out  in  s.  28)  amenable  to  subtle  administrative perception  and  expert  handling  but  falling  beyond  the formalised processes  unaided by research and study that the Court is  prone to  adopt, may  have to  be examined  before reaching a  right decision  to allow  or disallow  seemingly innocuous but  really or  potentially anti-social  moves  of dominant  undertakings.   It  is  well-known  that  backdoor techniques, and corporate conspiracies in the economic sense but  with   innocent  legal   veneer,  have   been  used  by oligopolistic organisations  and  mere  juridical  verbalism cannot give  the Court  the clue  unless there is insightful understanding of  the subject  which, in  specialised fields like industrial  economics, is  beyond  the  normal  ken  or investigation of  the  Court  or  the  area  of  traditional jurisprudence.  I   must  however   emphasize   that   Court

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supervision and  correction, within  well-recognised limits, is not  an expendable  item since the rule of law is our way of constitutional  life. In  our jural  order, ’the ethos of adjudication’  on   independent  court   scrutiny   is   too quintessential to  be  jettisoned  without  peril  to  those founding values  of  liberty,  equality  and  justice,  even though   Judges    considering   complex    and    technical legislations,  may  often  leave  the  Executive  and  other specialised bodies as the ’untouchable’ Controllerate. There is power  for  the  Court  to  interfere,  but  it  will  be exercised only  when strong  circumstances exist,  or  other basic guidelines for control come into play.      Even so,  this function,  so vital  to cry  a halt when executive powers  exceed  their  bounds  or  are  obliquely, oppressively or  illegally used,  has meaningful  dimensions and creative directions when disputes dealing with intricate economic legislation  fall for consideration. The absence of research  or   assessor  assistance   with  special   skill, knowledge and experience in fields unfamiliar for jurists is a handicap which demands attention for the sake of competent justice being  administered by  superior Courts.  After all, law must  grow  with  life,  if  it  is  to  do  justice  to Development, especially in developing countries. 394      Here we  come upon one of the basic deficiencies of our law studies  which do not yet take within their sweep, apart from jurisprudence, economics, politics and sociology. These are distinct  enough at  the core  but shade  off into  each other. As  Roscoe Pound  observed: "All  the social sciences must be  co-workers, and emphatically all must be co-workers with  jurisprudence".   Georges  Gurvitch  supplemented  the statement by  observing:  "A  little  law  leads  away  from sociology but much law leads back to it". The desiderata are neither novel  nor detractory  but a  recognition of the new status of  Law vis  a vis  Development in the context of the Court’s high  function of  keeping the  Executive and allied instrumentalities wisely  within  the  leading  strings  and formidable grip  of the law. Anthony Dickey, in a University of London  Public Lecture  in Laws,  advocates the  need for making judicial  review of  administrative action  more of a reality than  it is  as present  and adverts  to  the  court having to  possess ’adequate background training’ and ’first class research  assistance’. In another article,(1) the same author explains  the permissibility in English Courts of the practice of  seeking  assessor-assistance  where  specialist knowledge and  expert advice  are called for in complex case situations.      These observations  are made  by me to clear the ground for approaching  an ’economic’  lis of a complex nature in a socio-legal way and not in the traditional litigative style. So viewed,  what does  an ’undertaking’  mean in s. 23(4) of the Act  ? Surely,  ’definitions in  the Act  are a  sort of statutory dictionary  to be  departed from  when the context strongly suggests  it. The  central problem  on  which  Shri Gupte, appearing  for the  appellant, staked  his whole case largely is  as to whether an undertaking covers only a going concern, a  running industry  and not  one in  the offing or process of unfolding.      The decisions of the High Courts cited before us do not convince me.  On the  other hand, the reasoning based on the present tense is faulty as already elaborated. If this Court accepts  the   legalistic  connotation  of  ’undertaking’  a disingenuous crop of new companies with ulterior designs may well be  floated taking  the cue-a  consequence  which  this Court  should   thwart  because  thereby  the  law  will  be

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condemned to  a pathetic  futility. But  in the view I take, may be s. 22-though not s. 23(4)-is possibly attracted.      I have  already indicated my view on this issue. In the instant case,  the move  is to delink the sugar unit and re- incarnate it  as the Shahjahanpur Sugar (P) Ltd. We have two provisions  which   come  up   for  consideration   in  this expansionist and acquisitive situation. Section 22 reads:      "22(1) No  person or  authority, other than Government,      shall, after  the commencement  of this  Act, establish      any new  undertaking  which,  when  established,  would      become an  interconnected undertaking of an undertaking      to which  clause (a)  of  section  20  applies,  except      under, and  in accordance with, the previous permission      of the Central Government. 395           (2) Any person or authority intending to establish      a new undertaking referred to in sub-section (1) shall,      before taking  any action for the establishment of such      undertaking,  make   an  application   to  the  Central      Government in the prescribed form for that Government’s      approval  to   the   proposal   of   establishing   any      undertaking and  shall  set  out  in  such  application      information with  regard to  the  inter-connection,  if      any, of  the new  undertaking (which  is intended to be      established) with  every other  undertaking, the scheme      of finance for the establishment of the new undertaking      and  such  other  information  as  may  be  prescribed.      (emphasis, mine)           x         x         x         x      Section 23 (4) runs:      "If an  undertaking to which this Part applies proposes      to acquire  by purchase,  take-over  or  otherwise  the      whole or  part of  an undertaking  which  will  or  may      result either-      (a)  in the  creation of  an undertaking  to which this           Part would apply; or      (b)  in the  undertaking  becoming  an  inter-connected           undertaking of  an undertaking  to which this Part           applies,      it shall,  before giving  any effect  to its proposals,      make  an   application  in   writing  to   the  Central      Government in  the prescribed  form of its intention to      make  such  acquisition,  stating  therein  information      regarding its  interconnection with other undertakings,      the scheme  of finance  with  regard  to  the  proposed      acquisition   and   other   information   as   may   be      prescribed." (emphasis, mine)      The sections when placed in juxtaposition, suggest that the appellant’s  operation is to establish a new undertaking (out of  its old  sugar unit,  though) which, in view of the share-holding, will  inevitably  become  an  inter-connected undertaking of  Carew & Co. (the original undertaking, i.e., the  appellant).   Not  so   much  to  acquire  an  existing undertaking as  to establish,  by a  concealed  expansionist objective, a  new undertaking  with sugar manufacture is the core of  the operation.  Therefore, it  is not s. 23(4) that magnetizes the  appellant’s proposal  but, prima facie, Sec. 22. The  special provision  must exclude the general and, in this view, the acquisition of an existing undertaking stands repelled. The scheme of the Act deals both with establishing a new  undertaking and  acquiring (by  contrast) an existing undertaking. So  I agree  with my  learned brother Mathew J. that the  order under  s. 23  (4) is beyond its pale but add that this looks like a case for the application of s. 22. If the appellant intends to go ahead with the new adventure, he

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is trying  to establish,  he may,  prima facie have to apply for  and   get  the   previous  permission  of  the  Central Government under s. 22. I am not pursuing this aspect of the application of  Sec. 22  as that  will be  decided, if found necessary, after fuller investigation from the angle of that provision. 396      The problem  of interpretation  of statutes  raised  in this case  is far  too important for me to ignore the manner in which  jurists have  been viewing  the question in Anglo- Saxon jurisprudence.  I therefore  extract relevant excerpts from Harry  Bloom who  wrote on this topic in the Modern Law Review, p. 197, Vol. 33, March 1970:           "The Law  Commission (of England) and the Scottish      Law Commission  have dealt  with  one  aspect  of  this      problem, but  on the  whole they have prudently steered      clear of wider issues. Their White Paper is a trenchant      essay on  the short comings of the present techniques &      rules of  interpretation, and  a mild  rebuke of judges      who are  still too  faithful to  the Literal  Rule. Its      main burden, however is to make the case for the use of      extraneous documentary  aids to  interpretation, and it      does so,  I should think, in a way that puts the answer      to this  long-debated question  beyond doubt. Among the      recommendations (summed  up in draft clauses at the end      of  the  Report)  are  that  courts  when  interpreting      statutes, should be allowed to consider the following:      (a)  all indications  provided by the Act as printed by           authority including  punctuation  and  side-notes,           and the short title of the Act;      (b)  any  relevant   report  of   a  Royal  Commission,           Committee or  other body  which has been presented           or made  to or  laid before  Parliament or  either           House before the time when the Act was passed;      (c)  any  relevant   treaty  or   other   international           agreement which  is referred  to in  the Act or of           which copies  had been  presented to Parliament by           command of  Her Majesty  before that time, whether           or not the United Kingdom were bound by it at that           time;      (d)  any other document bearing upon the subject-matter           of the  legislation which  had been  presented  to           Parliament by  command of  Her Majesty before that           time;      (e)  any document (whether falling within the foregoing           paragraphs or not) which is declared by the Act to           be a  relevant document  for the  purpose of  this           section."           x x x x      "In time,  however, somebody  will have  to tackle  the      basic question-how long can we sustain the fiction that      when the  legislature prescribes  for  a  problem,  the      court, when confronted with a difficult statute, merely      uses the  techniques of construction to wring an innate      meaning out of the words?           One cannot,  these days,  approach the  problem of      statutory  interpretation   in   isolation   from   the      legislative process. And I do not think the proposal to      allow the  court  to  consult  parliamentary  documents      meets this  objection. As  long as  the fiction persist      that the courts merely ’interpret’ statutes, Parliament      will continue to put out legislation of ever increasing 397      detail and  complexity  in  the  belief  that  it  must      provide a  complete set  of answers.  This is  a  self-

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    defeating  ambition.   Where  does  one  look  for  the      intention of  the legislature  in today’s monster Acts,      with  their  flotillas  of  statutory  instruments  and      schedules,  the   plethora  of  boards,  tribunals  and      committees, with  delegated powers,  which they set up,      the myriad  of subjects they deal with, their confusing      cross references  to other  statutes, and  their  often      opaque and  tortured language  that defies  translation      into intelligible ideas?"           x         x         x         x         x      "What exactly  are the  respective roles  of Parliament      and the  courts as  regards legislation ? Since it is a      fiction that the courts merely seek out the legislative      intent, there  must be  a margin in which they would or      ’creatively’  interpret  legislation.  The  courts  are      ’finishers, refiners and polishers of legislation which      comes to  them in  a state requiring varying degrees of      further processing,’  said Donaldson  J.  in  Corocraft      Ltd. v. Pan American Airways, Inc., (1968 3 W.L.R. 714,      732) and  indeed it is no secret that courts constantly      give their own shape to enactments."           x         x         x         x         x      "How do  the present  rules help, when a statute passed      ad-hoc, to  deal with  a situation clearly envisaged by      the legislature,  is then  applied to a whole new state      of affairs that were never originally contemplated ?"      To  conclude   on  the   point  with   which  I  began, ’undertaking’ is  an expression  of flexible  sementics  and variable connotation, used in this very statute in different senses and  defined in  legal dictionaries widely enough. In sum, what  the appellant  proposed to the Central Government was to  establish a new undertaking, if we throw aside legal camouflages built  around a  verb and  pierce the  corporate veil. Therefore,  while jurisdiction  in the  respondent  to apply s.  23(4) of  the Act  is absent,  the  appellant  may caught within  the spider’s  web of  s. 22-I  do not express myself finally.  The appeal  must now succeed, but the legal drama may  still have  its fifth  Act  for  the  appellant-I cannot be  futuristic  as  the  full  facts  will  first  be examined by  Government for  that purpose in case he chooses to apply.      For these  reasons I  allow  the  appeal  but,  in  the circumstances, make no order as to costs.      FAZAL ALI,  J.-I agree with my brother Mathew, J., that s. 23 of the Monopolies and Restrictive Trade Practices Act, 1969-hereafter to be referred to as ’the Act’-has absolutely no application to the facts and circumstances of the present case. In  this view  of the matter the impugned order of the Central Government  must, therefore,  be quashed. Section 23 of the  Act would apply only if the undertaking sought to be acquired is  in actual  and physical  existence and has gone into actual  production. The  scheme which  is the  subject- matter of  this case  is merely  a proposal  and unless  the undertaking is  in existence  and doing business it will not fall within  the meaning of s. 2(v) of the Act which defines an "undertaking". 398      I, however,  entirely agree  with  my  brother  Krishna Iyer, J.,  that on  the   facts disclosed  in the appeal the Scheme propounded  by the  appellant may  prima  facie  fall within the  four corners of s. 22 of the Act. The resolution passed by  the appellant for setting up a new Company may be extracted thus:           "RESOLVED that  the Board  of Directors  be and is      hereby authorised  to form  a separate  Company  to  be

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    called "SHAHJAHANPUR  SUGAR (PRIVATE)  LIMITED",  as  a      wholly-owned subsidiary  of this Company, to ultimately      take over  and operate the Sugar Factory undertaking of      this  Company  at  Rosa  (Uttar  Pradesh)  as  a  going      concern.           FURTHER RESOLVED  that the  transfer of the assets      of the  Sugar Factory  undertaking to  the newly formed      subsidiary,   viz.    "SHAHJAHANPUR   SUGAR   (PRIVATE)      LIMITED", be  made on the basis of the valuation of the      respective  assets  made  by  Messrs.  LEES  &  DHAWAN,      Chartered Surveyors on May 29, 1970."      This  resolution  unmistakably  reveals  the  following essential features:      (1)  that the  appellant intended  to establish  a  new           Company and  this proposal  was approved by virtue           of the resolution quoted above;      (2)  that  the   new  Company  was  to  be  floated  by           transferring 100  per cent  shares from  the Sugar           Unit of  the Company  so that  the appellant could           retain effective control over the new Company;      (3)  that the  new Company  after being established was           to  be  known  as  "SHAHJAHANPUR  SUGAR  (PRIVATE)           LIMITED"; and      (4)  that after  the establishment  of the  new Company           the appellant  would become  the owner  of the new           Company as well as Carew Company Ltd. and thus the           proposed new  Company would  be an inter-connected           undertaking of the appellant.      These  facts,  therefore,  may  attract  the  essential ingredients of  s. 22  of the  Act and, if so, the appellant cannot be  allowed to  float a new Company without complying with the statutory requirements of s. 22 of the Act in which case fuller  facts may  have to  be  investigated  for  that purpose.      The object  of the  Act in  my opinion appears to be to prevent concentration of wealth in the hands of a few and to curb  monopolistic  tendencies  or  expansionist  industrial endeavours. This  objective is  sought  to  be  achieved  by placing three-tier  curb on  industrial activities  to which the Act applies, namely:-      (1)  By  providing   that  if   it   is   proposed   to           substantially expand  the activities  of a Company           by issue of fresh capi- 399           tal or  by installation  of  new  machinery,  then           notice to  the Central Government and its approval           must be taken under s. 21 of the Act.      (2)  In the  case of  establishment of a new Company by           insisting  on   the  previous  permission  of  the           Central Government under s. 22 of the Act.      (3)  In the  case of acquisition of an existing Company           by another  Company by  requiring the  sanction of           the Central Government to be taken by such Company           under s. 23 of the Act.      The present  case, in  my opinion,  may fall within the second category mentioned above. V.M.K.                                       Appeal allowed. 400