1973 (3) TMI 149 - HC - Companies Law

Summary

Issues Involved:
1. Challenge to Summons and Order by the Commission
2. Relevancy of Requested Documents
3. Interpretation of "Inter-connected Undertakings" under Section 2(g)
4. Scope of Control: De Jure vs. De Facto
5. Reliance on Datta Commission Report
6. Maintainability of the Writ Petition

Issue-wise Detailed Analysis:

1. Challenge to Summons and Order by the Commission:
The petitioner challenged a summons issued under Section 12 of the Monopolies and Restrictive Trade Practices Act, 1969, and an order dated May 12, 1972, passed by the Monopolies and Restrictive Trade Practices Commission. The summons directed the production of specific documents, including the cashbook, ledger, and journal of the company for 1971, minute books of the Committee of Directors for 1970 and 1971, and reports of Sri B. M. Birla on his foreign trips. The petitioner argued that these documents were irrelevant to the Commission's inquiry.

2. Relevancy of Requested Documents:
The petitioner contended that the documents requested by the Commission were irrelevant. The Commission, however, maintained that the documents were necessary to determine whether the proposed cement factory by Keshoram Industries would be an "inter-connected" undertaking with the petitioner company, Hindusthan Motors Limited. The Court noted that the relevancy was debated more with a reference to the scope of the inquiry than on the documents themselves before the Commission. The Court held that the scope of interference under Article 226 is very limited and should be exercised only in compelling circumstances.

3. Interpretation of "Inter-connected Undertakings" under Section 2(g):
The petitioner argued that inter-connection between undertakings should be determined solely under Section 2(g)(iii) for corporate bodies and not under any other sub-clause. The Commission, however, refused to read the different sub-clauses of Section 2(g) as mutually exclusive. The Commission observed that control over a group of companies could be exercised even without capital-wise, finance-wise, or management-wise control. The Court upheld the Commission's interpretation, stating that the statute intended the concept of inter-connection to be broad and inclusive.

4. Scope of Control: De Jure vs. De Facto:
The petitioner contended that control over corporate bodies must be de jure, i.e., exercised through voting rights, finance, or management. The Commission, however, considered both de jure and de facto control relevant. The Court agreed with the Commission, stating that the object of the statute would be frustrated if only de jure control was considered. The Court emphasized that effective control could be exercised in various ways, including de facto control.

5. Reliance on Datta Commission Report:
The petitioner argued that the Commission erred in relying on the Datta Commission report, which had a different basis for grouping companies compared to the Monopolies Commission report. The Court found this contention to be based on a misapprehension. The Commission was holding the inquiry based on the statute and not solely on the Datta Commission report. The report merely served as a starting point for the inquiry.

6. Maintainability of the Writ Petition:
The respondents argued that the writ petition was not maintainable against an interlocutory order of the Commission. The Court held that while a person could challenge the Commission's decision on the ground of irrelevancy, the scope of such objections and the limit of interference under Article 226 are very restricted. The Court emphasized that the Commission's requirement for documents is for forming its opinion and making a report, and the Court cannot substitute its own decision for that of the Commission.

Conclusion:
The Court dismissed the writ petition, upholding the Commission's summons and order. The Court found no compelling reason to interfere with the Commission's decision, as the documents requested were relevant to the inquiry, and the Commission's interpretation of "inter-connected undertakings" and the scope of control was correct. The Court also noted that the reliance on the Datta Commission report was not improper, and the writ petition was maintainable but not justified in the present case.