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Issues Involved:
1. Necessity of Central Government approval under section 23(1)(a) of the Monopolies and Restrictive Trade Practices Act, 1969, for the merger or amalgamation scheme. 2. Definition and interpretation of "undertaking" under section 2(v) of the Monopolies and Restrictive Trade Practices Act, 1969. 3. Validity of the merger scheme without the Central Government's approval. Detailed Analysis: 1. Necessity of Central Government Approval: The primary issue in this appeal was whether the approval of the Central Government was necessary for the scheme of merger or amalgamation between respondent No. 2-bank and respondent No. 1-company, as mandated by section 23(1)(a) of the Monopolies and Restrictive Trade Practices Act, 1969. The Union of India argued that such approval was necessary, while the respondents contended otherwise. 2. Definition and Interpretation of "Undertaking": The Union of India's contention was based on the definition of "undertaking" under section 2(v) of the Monopolies and Restrictive Trade Practices Act, 1969. The Regional Director argued that the transferor-company, despite being nationalized and its banking business transferred, was still capable of carrying on non-banking business and thus required approval under the Monopolies Act. The definition of "undertaking" was debated, with the Union of India suggesting a broad interpretation that included potential future activities. 3. Validity of the Merger Scheme: The learned single judge of the Bombay High Court had previously granted sanction to the merger scheme without requiring Central Government approval. This decision was challenged by the Union of India, which argued that the transferor-company's activities, such as investing compensation amounts and making short-term loans, constituted business activities under the Monopolies Act. Court's Reasoning and Judgment: The court referred to previous judgments, notably the Division Bench of the Bombay High Court in Union of India v. Tata Engineering and Locomotive Co. Ltd. and the Supreme Court's decision in Carew and Company Ltd. v. Union of India. These cases established that mere capacity or intention to carry on business in the future does not qualify an entity as an "undertaking" under the Monopolies Act unless it is engaged in production or services in the present or has done so in the past. The court noted that the transferor-company's main business was acquired by the government, and its subsequent activities of investing compensation amounts did not indicate an intention to resume business. The decision to amalgamate with the transferee-company further demonstrated a lack of intent to continue business independently. The court emphasized that the definition of "undertaking" must be contextually interpreted, and an entity not engaged in actual production or services at the material time does not fall within the purview of the Monopolies Act. The majority view in the Supreme Court's Carew case supported this interpretation, rejecting the Union of India's broad contention. Conclusion: The court concluded that the transferor-company did not qualify as an "undertaking" under the Monopolies Act at the time of the merger petition. Therefore, the Central Government's approval was not required. The appeal was dismissed with costs, upholding the learned single judge's order granting sanction to the merger scheme.
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