9911796707
TMI Blog1978 (10) TMI 111X X X X Extracts X X X X X X X X Extracts X X X X ..... to 28th of August, 1974, 51 per cent. of its equity shares were held by W.W. Sprague and Company Ltd. (W.W.S. Ltd.) which is a 100 per cent. subsidiary of Metal Box Company Overseas Ltd. (M.B.O. Ltd.). Both these companies are incorporated under the English Companies Act and they are holding companies. After 28th of August, 1974, the extent of equity shares held by W.W.S. and M.B.O. in the petitioner was reduced to 40 per cent. M.B.O. Ltd. also holds 60.26 per cent. equity shares of Metal Box Company of India Ltd. (M.B. India Ltd.), respondent No. 3, which in turn holds 50.99% equity shares in Kosmek Plastics Manufacturing Ltd. (Kosmek Ltd.). Both these companies, M. B. India Ltd. and Kosmek Ltd., are companies incorporated under the provisions of the Companies Act, 1956. M.B. India Ltd. carries on business in the manufacture of packages from tin plates, aluminium, paper and board, etc., as also packaging machinery. The petitioner's contention is that never had the petitioner and M.B. India Ltd. engaged in anything in the nature of a common adventure and that there have never taken place any business transactions or dealings between them. This fact has not been disputed from the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been found that not less than one-third of its equity shares was held by a subsidiary of the holding company of M.B. India Ltd. and that fact was sufficient to make the petitioner and M.B. India Ltd. inter-connected undertakings within the meaning of clause ( vii ) of Expln. 1 to section 2( g )( iii )( c ) of the Act. Thus, the petitioner was liable to be registered under the provisions of section 26 of the Act and it was asked to take necessary steps in that regard failing which penal action would follow. As noted above this order forms the subject-matter of challenge in the present writ petition and the prayer is that a writ, order or direction in the nature of certiorari be issued to respondents Nos. 1, 2 and 4 setting aside or quashing the said order as also a writ in' the nature of mandamus commanding them and each of them to forbear from requiring the petitioner to get its undertaking registered under section 26 of the Act. Before dealing with the submissions made by the parties' counsel it would be necessary to refer to the relevant provisions of the Act. Chapter III of the Act deals with "concentration of economic power", the object of the Act being: "An Act to prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than one-third of the total voting power with respect to any matter relating to each of the two bodies corporate is exercised or controlled by the same individual whether independently or together with his relatives or the same body corporate (whether independently or together with its subsidiaries)..........". On a plain reading of this clause of Expln. 1, it would appear that the following conditions must co-exist before it can be invoked : (1)Not less than one-third of the total voting power of two bodies corporate should be exercised or controlled by the same individual or the same body corporate ; (2)Such exercise or control of the voting power should be with respect to any matter relating to each of the two corporate bodies, and (3)Such exercise or control of not less than one-third of the total voting power of the two bodies corporate should be by the same individual or the same body corporate independently or together with his relatives or its subsidiaries, as the case may be. As for the application of this provision to the facts of the instant case it is not disputed that the petitioner and M.B. India Ltd. are two bodies corporate. W.W.S. Ltd. can be said to e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of exercise of power the memorandum and articles of association are necessary while for the persons who exercise the voting power the relevant document is the register of shareholders. According to Sri Jinwala, the learned counsel for the petitioner, the impugned order was passed without examining these two documents. If that had been done, it could have been found out that M.B.O. Ltd. does not exercise or control any part of the voting power of the petitioner. It does not hold any equity share whatsoever independently in the petitioner-company. Further, according to the learned counsel, control may be of various kinds, that is, legal or factual, contractual or otherwise, and hence it is only the register of shareholders which can show the persons who control the voting power. In order to illustrate his submission the learned counsel invited our attention to two English cases. In IRC v. J . Bibby and Sons Ltd. [1945] 1 All ER 667; [1946] 14 ITR (Supp.) 7 (HL) certain shares were held by some of the directors of the respondent-company as trustees and the question was whether the expression "controlling interest" occurring in the Finance (No. 2) Act, 1939, referred to the dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pply ; while if it does not hold any share itself but holds more than one-third shares through its subsidiary according to the interpretation advanced on behalf of the petitioner, this provision would not apply. Such a situation would lead to an absurd result. Thus, according to Sri Bajpai, commonsense would only bear the interpretation placed by him. We are not inclined to accept the above submission because there is no ambiguity whatsoever in the provision contained in clause ( vii ) aforesaid and hence we cannot take recourse to the preamble of the Act with a view to spell out the intention of the Legislature. As has been emphasised by us above, it is to be borne is mind that M.B.O. Ltd. and W.W.S. Ltd. are companies registered in England. They are not governed by the provisions of the Act and even if there is any concentration of economic power to the common detriment by the holding of these companies, the provisions of the Act have no control over the same. Apart from this, the words used are 'independently" or "together" and we do not think that the word "together" can be taken to mean "along with" or "through". In a sense, the words "independently or together" have been us ..... X X X X Extracts X X X X X X X X Extracts X X X X
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