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TMI Blog1984 (5) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... ions enumerated in clause (b) of sub-s. (1) of s. 72A of the I.T. Act, 1961 (hereinafter referred to as " the Act "). The petitioner has also prayed for a direction to opposite party No. 2, the Union of India, to issue a declaration under s. 72A(1) of the Act. Some admitted facts and events necessary in the context of a decision in the case may be briefly stated hereunder : On July 1, 1978, the petitioner-company acquired controlling interest in Messrs Kalinga Tubes Ltd. after receiving due permission under s. 372(4) of the Indian Companies Act, 1913. On August 8, 1979, the petitioner-company filed a petition under s. 72A(3) of the Act with the Specified Authority for approval of the proposed amalgamation of Messrs Kalinga Tubes Limited w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roposed amalgamation was approved by the competent authority under the Monopolies and Restrictive Trade Practices Act and on December 11, 1981, the Orissa High Court sanctioned the amalgamation of Messrs Kalinga Tubes Limited with the petitioner-company to be effective from January 1, 1979. On December 31, 1981, the Specified Authority informed the petitioner that the authority was satisfied that if the amalgamation was effected in accordance with the scheme of amalgamation, it would be in a position to recommend to the Central Government that the conditions referred to in s. 72A(1) of the Act were fulfilled. On January 15, 1982, the petitioner made an application under s. 72A(1) to the Specified Authority for making necessary recommendatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of loss of production and employment, and also waste of valuable capital assets. Experience has shown that taking over of such units by Government is not always the most satisfactory or the most economical solution. A more effective course would be to facilitate the voluntary amalgamation of sick industrial units with sound ones by providing certain incentives and by removing impediments in the way of such amalgamation. It is accordingly proposed to provide that where an amalgamation is accepted by the Central Government to be in public interest, the accumulated losses and unabsorbed depreciation of the amalgamating company will be allowed to be carried forward and set-off in the hands of the amalgamated company. " Thus on and fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made under orders of the court with effect from January 1, 1979, and, admittedly, the pre-conditions prescribed in clauses (a) and (b) of s. 72A(1) having been satisfied at that point of time, the Specified Authority committed gross error of law in not recommending the case of the petitioner to the Central Government on the ground that there had been a diversification of the industry in the year 1983. According to the learned counsel, the Specified Authority had taken irrelevant materials into consideration which have vitiated the impugned order. The further contention of the learned counsel is that diversification of the industry is permissible under the guidelines issued by the Central Government and in this particular case the Central G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified Authority is to be satisfied as to the existence or non-existence of the pre-conditions as provided in clauses (a) and (b) of s. 72A(1) of the Act. To us it is clear that the Central Government has to apply its mind to the recommendation as well as other relevant factors and must have its own satisfaction as to the fulfilment of the pre-conditions prescribed in clauses (a) and (b) of s. 72A(1). It is, therefore, open to the Central Government to override the recommendation of the Specified Authority and come to its own conclusion if it is satisfied that on the materials on record, the preconditions provided for in clauses (a) and (b) of s. 72A(1) of the Act are satisfied in a given case. Admittedly, the Central Government has not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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