Skip to content


Triveni Engineering Works Ltd. Vs. Union of India - Court Judgment

LegalCrystal Citation
SubjectMRTP
CourtDelhi High Court
Decided On
Case NumberCivil Writ Appeal No. 65 of 1972
Judge
Reported inILR1974Delhi282
ActsMonopolies and Restrictive Trade Practices Act, 1969 - Sections 2; Income tax Act, 1961 - Sections 207; Companies Act, 1956 - Sections 6; Constitution of India - Article 226
AppellantTriveni Engineering Works Ltd.
RespondentUnion of India
Advocates: Ved Vyas,; J.K. Kohli,; V.K. Bahl,;
Cases ReferredN. K. Vasuraj v. Delhi Development Authority and
Excerpt:
(i) monopolies and restrictive trade practices act (1969) - section 2, clause (w) & section 20 - 'value of assets' - meaning of.;that the words 'value of its assets' used in clause (w) of section 2 in relation to an undertaking means value of all assets of the company. the value of all these assets is not to be the market value or the written up or written down values in a balance-sheet but the book value or the value as given in the books of account of the company. the only deductions permissible from this book value are, depending upon the type of an asset, provision for depreciation or for renewals, or diminution in value. to say that the only value of an asset subject to a mortgage is the value of the equity of redemption would be incorrect. similarly, to say that the value of an.....prakash narain, j. (1) this petition under article 226 of the constitution of india raises interesting questions of law in relation to the implementation of and the rights and liabilities arising under the monopolies and restrictive trade practices act 54 of 1969, hereinafter for convenience referred to as the monopolies act, and the construction of its provisions.(2) petitioner no. 1, the trieveni engineering works ltd., is a public limited company incorporated under the companies act, 1956. petitioner no. 2, shri kanhaya lal sawhney, is a director of petitioner no. 1 with effect from february 26,1971. he was previously a director of the upper india sugar mills limited but on that company's amalgamation with petitioner no. 1 became the latter's director. the amalgamation of the two.....
Judgment:

Prakash Narain, J.

(1) This petition under Article 226 of the Constitution of India raises interesting questions of law in relation to the implementation of and the rights and liabilities arising under the Monopolies and Restrictive Trade Practices Act 54 of 1969, hereinafter for convenience referred to as the Monopolies Act, and the construction of its provisions.

(2) Petitioner No. 1, the Trieveni Engineering Works Ltd., is a public limited company incorporated under the Companies Act, 1956. Petitioner No. 2, Shri Kanhaya Lal Sawhney, is a Director of petitioner No. 1 with effect from February 26,1971. He was previously a Director of the Upper India Sugar Mills Limited but on that company's amalgamation with petitioner No. 1 became the latter's Director. The amalgamation of the two companies came about as a result of a formal order of this court dated February 8, 1971 and was effective as from the close of business hours on January 31, 1970.

(3) The Monopolies Act came into force on June 1, 1970. By virtue of the provisions of Section 26 of this Act, inter alia, inter-connected companies to which Part-A of Chapter Iii of the Monopolies Act applied were to get themselves registered within sixty days of the commencement of the Act or the date on which that part became first applicable to them or within such further time as the Central Government may, on sufficient cause being shown, allow. Section 20 in Part-1 of Chapter Iii of the Monopolies Act provides that Part-A applied to, inter alia, an undertaking if the total value of its own assets, or its own assets together with the assets of inter-connected undertakings, is not less than 20 crores of rupees. Petitioner No. 1 by itself was not an undertaking which fell within the ambit of Section 20 of the Monopolies Act. By a letter No. 21/ 24/71-M(11) dated July 9, 1971 the Central Government wrote to the petitioner company that on the basis of information available with the Company Law Board it appeared to the Government that Section 20 of the Monopolies Act is, prima facie, applicable to the undertaking of the petitioner company. Along with this letter the petitioner company was also supplied with a brief summary of the information collected by the Central Government. It was mentioned in this letter that it had been noticed that the petitioner company had not applied for registration under section 26 of the Monopolies Act and so, it was called upon to show cause within 21 days of the date of the aforesaid letter why action under section 48(2) of the Act should not be taken against it. According to the information supplied to the petitioner company the following companies were being regarded as interconnected with the petitioner-company, namely,

(I)R. B. L. Tirath Ram Shah (India) Ltd.

(II)The Ganga Sugar Corporation Ltd.

(III)The Mahalakshmi Sugar Mills Co. Ltd.

(IV)The Ramkola Sugar Mlils Co. Ltd.

(V)The Upper India Sugar Mills Ltd.

(VI)The Rewari Electric Supply & General Industries Ltd.

(VII)R. B. L. Tirath Ram Shah Isher Das Ltd.

Thus, companies were being regarded as inter-connected companies. The relevant year for consideration of these eight companies as inter-connected companies was given as 1969. The petitioners contest the stand of the Central Government and have filed this petition except for the Ramkola Sugar Mills Co. Ltd. and the Upper India Sugar Mills Ltd., the other five companies are made respondents. Ramkola Sugar Mills Co. Ltd. has not been made a respondent because it was amalgamated with the Ganga Sugar Corporation Ltd. with effect from November 1, 1969 and the Upper India Sugar Mills Ltd. was amalgamated with the petitioner company as noticed earlier, both under orders of the court. The value of the assets of the inter-connected companies was mentioned in the annexure to the said notice dated July 9, 1971 to be Rs. 21.55 crores.

(4) Petitioner No. 1 replied to the show cause notice by its letter dated July 9, 1971. It was contended that the value of assets of all the companies alleged to be inter-connected was only Rs. 19,12,42,979.00. It was further contended that although Triveni Engineering Works Ltd., Upper India Sugar Mills Ltd. and the Rewari Electric Supply & General Industries Ltd. were inter-connected companies but so far as the other companies were concerned, they were not inter-connected with Triveni Engineering Works Ltd. or any of the other two companies above-mentioned. Statements showing the gross and net assets of the various companies were submitted along with this reply. According to the contention of the company the value of assets of an undertaking or inter-connected companies had to be the net value of assets. It was, thereforee, submitted that the show cause notice be withdrawn. Another representation dated August 3, 1971, was also submitted by petitioner No. 1 to the Central Government, further explaining its position and dilating upon its contentions. In this representation a request was also made that a personal hearing may be granted. Yet another representation dated August 6, 1971 to the same effect as the earlier representations was made by petitioner No. 1 to the Central Government. Along with this representation details regarding classification of shareholdings of equity shares in petitioner No. 1 of various persons was given as also a list of Directors of the company from 1967 to 1970. This list was in amplification of what had been submitted by petitioner No. 1 in its representation dated July 19, 1971. A list of the Directors of the other seven companies was also submitted to the Central Government along with the copies of relevant resolutions. An affidavit of its Chartered Accountant, Shri S. P. Marwah, was submitted with regard to the assets of the company.

(5) It seems a personal hearing was afforded on the representations made in reply to the show cause notice issued by the Central Government. At this hearing a large number of documents and written submissions were filed. The case of petitioner No. 1 was argued before Shri G. A. Shah, Joint Secretary to the Government of India, Department of Companies Affairs, Company Law Board, New Delhi. There was some other correspondence also exchanged between the Company Law Board and petitioner No. 1 but it is not necessary to refer to it. Ultimately petitioner No. 1 received a letter No. 21/24/71-M(II) dated November 1, 1971 rejecting the contentions of the petitioner and advising it that it should submit an application for registration within 21 days from the .date of the issue of this letter failing which prosecution was to be launched. As something will turn on this letter it will be advantageous to read it in full. It reads :

'To

THETriveni Engineering Works Limited,

NATIONALInsurance Building,

1STFloor, 5, Parliament Street,

NEWDelhi.

SUBJECT: Registration under section 26 of the Mrtp Act, 1969.

Sir,

I am directed to refer to the correspondence ending with this Department's letter of even number dated the 18th August, 1971 and the hearing given in this regard in Shri G. A. Shah, Joint Secretary's room at 3.30 P.M. on 8th September, 1971 and to say that the Central Government has carefully examined the contention regarding value of assets vis-a-vis advance payment of income-tax. It may be mentioned that advance payment of tax is one of the items appearing under the head 'current assets' on the assets side of the balance-sheet and unless some provision for dimunition has been shown in the books of accounts, no deduction can be claimed from the gross value of the assets. More over there cannot be any dimunition in the value of advance payment of taxes.

In view of the fact that your undertaking is inter-connected with other companies as indicated in this Department's letter of even number dated the 14th July, 1971 and since the value of assets of all these inter-connected undertakings exceed Rs. 20.0 crores, your undertaking is registerable under section 26 of the M.A.T.P. Act, 1969.

You are, thereforee, advised to submit your registration applicable within 21 days from the date of issue of this letrer failing which necessary prosecutions will be launched against you for default in complying with the provisions of Section 26 without any further intimation to you.

Yours faithfully,

SD/-

S.S. Singh,

Under Secretary to the Govt. of India.

Petitioner No. 1 on receipt of the said letter dated November 1, 1971, made a representation to the Central Government submitting that advance payment of income-tax which was shown in the balance-sheet under the head 'current assets' on the 'assets' side of the balance-sheet has wrongly been regarded as an asset of the company ignoring the provision made for it in the books of account of the company which provision has been shown on the 'liabilities' side of the balance-sheet. It was further contended that in any case advance income-tax whether provision for it is shown in the balance-sheet on the assets' side or liabilities side cannot be included in the value of assets of the company. This representation further contended that 'diminution' in the value of assets contemplated by section 2(w) of the Monopolies Act was not required to be shown in the books of account of the company but deduction for it had to be made from the value of assets. A further personal hearing was asked for to clarify the stand of the petitioner. In reply to this representation petitioner No. 1 was informed by the Central Government by letter No. 21/24/71-M(11) dated December 29, 1971 that the 'position regarding advance payment of taxes vis-a-vis value of assets has been explained to you vide this Department's letter dated November 1, 1971. You are, thereforee, advised to submit your application for registration under section 26 of the Act before January 21, 1972. In case the application is not received by that date, you will render yourself liable for action under section 48 without any further intimation to you.'

(6) The petitioners thereupon filed the present writ petition as, obviously further representations to the Central Government could be of no avail.

(7) The petitioners' case in this court is that the opinion formed by the Central Government that petitioner No. 1 and its alleged interconnected companies were bound to register themselves under section 26 of the Monopolies Act and on failure to do so were liable to prosecution under section 48 of the said Act was formulated or based on incorrect reading of law, wrong appreciation of the facts placed before the Central Government and other extraneous considerations. In consequence, it is contended, that the Central Government has no power or jurisdiction to ask the petitioner company to get itself registered under section 26 of the Monopolies Act, or threaten prosecution as is evident from a reading of the impugned notices dated November 1, 1971 and December 29, 1971. The contention is that the impugned notices are wholly arbitrary and illegal. The points raised by the petitioner in support of its challenge of Governmental action are :

(A)'Value of Assets' as contemplated by section 2(w) of the Monopolies Act means net value of assets and not gross-value;

(B)Some meaning has to be attached to the term 'depreciation' and 'diminution' mentioned in section 2(w) of the Act.

(C)In finding out whether undertakings are inter-connected within the meaning of clause (g) of Section 2 of the Monopolies Act it has to be seen whether all the inter-connected undertakings are owned and controlled by the same person or group of persons meaning thereby actually owned or effectively controlled by the same person or group of persons.

(D)Advance payment of income-tax cannot be regarded as an asset of the company.

(E)It having been held in the amalgamation orders referred to earlier that Monopolies Act was not attracted in those amalgamations, those findings are binding on the Central Government and the Central Government cannot now contend otherwise.

(8) An affidavit of Lachhman Dass s/o Tara Chand was filed by way of return to the writ petition on behalf of respondent No. 6, Ganga Sugar Corporation Ltd. This in substance really supported the petition. Respondents 1 to 3 field a joint return to the rule nisi which is contained in the affidavit of Shri S. Balaraman, Under Secretary to the Government of India, Department of Company Affairs, New Delhi. It is contended on behalf of respondents 1 to 3 that a full hearing was given to the petitioners on their contentions but no cogent or convincing arguments were adduced to satisfy the Central Government that petitioner No. 1 was not liable to have itself registered under section 26 of the Monopolies Act. The eight undertakings were found to be inter-connected in the following manner :

(I)M/s. Mahalakshmi Sugar Mills Co. Ltd., M/s. R. B. L. Tirath Ram Shah Isher Dass Ltd. and M/s. Ganga Sugar Corporation Limited were found to be undertakings with the same management. S/s. K. L. Sawhney and his two nephews D. G. Sawhney and P. C. Sawhney, who are brothers, held majority Directorships in the said three companies and, 'therefore, they seemed to be under the same management within the meaning of section 370 of the Companies Act.'

(II)M/s. R. B. L. Tirath Ram Shah (India) Limited was shown under the same management in the balance-sheet and was, thereforee, inter-connected.

(III)M/s. Upper India Sugar Mills Limited was inter-connected with M/s. Mahalakshmi Sugar Mills Co. Ltd. as two brothers are Managing Directors of these two companies.

(IV)M/s. Triveni Engineering Works Limited became a subsidiary of M/s. Upper India Sugar Mills Ltd. w.e.f. January 31, 1970 and so, was inter-connected in the calendar year 1970.

(V)M/s. Ramkola Sugar Mills Co. Ltd. being a subsidiary of M/s. Ganga Sugar Corporation Ltd. was thus interconnected.

(VI)M/s. Rewari Electric Supply & General Industries Limited being a subsidiary of M/s. Upper India Sugar Mills Ltd. was, accordingly, inter-connected.

(9) On the question of computation of the value of assets the stand of respondents 1 to 3 was that advance taxes were in the nature of deposits with the Central Government and so, had to be regarded as an asset of the company. According to these respondents it is the gross value of assets of inter-connected companies which had to be taken into account in forming an opinion whether the said companies were liable for registration under section 26 of the Monopolies Act.

(10) In paragraph 13 of the return justification was given to consider two brothers being Managing Directors of two different companies being regarded as inter-connected companies. It was further averred that 'at least nine persons holding surnames as Sawhney including Shri K. L. Sawhney and Shri D. C. Sawhney, appear as shareholders controlling 39.3 per cent of the equity. These persons are all presumed to be family relatives of Shri K. L. Sawhney and his two nephews, Shri P. C. Sawhney and Shri D. C. Sawhney who held directorships in the petitioner company till recently'. The names of these nine persons were set out. Apart from the specific contention the stand taken by the Central Government on its interpretation of the various provisions of the Monopolies Act was reaffirmed

(11) The petitioners filed a rejoinder to the counter-affidavit filed on behalf of respondents 1 to 3. It is the affidavit of Ram Lal Sawhney. Apart from reaffirming the earlier stand of the petitioners, by this affidavit, it was specifically denied that nine persons having surnames as 'Sawhney' were all related to each other. It was averred that the 'Sawhney' family and its relatives held 34 per cent of the total capital of the first petitioner and not 39 per cent. Shri P. N. Sawhney, Shri Bhumeshwar Sawhney, Mrs. Deepika Sawhney, Shri K. Raj Sawhney, Mrs. Shiela Devi were denied to be, in any way, related to Shri P. C. Sawhney, Shri D. C. Sawhney or Shri K. L. Sawhney as per the definition of the term 'relative' in section 6 of the Companies Act, 1956. It was urged that, accordingly, their holdings could not be clubbed with the holdings of petitioner No. 2 and his relatives to show effective control of a group of persons. It was denied that the 'Sawhneys' were controlling more than 52 per cent of the equity capital as had been contended in the return of respondents 1 to 3.

(12) The balancing of free trade, commerce and industry with prevention of concentration of economic power is a perennial problem in any democratic society, at any time. In a country, like ours, with a developing society and a democratic form of Government the problem becomes even more acute. On the one hand our Constitution secures to all the citizens equality of status and opportunity, justice, social, economic and political, while on the other the Directive Principles of State Policy in Part Iv of the Constitution lay down in Articles 38 and 39 that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may a social order in which justice, social, economic and political in all spheres of national life and the ownership and control of the material resources of the community are so distributed as best to subserve the common good besides ensuring that the operation of the economic system does not result in concentration of wealth and means of production to the common detriment. In order to attain these basic objectives and ensuring a democratic way of life where there is no exploitation, which may be the result of private monopolies or may be the outcome of concentration of the economic power, a Monopolies Enquiry Commission was appointed by the Central Government in 1962 to enquire into the extant of concentration of economic power in private hands and the prevalance of monopolistic and restrictive trade practices in important sectors of economic activity in the country and suggest legislative and other measures that might be considered necessary to protect essential public interest. The Commission submitted its report in October, 1965. It was noticed that no responsible democratic system to-day advocated absolute freedom in trade, Commerce or industry or in other words pure monopoly nor did the system stand for pure competition. A via media, thereforee, had been evolved in most democratic countries of the world including U. S. A., U. K., France and Sweden. It was observed by the Commision that there was no need to strike all concentration of economic power as such but should be done only when it becomes a menace to the best production and fair distribution. Monopolistic and restrictive practices must be curbed except when they conduce to the common good. It was after consideration of this report that the Monopolies Act was enacted by the Parliament. This statute aims at State Control to keep business enterprise healthy and free and to provide a legal and economical environment hospitable to competition. The statute does not deal with all aspects of monopolies and restrictive trade practices but mainly regulates expansion, mergers, amalgamations and starting of new undertakings. There are some provisions to provide control over and prohibiting monopolistic and restrictive trade practices. It would be incorrect to think that the Act is directed only against what is commonly known as 'big business'. In short, this statute is a first step towards securing to the citizens the establishing of an economic system which does not result in concentration of wealth and means of production to the common detriment. Indeed the preamble to the Act lays down: 'An Act to provide that the operation of the economic system does not result in the concentration of economic power to the common detriment, for the control of monopolies, for the prohibition of monopolistic and restrictive trade practices and for matters connected therewith or incidental thereto.' it is in this light that the powers of State and rights and liabilities of the parties have to be considered.

(13) Before I proceed to deal with the contentions of the parties it is necessary that some of the relevant provisions of the Monopolies Act, the Companies Act, 1956 and the Income-tax Act, 1961 are noticed.

(14) The relevant provisions for our purposes of the Monopolies Act may first be read.

CLAUSE(g) of Section 2 reads as under :

'INTER-CONNECTEDUndertakings' means two or more undertakings which are inter-connected with each other in any of the following manner, namely :

(I).... ....

(II).... ....

(III).... ....

(IV).... ....

(V).... ....

(VI)if the undertakings are owned or controlled by the same person or group of persons.

(VII).... ....

CLAUSE(w) of Section 2 reads as under :

'(W)'Value of Assets', in relation to an undertaking, means the value of its assets as shown in its books of account after making provision for depreciation or for renewals, or diminution in value ;

CLAUSE(y) of Section 2 reads as under:

(Y)words and expressions used but not defined in this Act and defined in the Companies Act, 1956, have the meanings respectively assigned to them in that Act.

SECTION 20 reads as under:

UNDERTAKINGSto which this part applies :

THISpart shall apply to

(A)an undertaking if the total value of

(I)its own assets, or

(II)its own assets together with the assets of its inter connected undertakings, ISnot less than twenty crores of rupees.

(B)EXPLANATION.The value referred to in this section shall be

(I)in the case of an undertaking referred to in clause (a) or clause (b), as the case may be, the value of its assets on the last day of its financial year which closes during the callendar year immediately preceding the calendar year in which the question arises as to whether this Part does or does not apply to such undertaking; and

(II)in the case of an inter-connected undertaking, the value of its assets on the last day of its financial year which closes during the calendar year immediately preceding the calendar year in which the question arises as to whether this Part does or does not apply to the undertaking referred to in clause (a) or clause (b).

SECTION 23 reads as under:

Merger, and take over :

(1)Notwithstanding anything contained in any other law for the time being in force,

(A)no scheme of merger or amalgamation of an undertaking to which this Part applies with any other undertaking,

(B)no scheme of merger of, amalgamation of two or mure undertakings which would have the effect of bringing into existence and undertaking to which clause (a) or clause (b) of Section 20 would apply.

SHALLbe 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 or amalgamation with any other undertaking, or a scheme of merger or amalgamation is proposed 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 section 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 pres- cribed form with a copy of the scheme annexed thereto, for the approval of the scheme.

(3)....

(4)....

(5)....

(6)....

(7)....

(8)....

(9)....

SECTION 26 reads as under:

S. 26. Registration of Undertakings to which Part A applies :

(1)Every undertaking to which this Part applies at the commencement of this Act or to which the provisions of that Part become applicable thereafter, shall, within sixty days from such commencement or the date on which that Part becomes first applicable to it, or within such further time as the Central Government may, on sufficient cause being shown, allow, make an application (in such form and containing such particulars as may be prescribed) to the Central Government for its registration as such undertaking.

(2)The Central Government shall, on receipt of the application referred to in sub-section (1), forthwith enter the name of the undertaking in a register to be maintained for the purpose and issue to the undertaking concerned a certificate of registration containing such particulars as may be prescribed.

(3)Any undertaking which has ceased to be an undertaking to which this Part applies may, at any time after such cesser, apply to the Central Government for cancellation of the registration and the Central Government may, after making such inquiry as it may think fit, cancel the registration of such undertaking and notify such cancellation in the Official Gazette.

SECTION 28 reads as under :

S. 28. Matters to be considered by the Central Government before according approval:

(15) In exercising its power under Part A or Part B of this Chapter, the Central Government, or, as the case may be, the Commission, shall take into account all matters which appear in the particular circumstances to be relevant and, among other things, regard shall be had to the need consistently with the general economic position of the country

(A)to achieve the production, supply and distribution, by most efficient and economic means, of goods of such types and qualities, in such volume and at such prices as will best meet the requirements of the defense of India, and home and overseas markets ;

(B)to have the trade organized in such a way that its efficiency is progressively increased ;

(C)to ensure the best use and distribution of men, materials and industrial capacity in India ;

(D)to effect technical and technological improvements in trade and expansion of existing markets and the opening up of new markets ;

(E)to encourage new enterprises as a countervailing force to the concentration of economic power to the common detriment ;

(F)to regulate the control of the material resources of the community to subserve the common good ; and to reduce disparities in development between different regions and more especially in relation to areas which have remained markedly backward.

SECTION 29 reads as under :

S. 29. Opportunity of being heard :

(16) Before making an Order under this Chapter, the Central Government shall give a reasonable opportunity of being heard to any person, who is, or may be, in its opinion, interested in the matter under the consideration of that Government.

SECTION 48 reads as under :

S. 48. Penalty for failure to register agreements:

(1)If any person fails, without any reasonable excuse, to register an agreement which is subject to registration under this Act, he shall be punishable with fine which may extend to five thousand rupees, and where the offence is a continuing one, with a further fine which may extend to five hundred rupees for every day, after the first, during which such failure continues.

(2)If any undertaking, to which Part A of Chapter Iii applies, fails, without any reasonable excuse, to make an application under section 26, to register itself as an undertaking to which that Part applies, then,

(A)the undertaking, where it is a company, or

(B)every partner of the undertaking, where it is a firm, or

(C)where it is not a company or a firm, every person who owns or controls the undertaking, shall be punishable with fine which may extend to one thousand rupees, and where the offence is a continuing one, with a further fine which may extend to fifty rupees for every day, after the first, during which such failure continues.

SECTION 55 reads as under :

S. 55 Appeals :

Any person aggrieved by any order made by the Central Government under Chapter Iii or Chapter Iv, or, as the case may be, or the Commission under section 13 or section 37, may, within sixty days from the date of the order, prefer an appeal to the Supreme Court on one or more of the grounds specified in section 100 of the Code of Civil Procedure, 1908.'

(17) The relevant provisions of the Companies Act, 1956, in this case may now be read. Section 6 which defines 'relatives' reads as under :

'6.A person shall be deemed to be a relative of another if, and only if,

(A)they are members of a Hindu undivided family ; or

(B)they are husband and wife ; or

(C)the one is related to the other in the manner indicated in Schedule IA.)'

(18) I may now advert to the relevant provisions of Income-tax Act, 1961. The relevant provisions are sections 207, 208, 209, 210, 212, 214, 215, 216, 218, 219, 221 and 222.

(19) SEC. 207 provides that tax shall be payable in advance in accordance with the provisions of section 208 to 210 of this Act in the case of income other than income chargeable under the head 'current assets'. For brevity in the remaining sections this tax has been referred to as 'advance tax'. Section 208 creates a liability for payment of advance tax. Section 209 lays down how the advance tax is to be computed. Section 210 provides for an order being made by an Income-tax Officer for payment of advance tax and issue of a notice of demand after determination of tax by the Income-tax Officer. Section 212 lays down that any assessed who is required to pay advance tax by an order made under section 210 may give his own estimate and pay tax in advance accordingly. Section 214 and 215 respectively provide for payment of interest by the Government and the assessed on the excess amount of tax paid or shortfall to a certain extent in the tax paid on a regular assessment being made. Section 218 lays down that if any assessed does not pay on the specified date any Installments of advance tax that he is required to pay under section 210 and does not, before the date on which such Installment as is not paid becomes due, send under sub-section (1) or sub-section (2) of section 212 an estimate or a revised estimate of the advance tax payable by him he shall be deemed to be an assessed in default in respect of such Installment or Installments. There is a proviso that he would not be deemed to be an assessed in default in respect of any amount of which the payment is deferred under section 213 until after the date communicated to him by the Income-tax Officer under that section. Section 221 provides penalty payable by an assessed in default or deemed to be in default in making payment of advance tax. Section 222 authorises recovery of advance tax by coercive process.

(20) I now come to the contentions of the parties and the interpretation to be placed on the various provisions of the Monopolies Act keeping in view the provisions of the Companies Act and the Income-tax Act.

(21) Clause (g) of section 2 has already been read. Petitioner No. 1 and seven other companies are claimed by the Central Govt. to be inter-connected companies under sub-clause (vi) of this clause. I am thereforee not called upon to interpret the entire provision. According to the correspondence between the parties placed on the record and the avernments in the return filed on behalf of respondents 1 to 3, the inter-connected is claimed by the Central Government on two grounds. The first is that 'Sawhneys' are controlling more than 52 per cent of the equity capital and the second is that inasmuch as the petitioner-company is a Director controlled company of which the Directors are Sawhneys as on June 1, 1970, there is inter-connection between the eight undertakings. In other words the petitioner-company is sought to be brought within the ambit of the Explanationn to clause (g) of section 2 of the Monopolies Act. Apart from the fact that the relevant year for the purposes of section 26 being attracted is 1969 and not 1970 and the Government cannot adopt data of two different years, it is evident that the approach of the Government is based on, presumably, the assumption that 'Sawhneys' control more than 52 per cent of the equity capital. This aspect was not disclosed to the petitioners at the hearing after the show cause notice and was not mooted during the proceedings when the Central Government was holding enquiry about the prina facie opinion it had first formulated about inter-connection culminating in that opinion forming the basis of the impugned notices dated November 1, 1971 and December 29, 1971. According to clause (y) of section 2 of the Monopolies Act words and expressions used and not defined in this Act and defined in the Companies Act, 1956 have the meaning respectively assigned to them in that Act. The Explanationn to clause (g) of section 2 refers to 'relatives'. This term is not defined in the Monopolies Act and so, must have the same meaning as in section 6 of the Companies Act. It is stated on affidavit by the petitioners that out of all the persons mentioned by respondents 1 to 3 as being related, five are not related to the other four. thereforee, the equity holdings of these four persons cannot be clubbed with the holdings of the other four to contend that the said four and their 'relatives' hold 52 per cent of the equity capital and thus are owning and controlling as a group a particular undertaking. The opinion of the Central Government having been formed on collateral data or irrelevant data or incorrect data cannot, thereforee, be held to be an opinion framed correctly or with jurisdiction.

(22) The view that I have taken above makes it unnecessary for me to dilate on the question of the holding in relation to Ganga Sugar Corporation Ltd. vis-a-vis the interpretation to be given to the phrase 'inter-connected undertakings' in the present case.

(23) The next point to be considered is the meaning to be attached to the term 'value of assets' in clause (w) of section 2 of the Monopolies Act. The contention on behalf of the Central Government is that what is to be taken into consideration is the gross value of the assets of an undertaking or inter-connected undertakings. I find petitioners' case is that it is the net value of assets which should be taken into account in determining whether an undertaking or inter-connected undertakings are liable to registration under section 26 of the Monopolies Act. To my mind neither of the contention's can be accepted. Clause (w) of section 2 speaks neither of gross value nor of net value. It speaks of the value of assets as shown in the books of account from which the permissible deductions are provision for depreciation or renewal, or diminution in value. In other words the value of all the assets of an undertaking as given in its books of account is to be first noted and from the amount so arrived at, deduction is to be made for provisions made for depreciation or renewals or diminution in value, according to the nature of a particular asset. These values also have to be taken with reference to a particular year and not for different years. There is no warrant in the statute for arriving at the value of assets by taking into consideration a balance-sheet or balance-sheets. The approach of the Central Government, to my mind, seems to be incorrect or misdirected inasmuch as reliance has been placed by it on the balance sheet as is evident from a reading of the communication dated November 1,1971. It may be said that a balance-sheet reflects the position of the company according to its hooks. This may or may not be so. In the present case it appears only the balance-sheets were taken into consideration, despite the petitioners' bringing it to the notice of the Company Law Board in particular by letter dated November 25, 1971, that figures as given in the books of account be taken and considered. It has not been urged or averred by respondents 1 to 3 that they formed an opinion about the value of assets by looking at or examining the books of account. The opinion of the Central Government, thereforee, was formulated on the basis of documents not relevant or permissible under the law.

(24) It was urged by Mr. Veda Vyasa, the learned counsel for the petitioners, that the Government's stand that gross assets have to be taken into account, reiterated in the return filed by respondents I to 3, is wholly untenable as the very definition in clause (w) of section 2 would show that it is the value arrived at by deducting the liabilities from the assets which should govern the case as it is done for the purposes of Income-tax Act and under the provisions of the Companies Act. The argument of the learned counsel really is what was observed by Cotton, L.J. in re : Pyle Works, 1890 (44) CD534. Cotton, L.J. was considering in that case the meaning of the term 'asset' referred to in sections 98 and 133 of the English Companies Act, 1862. In that context the learned Law Lord posed to himself a question as to what are to be considered as 'assets' or 'property' of the company? His opinion was that the 'assets' or 'property' of the company which are refered to in those sections must mean that portion of the capital which the directors have not actually dealt with before the winding-up commenced. That portion of the capital, being the property of the company, must be got in by the liquidator ; but if the legal estate, so to speak, is outstanding in a mortgage, then the only portion of that property which the liquidator can look upon as a fund in the winding-up for payment of the debts of the creditors will be the equity of redemption, or in other words, that portion of the property remaining after the satisfaction of all the obligations which the directors have properly thrown upon this part of the property of the company. thereforee, in my opinion, although the assets of the company must, under sections 98 and 133, be applied the liquidator in payment paripassu of all the creditors then unpaid, yet property which is in mortgage is not, in my opinion, 'assets' of the company in the sense in which that is to be done, namely, free assets, assets which can be dealt with by the company in payment of their debts without regard to those who have a mortgage on this portion of the property of the company.' Perhaps it was in the context of this view of the law under the Companies Act that the argument was advanced of behalf of the petitioners that if goods are pledged or mortgaged then only the value minus the amount of pledge or the equity of redemption would be the assets of a company. I cannot accept this contention as in the present case how the value of assets is to be arrived at is clearly given in clause (w) of section 2 and there is no justification for importing concepts of the value of assets in liquidation to arrive at the value of assets for the purposes of the Monopolies Act.

(25) In Lever Bros. and Unilever, Ltd. v. Inland Revenue Commissioners, (1945) 1 All E.R. 145, the Court of Appeal construed the word 'asset' to find out whether contribution to a superannuation fund to equalise benefits for employees made by the company was acquisition of an asset or equalled to acquisition of an asset as against a mere advantage. It was observed that the term has a definite meaning in law as well as in business. A distinction was drawn between holding of an undertaking and acquisition of an asset. Securing of an advantage by paying to remove an easement of land was held not to amount to acquiring of asset. The result of the extinction of an easement on company's land may result in increasing the value of the land to justify writing up of its value in the balance-sheet by a corresponding amount but that was held to be quite different from acquiring of an asset. In other words, improvement of an existing asset by getting rid, for example, of a servitude which affects it is not the acquisition of an asset.

(26) In Maddox Properties Ltd. v. Klass (1946) 1 All. E.R. 486 the House of Lords affirmed the observations in the case of Lever Bros and Unilever Ltd., referred to above.

(27) More recently in re: Barlerean Enterprises Ltd., Mathies and Davies v. Down.

(1970) 2 W.L.R. 899 the Court of Appeal again construed the word 'asset' as used in sections 267, 309 and 319 of the English Companies Act, 1948. It was observed that the old concept given to this word prior to 1897 was no longer relevant and that property which is subject to charge forms part of the assets of the company which are applied first in payment of cost and expenses of winding up second in, payment of preferential claims and only third in payment of debenture holders. When there is a floating charge, legislature no longer regarded the property as belonging wholly to the debenture holders. In other words, the view taken was that what is the 'asset' of a company really depended upon the sense in which the word has been used by the legislature. I agree with Mr. R. M. Lal's submission that, as observed by Jenkins J., in re: No. 12 Regent Street, Oxford, (1948) 1 Ch.D. 735 there was no warrant for introducing limitations or qualifications in construing a provision of law based on concepts in other statutes. In this view of the matter, in my opinion, clause (w) of section 2 of the Monopolies Act has to be construed by itself without relying upon the concepts of the Companies Act or the Income-tax Act, particularly, when the legislature has in unambiguous phraseology laid down how 'value of assets' has to be computed.

(29) Clause (w) has already been read. When the clause speaks of 'value of its assets' in relation to an undertaking it obviously means value of all assets of the company. The value of all these assets is not to be the market value or the written up or written down values in a balance-sheet but the book value or the value as given in the looks of account of the company. The only deductions permissible from this book value are, depending upon the type of an asset, provision for depreciation or for renewals, or diminution in value. If this is the correct approach then to say that the only value of an asset subject to a mortagage is the value of the equity of redemption would be incorrect. Similarly, to say that the value of an asset subject to a pledge or lien would be the value as arrived at after deducting the amount in pledge or in lien would be an incorrect approach. Debts or liabilities do not figure in clause (w) as such. The value that has to be taken is the value of the asset without qualification and the asset that will be included for computation of the value of asset would not only be what are called 'free assets' but also assets subject to a charge or lien.

(30) This brings me to the consideration of the meaning to be given to the words 'depreciation, renewals, and diminution'. There is no difficulty in understanding the words 'depreciation or renewals' for these have a definite connotation both in law and in business. What is to be excluded from the book value of assets is the provision made for depreciation or for renewals. If no provision is made, no deduction is permissible. The word 'diminution', however, presents some difficulty. In Ballentine's Law Dictionary, Second Edition, this word is defined: 'A taking away or lessening; and omission or deficiency.' In the Dictionary of English Law by Earl Jowitt the word 'diminution' is defined as: 'the act of making less, opposed to augmentation'. To take an example, if a pharmaceutical undertaking has stocks of medicine worth Rs. 50.00 lacs which had to be consumed by a particular date and that date has expired, there would be diminution vis-a-vis that stock to the extent of 100 per cent as the stock can no longer be used. To take another example, if a sugar company has stock of refined sugar of the value of Rs. 50 lacs which is several years old and has, on account of the reasons of age changed colour or consistency then the value would be the price at which such poor quality of sugar can be sold in the market. 'Diminution may not be reflected in books of account or even balance-sheets. It has, thereforee, either to be worked out or the provision for it has to be made. Unless that is done, the value of the asset in question cannot be arrived at to be in keeping with the legislative intent. Nothing like this seems to have been done in the present case and so, the opinion formed by the Central Government regarding the value of assets of the petitioners or at least some of its assets is an opinion formed without any data or basis. This is clearly not permissible.

(31) I now come to the question whether the amount paid by the company as advance tax is an 'asset' of the company. The respective cases of the parties on this point, are that according to the Central Government advance tax paid is a deposit and so, an asset of the company while according to the petitioners it is either a liability or an amount which has already been paid and so, no longer available to the company.

(32) The relevant provisions of the Income-tax Act 1961 have already been noticed. There can be no manner of doubt that advance tax paid or payable cannot be regarded as a deposit with the Central Government or an asset of the company available to it for the purposes of its trade, commerce or industry. In Purshottamdas Thakurdas v. Commissioner of Income-tax, Bombay City 1. : [1963]48ITR206(SC) the Supreme Court commented upon the nature of advance tax. After noticing the relevant provisions of the Income-tax Act, 1922 it was observed: 'Section 18A which was inserted in 1944 deals with advance payment of tax. It was introduced as a war measure probably 'to combat inflation, but, like many other innovation in taxation legislation it has outlived the exigency which necessitated it. The section applies to these assesseds whose total income in the latest assessment, and also to these hitherto unassessed whose total income of the previous year, exceeded by a certain sum the maximum amount not chargeable to tax. The section attempts to reconcile the principle of advance payment of tax with the scheme of the Act which is to tax the income of the previous year. The basis of the section is the principle of 'pay as you earn', that is, paying tax by Installments in respect of the income of the very year in which the tax is paid....'

(33) In Commissioner of Wealth-Tax (Central), Calcutta v. Standard Vacuum Oil Co. Ltd. : [1966]59ITR569(SC) the Supreme Court held on appreciation of various provisions of the Income-tax Act, 1922, that notices of demand for payment of advance tax under section 18A were for 'debts owed'. No doubt this was a case under the Wealth Tax Act where net wealth was to be computed but the principle settled was that on a construction of the various provisions of the Income-tax Act and the form in which notice of demand is issued for payment of advance tax, there was no doubt that advance tax payable or paid was just as much a liability of the assessed as income-tax after a regular assessment. Sikri, J. (as his Lordship then was) observed that the Court could not find any substantial difference between advance tax paid under the provisions of Section 18A of the Income-tax Act, 1922 and , tax due and paid under a demand notice issued after a regular assessment. The observations of the Gujarat High Court in Commissioner of wealth tax v. Rajpur Manufacturing Co. : [1964]52ITR482(Guj) that a condition subsequent, fulfillment of which may 'result in the reduction or even extinction of liability, would not have the effect of converting the liability which attaches under such notice under section 18A into a contingent liability' were specifically approved.

(34) From the above exposition of law it is quite clear that advance tax is not a deposit or any other kind of tax but pure and simple income-tax paid in advance before regular or final assessment and irrespective of it. In this view of the matter whether advance tax paid is shown as an asset in a balance-sheet with a corresponding provision on the liabilities side or whether it is shown on the liabilities side in the balance-sheet as an amount yet to be paid is immaterial. What has to be seen is whether the amount has gone out of the coffers of the company. If it has, then it ceases to be an asset of the company to be included in the value of its assets, for a simple reason that the money is no longer available to the company for being utilised in its trade, commerce or industry. Even if it is ear-marked for payment of advance tax the cash assets of the company would be diminished to the extent of the 'debt owed' either on its own estimate or on the basis of demand made to it in pursuance of the provisions of section 210 of the Income-tax Act, 1961. Provision for tax whether advance tax or income-tax cannot be regarded as an asset of the company, particularly in view of the fact that penalties may be incurred for default of payment of either advance tax or tax determined on regular assessment. Indeed, in Smt. Kusum Kumari v. Union of India and others : [1972]85ITR19(All) , a Bench of the Allahabad High Court observed that in order to give effect to section 218 of the Income-tax Act, 1961, the expression 'tax' in section 221 of the Act should be 'construed widely so as to include therein advance tax also, and section 221, which provides for the levy of penalty for failure to pay tax, applies to a default in payment of advance tax also.'

(35) Mr. R. M. Lal, the learned counsel for respondents 1 to 3 urged that advance tax is something akin to giving of security for due fulfillment of a contract or liability. He sought support for this from the provisions of sections 214 and 215 of the Income-tax Act, 1961, which provide for payment of interest by the Government or the assessed. It was urged that the amount deposited by way of advance tax is ultimately to be adjusted on regular assessment being made and appropriation takes place only on regular assessment. The learned counsel contended that there cannot be an appropriation at one stage and reappropriation at a later stage for appropriation at one be once. The argument cannot be accepted. Apart from the question that non-payment of advance tax results in making the assessed an assessed in default just as much as an assessed becomes that on non-payment of demand after regular assessment. Advance tax is debt due and is realisable even by coercive method under the scheme of Part C of Chapter Xvii of the Income-tax Act, 1961. dit that is to be given for advance tax paid on regular assessment, as contemplated by section 219 of the Income-tax Act, is in recognition of tax already having been paid towards the liability determined on regular assessment. This is because there cannot be double payment of tax for the same year, once on self-assessment or on demand for payment of advance tax under section 210 and another liability arising after regular assessment. The interest payable by the. Govt. on excess payments already made on the principle that the Government accepts that it had retained money which it was not entitled to retain and not on the principle that it was holding money due to the assessed. The appropriation of advance tax is made at the time when it is paid and not on or after regular assessment. I, thereforee, hold that the Central Government was wholly wrong and misapplied the law in considering advance tax as a deposit and thus including Rs.1,06,67,798.00 it in the value of assets of the company.

(36) The view that I have taken above makes it wholly unnecessary for me to comment upon the argument that the previous amalgamation orders to which the Central Government was a party, estops or debars the Central Government from now contending that the petitioner company falls within the ambit of section 26 of the Monopolies Act.

(37) No objection regarding the maintainability of the writ petition was taken in the return filed on behalf of respondents I to 3. However this aspect was urged at the Bar by Mr. R. M. Lal. According to the learned counsel there is no order which has been passed which can be called in question or which can be quashed. The impugned notices dated November 1, 1971, and December 29, 1971, are merely in the nature of advice which may or may not be followed by the petitioners. Apart from this it was urged that whether the petitioners have committed default of section 26 of the Monopolies Act is a matter which can be appropriately adjudicated upon if a prosecution is launched. The contention is that this court should not concern itself in its jurisdiction under Article 226 of the Constitution of India to determine facts which can more appropriately be determined before the judicial Magistrate if a presecution is launched. In other words, the bar of alternate remedy was raised. It was further urged that if the petitioners regard the impugned notices as orders passed by the Central Government in proceedings commenced by communication dated July 9, 1971 then they could have filed an appeal under section 55 of the Monopolies Act to Supreme Court of India.

(38) It is true that no order as such have been passed by the Central Government in what may be called judicial or quasi-judicial proceedings. All the same one cannot lose sight of the fact that the Central The Government commenced an administrative enquiry by writing to the petitioners on July 9, 1971, that, prima facie, it was of the view that section 26 of the Monopolies Act was attracted in the case of the petitioners. The basis for this opinion was also disclosed and the petitioners were asked to show cause within 21 days why action against them be not taken under section 48(2) of the Monopolies Act lor default in complying with the provisions of section 26. The Central Government thus commenced what may be called an administrative enquiry. It was not bound to institute or commence such an enquiry and could have had its stand tested by launching a prosecution against the petitioners. However, inasmuch as the Government is not expected to act in an arbitrary manner even in the administrative sphere, it rightly undertook an administrative enquiry As is evident this enquiry was held with the intention of formulating an option whether the petitioners had or had not committed default in complying with the provisions of section 26 of the Monopolies Act. Once such an administrative enquiry has been held and an opinion is sought to be formulated, the court can examine whether the Central Government had material before it to arrive at an opinion and whether any collateral considerations or extraneous matters were taken into account in forming that opinion. The threat held out by the Central Government of prosecution affects the liberty and/or property of the petitioners. If the administrative act of holding out a threat is based on opinion formed without data or on collateral data or a wrong view of the law, the High Court can under Article 226 of the Constitution examine the basis on which an opinion is formed or a threat is held out.

(39) In Barium Chemicals Ltd. and another v. Company Law Board and others, : [1967]1SCR898 the Supreme Court was concerned with interpreting the provisions of section 237(b) of the Companies Act, 1956 and the objection as to whether the High Court can interfere in its jurisdiction under Article 226 of the Constitution with the administrative act of the Centra! Government in formulating an opinion. The legality of an order dated May 19. 1965 of the Chairman, Company Law Board, directing that the affairs of the Barium Chemicals Ltd. be investigated was challenged by a petition under Article 226 of the Constitution moved in the High Court. This petition was dismissed and the matter went up in appeal before the Supreme Court. After noticing the provisions of section 237 of the Companies Act, it was observed that no doubt the formation of opinion by the Central Government is purely a subjective process but all the same there can also be no doubt that since the legislature has provided for the opinion of the Government and not of the Court such an opinion is not subject to a challenge on the ground of propriety, reasonableness or sufficiency. But the Authority is required to arrive at such an opinion from circumstances suggesting what is set out in sub-clauses (i), (ii) or (iii). If these circumstances were not to exist, the Government cannot say that in its opinion they exist nor can the Government say the same thing whether the circumstances relevant to the clause do not exist. It was further observed that the words 'reason to believe' or 'in the opinion of' do not always lead to the construction that the process of entertaining 'reason to believe' or 'the opinion' is an altogether subjective process not lending, itself even to a limited scrutiny by the court that such 'a reason to believe' or 'opinion' was not formed on relevant facts or within the limit or within the restraints of the statute as an alternative safeguard to rules of natural' justice where the function is administrative. To quote from the speech of Hidayatullah, J. (as the learned Chief Justice then was):

'NOdoubt the formation of opinion is subjective but the existence of circumstances relevant to the inference as the sinaqua non for action must be demonstrable. If the action is questioned on the ground that no circumstances leading to an inference of the kind contemplated by the section exists, the action might be exposed to interference unless the existence of the circumstances is made out. As my brother Shelat has put it tranchantly ;

'IT is not reasonable to say that the clause permitted by Government to say that it has formed the opinion on circumstances which it thinks exist...' Since the existence of 'circumstances is a condition fundamental to the making of an opinion, the existence of the circumstances, if questioned, has to be proved at least prima facie. It is not sufficient to assert that the circumstances exist and give no clue to what they are because the circumstances must be such as to lead to conclusions of certain definiteness. The conclusions must relate to an intent to defraud, a fraudulent or unlawful purpose, fraud or misconduct or the withholding of information of a particular kind. We have to see whether the Chairman in his affidavit has shown the existence of circumstances leading to such tentative conclusions. If he has, his action cannot be questioned because the inference is to be drawn subjectively and even if this Court would not have drawn a similar inference that fact would be irrelevant. But if the circumstances pointed out are such that no inference of the kind stated in S. 237(b) can at all be drawn the action would be ultra virus the Act and void.'

(40) In Calcutta Discount Co. Ltd. v. Income-tax Officer, Companies District I, Calcutta and another : [1961]41ITR191(SC) , the Supreme Court was considering the question of the jurisdiction of the High Court under Article 226 of the Constitution to interfere with an order under section 34 of the Income-tax Act, 1922, issued by the Income-tax Officer if the conditions precedent for the issue of such a notice do not exist. It was held that if the conditions precedent for the issue of a notice under section 34 do not exist, the jurisdiction of the High Court to issue high prerogative writs under Article 226 of the Constitution to prohibit action under the notice may be exercised. This is precisely the contention in the present case that the conditions precedent to launching a prosecution do not exist and have been proved not to exist in the administrative enquiry held by the Central Government and so, a writ of prohibition should issue under Article 226 of the Constitution of India restraining the Central Government from prosecuting the .petitioners under section 48 of the Monopolies Act on the basis of the opinion formed on material disclosed in the administrative enquiry and the return filed in the present writ petition.

(41) In A. V. Venkateswaran, Collector of Customs, Bombay v. Ramchand Sobhraj Wadhwani and another, : 1983ECR2151D(SC) the Supreme Court was concerned with a similar objection raised in connection with governmental action under Customs Act. It was held that the rule that a party who applies for the issue of a high prerogative writ should, before he approaches the court, have exhausted other remedies open to him under the law, is not one which bars the jurisdiction of the Court to entertain the petition or to deal with it, but is rather a rule which courts have laid down for the exercise of their discretion. The mere fact, thereforee, that the alternate forum of the contentions of the petitioners being tested in prosecution is available is not bar to the jurisdiction of this court in dealing with an administrative action under Article 226 of the Constitution.

(42) Today it cannot be contended that administrative action as opposed to judicial action is not open to judicial review. Indeed, it is settled law that both the types of action are subject to judicial review. The bar of alternate remedy is more a bar of exercising of jurisdiction than of jurisdiction. In a recent matter which came up before a full bench of (his court this aspect has been fully investigated. In C.W. 465 of 1970, B. T. Manghani v. The Delhi Development Authority, and others, (11) an objection was raised on behalf of respondents to the maintainability of the writ petition. The objection was that there is a properly constituted forum, namely, the Court of Judicial Magistrate which is seized of the matter which is competent to determine all questions raised in the writ petition and, thereforee, the High Court should not exercise its extraordinary jurisdiction under Article 226 of the Constitution. That writ petition was filed by the petitioner in that case for a writ of prohibition against his prosecution by the Delhi Development Authority for alleged violation of the Master Plan under the Delhi Development Act, 1957. A host of similar writ petitions were also filed. In support of this objection a bench decision of this court in N. K. Vasuraj v. Delhi Development Authority and others was cited. The full bench rejected the objection and also overruled the bench decision on this point. It was observed that the offience for which the petitioner in that case was being prosecuted was a recurring offence, like the offence under section 26 of the Monopolies Act, the court in such a situation could go to the root of the matter as to whether on the interpretation of the provisions of the statute any offence was at all made out. The prosecutions were not at the instance of the petitioner but at the instance of the Delhi Development Authority, like in the present case the prosecution, if any, is to be at the instance of the Central Government. There was no question of an alternate remedy being availed of by the petitioner in such a case. The petitioners would be harrassed by prosecutions commenced on an incorrect appreciation of law. Thus, all facts were tested in the writ petition but only an exposition of law was to be given and an administrative act was to be quashed if that action was taken on a wrong interpretation of law. This precisely is the point arising in the present case also. The admitted position of the Government being what it is, it would be very unfair, to say the least, to a citizen or other party if he or it is made to face a prosecution and there have its objections regarding the interpretation of law settled when it can appropriately be settled in the present proceedings without going into the disputed questions of fact.

(43) There is no question of filing an appeal under Section 55 of the Monopolies Act as there is no order which can be appealed against. Furthermore, the only order appealable are orders contemplated by the provisions in Chapters Iii and Iv or orders made by the Commission under sections 13 and 37.

(44) The Central Government's interpretations of the various clauses relevant in the present case has been given not only in the two impugned notices but in the return filed on its behalf. Whether these interpretations are in consonance with law is the only question which has to be determined. As a corollary, if on an incorrect view of the law a threat has been held out affecting the liberty and/or property of the petitioners this court has jurisdiction to strike down that threat as being held out on the basis of an opinion formulated on an incorrect appreciation of law or taking into consideration facts not permissible by law. The High Court in its jurisdiction under Article 226 of the Constitution can always, as already noticed earlier, examine the existence of material on the basis of which an opinion is formed for an administrative action. In this view of the matter the objection to the maintainability of the writ petition cannot be upheld.

(45) The result is that this petition is accepted and a writ issued quashing the impugned notices dated November 1, 1971 and December 29, 1971 and the Central Government is prohibited from prosecuting the petitioners on the basis of the opinion formed by it on the enquiry commenced by it by the communication dated July 9,1971.

(46) As the matter was not free from difficulty and raised intricate questions on which various views were possible, I leave the parties to bear their own costs.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //