Tulzapurkar, J.:— By this Company Petition filed under ss. 391 and 394 of the Companies Act, 1956, the petitioner-company (the Tata Iron and Steel Company Limited) is seeking to obtain the sanction of this Court to an arrangement being the Scheme of Amalgamation of West Bokaro Limited with the petitioner-company; and it directly raises the question about the proper scope and ambit of s. 23(3) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Monopolies Act).

2. The facts giving rise to the petition may be stated. The petitioner-company was incorporated on August 28, 1907 under the Indian Companies Act VI of 1882, having its registered office at Bombay House, 24, Homi Mody Street, Fort, Bombay. The authorised Capital of the petitioner-company is Rs. 56,50,00,000 divided into 50,000 6 per cent cumulative preference shares of Rs. 150 each; 7,00,000 7½ per cent cumulative second preference shares of Rs. 100 each; 3,75,000 7½ per cent cumulative “A” second preference shares of Rs. 100 each and 60,00,000 ordinary shares of Rs. 75 each. The issued capital of the petitioner-company is Rs. 50,20,87,125 divided into 50,000 6 per cent cumulative preference shares of Rs. 150 each; 7,00,000 7½ per cent cumulative second preference shares of Rs. 100 each; 3,71,909 7½ per cent cumulative “A” second preference shares of Rs. 100 each; 51,65,283 ordinary shares of Rs. 75 each; while the subscribed capital of the Company is Rs. 49,98,22,189 divided into 50,000 6 per cent cumulative preference shares of Rs. 150 each; 6,93,819 7½ per cent cumulative second preference shares of Rs. 100 each; and 3,71,384 7½ per cent cumulative “A” second preference shares of Rs. 100 each and 51,027 Ordinary Shares of Rs. 75 each (less calls unpaid Rs. 136). The petitioner-company was formed for the several objects as are set out in its memorandum of association, and the principal objects are—

(a) To carry on in India and elsewhere the trades or business of Iron Masters, steel makers, steel converters, manufacturers of ferro-manganese, colliery proprietors, coke manufacturers, miners, smelters, engineers, tin plate makers and iron founders, in all their respective branches; and

(b) To search for, get work, raise, make merchantable, sell and deal in iron, coal, ironstone, limestone, manganese, ferro-manganese, magnesite, clay, fire-clay, brick earth, bricks, and other metals, minerals and substances, and to manufacture and sell briquettes and other fuel, and generally to undertake and carry on any business, transaction or operation commonly undertaken or carried on by explorers, prospectors or concessionaires and to search for, win, work, get, calcine, reduce, amalgate, dress, refine and prepare for the market any quartz and ore and mineral substances, and to buy, sell, manufacture and deal in minerals and mineral products, plant and machinery and other things capable of being used in connection with mining or metallurgical operations or required by the workmen and others employed by the Company.

3. However, since its incorporation, the petitioner-company has been carrying on the business of manufacturers and dealers in iron and steel and some of the other businesses set out in its memorandum of association.

4. It appears that in the early part of the last War, the petitioner-company experienced considerable short-fall in supplies of coking coal from the market collieries due to gradual exhaustion of deposits of good coking coal in the Jharia coal field. The petitioner-company, therefore, decided to acquire new reserves of coking coal, and for this purpose, a sub-lease of about 13,000 bighas in the West Bokaro coal field was obtained from Bokaro and Ramgur Limited, who were the lessees of this area and whose managing agents were Anderson Wright & Company. In conformity with the terms of the arrangement for obtaining the sub-lease, a subsidiary company, called West Bokaro Limited (hereinafter called “the transferor company”) was formed as a private Company, wholly owned by the petitioner-company, to take the sub-lease of West Bokaro and work the coal field for supplying coking coal to the petitioner-company.

5. The transferor company was incorporated on March 27, 1945 under the provisions of the Companies Act VII of 1913 as a private company. By virtue of the provisions of s. 43A of the Companies Act, 1956 (as subsequently amended) the transferor company has technically become a public company. The principal object amongst others of the transferor company is to acquire by lease, sub-lease, grant, assignment, transfer or otherwise any leases, prospecting licences, grants or concessions of any coal and mineral lands, coal or other minerals, mining rights, concessions and property believed to contain coal or other minerals from any person or persons, firm, syndicate, company, corporation, Government, municipality and to perform and fulfil the condition thereof and particularly to obtain a sub-lease from Bokaro and Ramgur Limited, a company incorporated under the Indian Companies Act, 1882, and to work the same and perform and fulfil the conditions thereof.

6. It appears that one of the terms of the arrangement for obtaining by the transferor company of the sub-lease from Bokaro & Ramgur Ltd., was that Messrs Anderson Wright & Company, the managing agents of Bokaro & Ramgur Limited, who had been managing the colliery, be appointed the managing agents of the new company West Bokaro Limited, i.e, the transferor company, and they were accordingly so appointed for a term of twenty years from March 27, 1945 subject to termination of the agreement by either party at any time after the expiration of ten years from that date, after giving twelve calendar months' notice. Pursuant to the above provision for termination, the managing agency of Messrs Anderson Wright & Company was terminated as from April 1, 1958 after due notice.

7. As the condition that Messrs Anderson Wright & Company shall be the managing agents of the transferor company no longer exists and the managing agency has been terminated, the directors of both the companies consider it desirable to amalgamate the two companies in the interest of economical working and with the view to save the expense of running the transferor company as an independent unit. It appears that the petitioner-company has been having within its organization a collieries' department managed by experienced personnel, which department looks after the company's group of collieries, and, therefore, it appears that even after the proposed amalgamation is sanctioned by the Court, the petitioner-company would be able to run the West Bokaro Colliery of the transferor company with the help of its own colliery department. The case of the petitioner-company has been that the transferor-company has throughout remained and still is a hundred per cent subsidiary of the petitioner-company; and what is more, the transferor-company's sole business is that of running the West Bokaro Colliery and supply its entire production i.e the whole output of coal from Bokaro Colliery to the petitioner-company, and, therefore, the proposed amalgamation of the two companies would undoubtedly result in economic working so far as the production of coking coal and coal is concerned. It is the case of the petitioner-company further that it is in good financial position according to its latest balance-sheet for the year ending March 31, 1973 and the value of its assets exceeds its liabilities by more than three times; and since the date of the last balance-sheet, there has been no substantial or material changes in the financial structure or position of the petitioner-company as would affect its solvency; and that no proceedings are pending in relation to the petitioner-company under any of the ss. 235 to 251 of the Companies Act, 1956. Similarly, the transferor-company is also a solvent company and is in good financial position and its assets exceed its liabilities, and that the interest of the creditors of neither of the petitioner-company nor the transferor company will be affected by the proposed amalgamation. Since the board of directors of both the companies were of the opinion that no uesful purpose will be served by the said companies continuing as separate entities, and in fact their amalgamation would be advantageous to both as the same would result in economic working and would also save expenses of running the transferor-company as an independent unit, the board of directors of both the companies, therefore, decided to amalgamate the transferor-company with the petitioner-company with effect from April 1, 1973. Accordingly, a Scheme of Amalgamation of the transferor company with the petitioner-company was evolved and the same has been approved by the board of directors of both the Companies.

8. The salient features of the proposed Scheme of Amalgamation have been set out in sub-paras, (i) to (viii) of para. 6(g) of the petition, and briefly stated, the Scheme of Amalgamation provides that upon sanction being obtained from this Court, the same will become effective from April 1, 1973 (which has been termed as the ‘Appointed Day’) from which day the undertaking and all the property, rights and powers of the transferor-company shall without further act or deed be deemed to be and be transferred to and vested in the petitioner-company; and all the liabilities and duties of the transferor-company shall as from the Appointed Day become the liabilities and duties of the petitioner-company, and on the scheme becoming effective, the transferor-company would be dissolved without winding up; and in consideration of the transfers of its properties, rights and liabilities and duties as aforesaid, 1,50,000 equity shares of Rs. 100 each being the whole of the subscribed and issued capital of the transferor-company held by the petitioner-company either in its own name or in the name of its nominee in the capital of the transferor-company shall stand cancelled without further act or deed. The Scheme is conditional on its being sanctioned by this Court as well as by the Calcutta High Court where an application for the same purpose is being made by West Bokaro Limited under ss. 391 and 394 of the Companies Act, 1956, and a provision is also made for the contingency of sanction being delayed at the hands of either this Court or the Calcutta High Court, and in that event, it has been provided that the Appointed Day on which the amalgamation is to become effective shall be extended (by the transferor-company through its board of directors and by the petitioner-company through its board of directors), but failing such agreed extension of the Appointed Day, the Scheme, if not sanctioned on or before March 31, 1974 will become null and void. It is undisputed that the Appointed Day has been extended both by the transferor-company through its board of directors as well as by the petitioner-company through its board of directors till March 31, 1975 (vide the affidavit of Smt. Khorshed Rustom Zaveri dated April 22, 1974). It is under these circumstances that the petitioner-company has made this application for obtaining sanction of this Court to the Scheme of Amalgamation under ss. 391 and 394 of the Companies Act, 1956.

9. On a Judge's summons (Company Application 65 of 1973) that was taken out by the petitioner-company, an order was passed on June 29, 1973 giving certain directions to the petitioner-company for the purpose of convening a meeting of all its members on August 21, 1973 for the purpose of considering and if thought fit approving with or without modification the proposed Scheme of Amalgamation, and one of the directions so given was that over such meeting of its members, either Mr. J.R.D Tata or Mr. N.A Palkhivala, and failing both, Mr. S. Moolgaonkar should act as the Chairman and that the Chairman should report the result of the meeting to this Court. Accordingly, a meeting of all the members of the petitioner-company was duly convened on August 21, 1973 at Birla Matushri Sabhaghar, 19, Marine Lines, Bombay, whereat Mr. J.R.D Tata acted as the Chairman. Suffice it to say that by an overwhelming majority of the members who were present and entitled to vote, the Scheme of Amalgamation that was put before the meeting was approved, and the necessary resolution approving the same was passed, and in due course the Chairman of that meeting filed his report in this Court on September 14, 1973. It appears that the transferor-company had also made an application under s. 391 of the Companies Act to the Calcutta High Court for an order for convening a meeting of its members to consider the Scheme of Amalgamation and had obtained direction for convening the meeting, and in accordance with the directions given by that Court, a meeting of the members of the transferor-company was held on July 31, 1973 when the Scheme of Amalgamation was passed by its members unanimously. We are informed that thereafter the transferor-company has also made a similar application under s. 394 of the Companies Act to that Court for obtaining its sanction to the Scheme of Amalgamation which is still pending. The petitioner-company has, therefore, prayed that the arrangement being the Scheme of Amalgamation (being Exhibit ‘C’ to the petition) may be sanctioned by this Court so as to be binding on the petitioner-company and its members and also on the transferor company and its members, and has prayed for further incidental reliefs.

10. Notice of the petition was served upon the Regional Director, Department of Company Affairs, (Company Law Board), Government of India, Bombay, in pursuance of s. 394-A of the Companies Act, 1956, and also upon the Registrar of Companies, Maharashtra, Bombay. Similarly, notice of the hearing of the petition was also advertised in the Maharashtra Government Gazette, Times of India, Bombay edition, and Bombay Samachar. Pursuant to these notices, none else except Mr. S. Rajagopalan, Regional Director, Company Law Board, Western Region, Bombay 2, has filed an affidavit dated November 17, 1973, contending that the proposed Scheme of Amalgamation requires the approval of the Central Government in view of the mandatory provisions contained in s. 23(1) of the Monopolies Act before sanction to the Scheme could be accorded by this Court. It has been contended that it was necessary for the petitioner-company to obtain approval of the Central Government for the Scheme of Amalgamation before approaching this Court for sanction to the scheme, but the petitioner-company had made no application to the Central Government for its approval. It may be stated that prior to the filing of this affidavit by Mr. Rajagopalan, correspondence had ensued between the petitioner-company, on the one hand, and the said Regional Director, in which the company pointed out that the amalgamation in question was covered by the exemption provided for by sub-s. (3) of s. 23 of the said Act, and that, therefore, no approval of the Central Government was required, and, therefore, no application had been made to the Central Government for that purpose. In the correspondence, it was explained as to how the proposed Scheme of Amalgamation fell within the exception provided for by sub-s. (3) of s. 23. Notwithstanding this correspondence, Mr. Rajagopalan filed his affidavit raising the aforesaid contentions by way of reply to the petitioner-company's prayer that this Court should accord its sanction to the proposed Scheme of Amalgamation. The petition came up for hearing before learned single Judge of this Court on its Original Side, and the same has been referred to this Bench for disposal.

11. At the outset, it may be stated that the Scheme of Amalgamation, a printed copy whereof has been annexed to the petition at exh. C, has not been opposed on merits by anyone, not even by Mr. Rajagopalan, the Regional Director, Western Region. In fact, as stated earlier, the members of the petitioner-company have approved it with an overwhelming majority, while the members of the transferor-company have approved it unanimously, and no defect or deficiency on merits has been pointed out even by the Regional Director who has filed his affidavit in reply to the petition. The only ground on which the prayer for according sanction to the Scheme at the hands of this Court is opposed by the Regional Director has been that the Scheme of Amalgamation in question falls within the purview of s. 23(1) and (2) of the Monopolies Act, and as such, before the petitioner-company approached this Court for obtaining the sanction to the Scheme, the petitioner-company ought to have made the necessary application to the Central Government for its approval to the Scheme and that prior approval of the Central Government to the Scheme is necessary. On the other hand, it has been the case of the petitioner-company that the Scheme of Amalgamation in question squarely falls within the exception which has been provided for in sub-s. (5) of s. 23, and as such no prior approval of the Central Government to it is necessary, and it is perfectly open to this Court to accord its sanction to the Scheme under s. 394 of the Companies Act, 1956. It will thus be seen that the only question which arises for our consideration is whether the Scheme of Amalgamation in question falls within the exception provided for under sub-s. (3) of s. 23 or not, and this directly raises the question of the proper scope and ambit of the said exception contained in the said provision.

12. Before we consider the question about the proper scope and ambit of sub-s. (3) of s. 23 of the Act, it would be desirable to refer to, and if necessary, set out the relevant provisions of the Monopolies Act, 1969, which would have a bearing on the question at issue. The Monopolies Act, as its preamble would indicate, was enacted with certain objects, viz., 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; and Chapter III which has the caption “Concentration of Economic Power” comprises a group of eleven sections (ss. 20 to 30) divided into three parts: Part A comprises ss. 20 to 26, Part B consists of only one section, s. 27, while Part C has three sections, namely, ss. 28 to 30, and all these sections in Chapter III have been directed to achieve the objective of preventing concentration of economic power to the common detriment; and s. 23 is one of such provisions aimed at preventing concentration of economic power to the common detriment by putting restriction on mergers, amalgamations and takeovers of certain undertakings to which Part A of Chapter III would apply, However, before dealing with the provisions of s. 23 it would be desirable to note some of the definitions given in s. 2. The expression “undertaking” is defined in s. 2(v) as follows:

“‘undertaking’ means an undertaking which is engaged in the production, supply, distribution or control of goods of any description or the provision of service of any kind;”

13. We are not concerned with any service in this case but with goods which are manufactured by both the petitioner-company and the transferor-company and s. 2(e) defines “goods” as follows:

“‘goods’ includes goods produced in India, and, in relation to any goods supplied, distributed or controlled in India, also includes goods imported into India;”

14. Section 2(d) defines the concept of “dominant undertaking” and the material part of the definition runs as follows:

“‘dominant undertaking’ means an undertaking which either by itself or along with inter-connected undertakings,—

(i) produces, supplies, distributes or otherwise controls not less than one-third of the total goods of any description that are produced, supplied or distributed in India or any substantial part thereof, or

(it) provides or otherwise controls not less than one-third of any services that are rendered in India or any substantial part thereof:

Provided…

Explanation IV.—In determining the question as to whether an undertaking is or is not a dominant undertaking, regard shall be had to—

(i) the lowest production made, or services rendered, by the undertaking concerned during the relevant year, and

(ii) the figures published by the Central Government with regard to the total production made or services rendered in India or any substantial part thereof during the relevant year…”

15. The concept of ‘inter-connected undertakings’ so far as is material is defined in s. 2(g) thus:

“‘inter-connected undertakings’ means two or more undertakings which are interconnected with each other in any of the following manner, namely:—

(ii) …

(iii) where the undertakings are owned by bodies corporate,—

(a) if one manages the other, or

(b) if one is a subsidiary of the other, or…”

16. We shall next set out the provisions of the relevant sections which occur in Chapter III which is divided in three Parts. We are concerned in this case with ss. 20 and 23 which occur in Part A. Section 20 runs as follows:

“20. This Part 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 interconnected undertakings, is not less than twenty crores of rupees;

(b) a dominant undertaking—

(i) where it is a single undertaking, the value of its assets, or

(ii) where it consists of more than one undertaking, the sum-total of the value of the assets of all the inter-connected undertakings constituting the dominant undertaking, is not less than one crore of rupees.

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 calendar 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) …”

17. Section 23 deals with merger, amalgamation or take over and restrictions or limitations that are placed upon the same. Sub-sections (1), (2) and (3) of s. 23 which are material run as follows:

“(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 or amalgamation of two or more undertakings which would have the effect of bringing into existence an undertaking to which clause (a) or clause (b) of section 20 would apply,

shall be 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 prescribed form with a copy of the scheme annexed thereto, for the approval of the scheme.

(3) Nothing in sub-section (1) or sub-section (2) shall apply to the scheme of merger or amalgamation of such inter-connected undertakings as are not dominant undertakings and as produce the same goods.”

18. In the light of the aforesaid provisions, we have to consider whether the Scheme of Amalgamation satisfies the requirements of sub-s. (3) of s. 23 or not and in that behalf certain undisputed facts emerging from the record may be stated. Having regard to the definition of ‘undertaking’ given in s. 2(v), it cannot be disputed that both the petitioner-company as well as the transferor-company, viz., West Bokaro Ltd., will have to be regarded as companies which own and run certain undertakings. The petitioner-company, undoubtedly, manufactures and produces iron goods and steel as its principal products; but one of the objects mentioned in its memorandum of association also authorises the petitioner-company to produce coal, and in fact, it has its own Colliery Department and produces coal, though for home-consumption. In other words, since the petitioner-company is engaged in the production of coal, it will have to be regarded as owning an undertaking which produces coal. The transferor-company indisputably produces coal as its sole product and supplies the entire output to the petitioner-company and as such must be regarded as owning an undertaking producing that kind of goods. Having regard to the definition of “inter-connected undertakings” which has been given in s. 2(g) of the Act, the petitioner-company and the transferor-company will have to be regarded as owning inter-connected undertakings, for admittedly, the transferor-company is wholly subsidiary of the petitioner-company and has remained so all throughout. The third indisputable fact which emerges clearly is that each of the two undertakings falls within s. 20(a) of the Act, for admittedly the assets of each one of the companies owning their respective undertakings singly as well as jointly exceed twenty crores of rupees, and, therefore, the respective undertakings owned by the two companies would be undertakings to which Part A of Chapter III would apply. Yet, one more fact which will have to be considered is whether, having regard to the definition of the expression “dominant undertaking” given in s. 2(d) of the Act, none of the undertakings respectively owned by the two Companies either singly or jointly is a dominant undertaking or not. In this regard, it would be pertinent to mention certain undisputed facts. The coking coal production of the transferor-company is about 0.5 million tonnes which is 3 per cent of the total production of the country which is about 16.65 millions tonnes per annum, while the total production of coking coal of the petitioner-company is about 1.50 millions tonnes per year which is 9 per cent of the country's total production. The combined production of the transferor-company and the petitioner-company of this particular item of goods is about 12 per cent of the total production of this item. It seems that the total requirement of coking coal of the petitioner-company is 2.6 millions tonnes per annum of which 1.50 millions tonnes is produced by the petitioner-company, while 50 millions tonnes is obtained by it from the transferor-company. The above figures and the factual data about coal production have nowhere been disputed by Mr. Rajagopalan in his affidavit in reply which was filed after the correspondence had ensued between the parties in which all this information was disclosed. These facts would clearly bring out two aspects. Not only is the respective undertaking of each of the two companies taken singly not a dominant undertaking but even if the production of the two undertakings were to be combined, the total production being less than one-third of the total production of coal in the country, the two undertakings even jointly do not become any dominant undertaking. It is in the light of these facts, which have gone almost unchallenged, that the question will have to be considered by us as to wether the proposed Scheme of Amalgamation is one for which a prior approval of the Central Government would be required under s. 26(1) and (2) of the Act, or whether the same falls within the exception provided for by sub-s. (3) of s. 23 of the Act.

19. Ordinarily since the two undertakings in this case are clearly undertakings to which Part A of Chapter III of the Act applies, any Scheme of Amalgamation of these two undertakings would require prior approval of the Central Government thereto under s. 23(1) of the Act, and under s. 23(2) it would be obligatory upon the petitioner-company to make the necessary application to the Central Government in the prescribed form for approval of the Scheme by the Central Government, but the question is whether the proposed Scheme of Amalgamation for which sanction of the Court is sought by the petitioner-company falls within the exception contained in sub-s. (3) of s. 23, for, there can be no doubt that the language of sub-s. (3) of s. 23 carves out an exception to the general rule which has been enunciated in sub-ss. (1) and (2) of s. 23. Having regard to the language used in sub-s. (3) of s. 23 quoted above, it seems to us very clear that in order that the proposed Scheme of Amalgamation or merger should fall within the ambit of that exception, three conditions are required to be satisfied: (a) the amalgamation or merger must relate to or be of inter-connected undertakings; (b) that such inter-connected undertakings should not be dominant undertakings; and (c) that these undertakings should be such as produce the same goods. If all these aforesaid three conditions are satisfied, then the proposed scheme of amalgamation or merger between such interconnected undertakings is taken out of the purview of sub-s. (1) or sub-s. (2) of s. 23. In other words, to such a scheme of merger or amalgamation, no prior approval of the Central Government will be necessary and no application for obtaining such approval of the Central Government need be made before the Court is called upon to accord its sanction thereto. We would also like to observe that in each of the three conditions specified in sub-s. (3), certain expressions have been used. For instance, the first condition requires that the amalgamation or merger must be of “interconnected undertakings”. The second condition requires that such interconnected undertaking should not be “dominant undertakings” and that these must be such as produce the same “goods”. Now each one of these expressions, viz., interconnected undertakings, dominant undertakings, and goods must be given the same meaning which has been accorded to each by the definitions in s. 2 of the Act, and it is in the light of these definitions given in s. 2 that the Court will have to consider whether in a given case, the conditions are applicable to the amalgamation or merger of the two undertakings for which sanction of the Court is sought. That, in our view, being the true scope and ambit of the exception contained in sub-s. (3) of s. 23, we will have to consider whether, in the instant case, the three conditions are satisfied or not.

20. As stated earlier, it has not been disputed before us that the two undertakings, viz., the coal producing undertaking of the petitioner-company and the coal-producing undertaking of the transferor-company, are interconnected undertakings within the definition of that expression, for admittedly the undertaking of the transferor-company is wholly a subsidiary undertaking of the petitioner-company. The second condition requires that none of such interconnected undertakings should be dominant undertakings. Even this condition could be said to have been admittedly satisfied in the instant case, for on the facts mentioned above, it was not disputed by Mr. Advani, who appeared for the Regional Director, that either taken singly or jointly, the two interconnected undertakings in the instant case are not dominant undertakings, the combined production of coal of both being less than one-third of the total production of the item in the country.

21. It was as regards the third condition that some argument was advanced by Mr. Advani before us, and the argument was that the two undertakings in question could not be regarded as undertakings that produce the same goods. As is stated earlier, the admitted facts are that the transferor-company, undoubtedly, produces coal, and, therefore, it is an undertaking engaged in the production of coal. Bo far as the petitioner-company is concerned, it inter alia produces three types of goods, coal, iron and steel, the latter two as end products which are marketed, while the first one as raw-material intended for the home-consumption; but, all the same, the petitioner-company does engage itself in the production of the three types of goods including coal, and it appears to us very clear that both the undertakings of the respective companies are engaged in production of the “same goods”. It was urged by Mr. Advani that the expression “as produce the same goods” occurring in sub-s. (3) of s. 23 means and is referable to production of end-products, that is to say, the production of such goods as are commercially marketed, and that expression cannot be so construed as to include production of any intermediate product like a raw-material intended to be used for producing the end products or marketable goods; and if the expression “as produce the same goods” is so construed, then the undertaking of the petitioner-company as well as the undertaking of the transferor-company cannot be regarded as such undertakings as are producing the same goods. He pointed out that so far as the transferor-company is concerned, it cannot be disputed that it is producing coal as an end-product, that is, a product intended for being marketed. But so far as the petitioner-company is concerned, the goods which its undertaking is producing would be iron and steel which are intended for beings marketed and the petitioner-company cannot be said to be producing coal, for, after all, such coal as is produced by the petitioner-company is not intended for being put on the market and is being actually used for home-consumption, that is to say, used for producing the end products like iron and steel. He urged that in the context of the entire provision of s. 23(3) and the several expressions used therein, such as ‘inter-connected undertakings’, ‘not dominant undertakings’, etc., and having regard to the background of the objects of the Act, it would be proper to interpret the expression “as produce the same goods” to mean as produce the same end products or products intended for being marketed. He, therefore, urged that in this case, the two undertakings in question cannot be said to be undertakings as are producing the same goods, and, therefore, this condition is not satisfied, and the proposed Scheme of Amalgamation does not fall within the exception provided for in sub-s. (3) of s. 23 but within the purview of the general rule contained in sub-ss. (1) and (2) of s. 23 and would require prior approval of the Central Government. It is not possible to put the construction suggested by Mr. Advani on the expression “as produce the same goods” occurring in sub-s. (3) of s. 23. As stated earlier, the expression “goods” will have to be understood in the sense in which the same has been defined in s. 2(e) of the Act. Of course, that definition is merely inclusive definition, and according to the definition, “goods” includes goods produced in India and in relation to any goods supplied, distributed or controlled in India and also includes goods imported into India. But “goods” in that definition must mean any kind of goods and not merely goods as are intended for being marketed or merely the end products; moreover, sub-s. (3) speaks of an undertaking or undertakings producing the same goods: and therefore the definition of “undertaking” will have also to be taken into account while construing the expression “as produce the same goods”. The expression “undertaking” has been defined in s. 2(v) which states that an undertaking means an undertaking which is engaged in the production, supply, distribution or control of goods of any description or the provision of service of any kind. It is not confined to production of any end products or products intended for being marketed only. The expression “goods of any description” must mean goods of any kind, and there is nothing either in the definition of the expression “goods” or in the definition of the expression “undertaking” or in the substantive provision relating to the exception contained in sub-s. (3) to indicate that only goods of a particular kind, viz., end products or goods intended for being marketed are the only goods to which either the provisions of the Act would apply or the exception contained in s. 23(3) would apply. There being nothing to limit the connotation of the phrase “goods of any description” occurring in the definition of the concept of “undertaking”, it seems to us difficult to accept Mr. Advani's contention that the words “same goods” should mean end products only, and not goods of any kind. The expression “goods of any description” would include not only end products but also intermediate products, or products which come into existence as and by way of raw-material. It cannot be suggested that concentration of economic power in the matter of production of any raw-material was not intended to be prevented by the provision of the Monopolies Act. In other words, neither the language of s. 23(3) nor any of the objects of the Monopolies Act warrants any such restricted meaning to be given to the expression “same goods” occurring in sub-s. (3) of s. 23 of the Act. In our view, therefore, since the undertaking of the petitioner-company as well as the undertaking of the transferor-company are engaged in the production of coal, these two undertakings must be regarded “as producing same goods”, and if that be so, even the third condition which is requisite for invoking the exception contained in sub-s. (3) is satisfied in the instant case.

22. An attempt was made by Mr. Advani to rely upon a judgment of a Division Bench of this Court in the case of Union of India v. Tata Eng. & Loco. Co. . 1971 74 Bom. L.R 1., where, according to him, the scope and ambit of sub-s. (3) of s. 23 has been differently indicated. He pointed out that in that case the Court considered the group of relevant sections appearing in Part A of Chapter III and after analysing the four classes of undertakings to which Part A applied and considering the provisions of s. 23 and particularly of sub-s. (3) thereof, the Court has taken the view that sub-s. (3) of s. 23 of the Act excludes from the application of the provisions contained in sub-ss. (1) and (2) of s. 23 interconnected undertakings which are dominant undertakings engaged in the provision of service. In other words, according to the Division Bench (vide page 20 of the Report), the exception contained in sub-s. (3) of s. 23 is applicable only to interconnected undertakings which are dominant undertakings engaged in the provision of service. Relying upon this conclusion arrived at by the Division Bench in that case, he urged that the proposed Scheme of Amalgamation in the instant case would not come within the purview of the exception provided for in sub-s. (3) of s. 23 of the Act. We have very carefully gone through both the judgments—the judgment of the learned single Judge who disposed of the petition for sanction in the first instance as well as the judgment of the Division Bench in appeal—and we are of the view that whatever conclusion has been reached by the Division Bench on the provisions of s. 23(3) is clearly obiter inasmuch as the aspect as to what is the true scope and ambit of the said provision did not arise for determination before it. The facts in that case were that upon nationalisation of its banking business under the Banking Companies (Acquisition and Transfer of Undertakings) Act V of 1970 the old Central Bank had stopped carrying on any business and the real question that arose for determination before the trial Court as well as the Appeal Court was whether the old Central Bank with no business left was an undertaking within the meaning of the expression as defined in s. 2(v) of the Act. The contention on behalf of the Tata Engineering and Locomotive Co. Ltd., who were the petitioners seeking the sanction of the Court to the proposed merger of the old Central Bank with itself, was that the old Central Bank was not an undertaking and, therefore, there was no question of the proposed merger falling within the substantive provisions of s. 23(1) and (2) of the Act. The rival contention was that the old Central Bank should still be regarded as an undertaking, and that contention was sought to be supported on various grounds, but the learned trial Judge positively came to the conclusion that none of the grounds urged in support of that contention gave the old Central Bank the character of an undertaking within the meaning of s. 2(v) read with s. 23(1) of the Act, and that, therefore, the merger or amalgamation of the old Central Bank with Telco did not require approved of the Central Government under s. 23(1) of the Act. When the matter was carried in appeal, this finding of the learned trial Judge was in terms confirmed by the Court of Appeal. In other words, even the appellate Court took the view that the Central Bank Ltd. (the old Central Bank) was not an undertaking within the meaning of the expression as used in s. 23(1) of the Act, and confirmed the trial Court's order that the merger of the old Central Bank with Telco did not require the approval of the Central Government under s. 23(1) of the Act. That being the position, there was no occasion either for the trial Court or the appeal Court to consider the question about the scope and ambit of sub-s. (3) of s. 23 of the Act, and whatever the Court of appeal has said in connection with sub-s. (3) of s. 23 will have to be regarded as obiter dicta. Further, as a matter of fact, it will be clear from the judgment of the appeal Court that the provisions of sub-s. (3) of s. 23 have been considered by it only for a limited purpose of emphasising the aspect that the very fact that an exception had been carved out under sub-s. (3) of s. 23 showed that in trying to achieve the object and intention of the enactment, the Act made a distinction between an undertaking and an undertaking. We may point out that on behalf of the Union of India, Mr. Bhabha had raised a contention that the expression “undertaking” occurring at the second place in sub-s. (1) of s. 23 should be given its dictionary meaning and not the definition meaning accorded to it under s. 2(v) of the Act, and it was with a view to repel this contention that the provisions of s. 23(3) were considered, and that too, as we have indicated above, for the purpose of bringing out the aspect that the very fact that an exception had been carved out in the said provision was an indication that in trying to achieve the avowed object and intention of the legislation, the Act made distinction between an undertaking and an undertaking. That the provisions of s. 23(3) were considered for such a limited purpose will become very clear from the following observations which appear at page 20 of the report:

“…The opening words ‘Nothing in sub-section (1) or sub-section (2) shall apply’ show that sub-section (3) carves out an exception out of the general provision which is contained in sub-sections (1) and (2). The very fact that an exception has been carved out, whatever be the ambit of that exception, shows that in trying to achieve the avowed object and intention of the Monopolies Act, the Act makes a distinction between an undertaking and an undertaking.”

23. In fact the above observations clearly indicate that the Court of appeal was not concerned with the real scope and ambit of the exception and the main reason why the provisions of sub-s. (3) of s. 23 were taken into consideration by the appeal Court was to refute Mr. Bhabha's contention that the expression “undertaking” appearing a second time in sub-s. (1) should be given the ordinary dictionary meaning and not the meaning given to it in s. 2(v) of the Act and for the purpose of showing that though the object and intention of the Legislature in enacting the measure generally was to prevent the concentration of economic power, the very fact that an exception had been carved out in sub-s. (3) of s. 23 indicated that in trying to achieve the avowed object, the Act had made a distinction between an undertaking and an undertaking. In our view, therefore, the conclusion reached by the Division Bench on the ambit of the exception on which reliance was placed by Mr. Advani is clearly obiter and does not partake the ratio decidendi of the case.

24. Moreover, with great respect, we would like to point out that the conclusion, reached by the Division Bench appears to run counter to the express language used in sub-s. (3) of s. 23. In all humility, we are of the view that on a plain reading of sub-s. (3) of s. 23 of the Act, the proper scope and ambit of that exception is as we have indicated above in the earlier part of our judgment.

25. In the result, the petition succeeds, and we hereby accord our sanction to the proposed Scheme of Amalgamation subject to the condition that similar sanction is obtained by the transferor-company from the High Court of Judicature at Calcutta.

26. In prayer (b) of the petition, the petitioners are allowed to delete the words “the close of business hours on” occurring in the first and second line of the prayer (b). The amendment to be carried out by the petitioners by tomorrow.

27. The petition is, therefore, granted in terms of prayers (a) to (i) subject to the condition mentioned above.

28. The petitioner will bear its own costs and pay the costs of the Regional Director quantified at Rs. 1000.

29. Petition allowed.