Appeal No. 518 of 1986 in W.P. No. 2251 of 1984. Case: Union of India (UOI) and Ors. Vs Bennett Coleman and Co. Ltd. and Ors.. High Court of Bombay (India)

Case NumberAppeal No. 518 of 1986 in W.P. No. 2251 of 1984
CounselFor Appellant: D.R. Dhanuka, Milind R. Sathe and Sankarramakrishnan, Advs. and For Respondents: L.M. Singhvi, J.J. Bhatt andi/b., D.D. Madon, Advs., Kanga and Co., V.D. Govilkar,Adv.
JudgesS.P. Bharucha and T.D. Sugla, JJ.
IssueMonopolies and Restrictive Trade Practices Act, 1969 - Sections 2, 20, 21, 22 and 22(1); Monopolies and Restrictive Trade Practices (Amendment) Act, 1984; Constitution of India - Articles 19(1), 31 and 39; Constitution of India (39th Amendment) Act
Citation1988 (3) BomCR 581a, (1987) 89 BomLR 485
Judgement DateSeptember 10, 1987
CourtHigh Court of Bombay (India)

Judgment:

S.P. Bharucha, J.

  1. Bennett Coleman and Co. Ltd. (hereinafter called "the company") publishes the newspapers "The Times of India" and "Nav Bharat Times". In 1983, company called Jansevak Karyalaya Ltd. (Jansevak) entered into negotiations with the company for printing and publishing editions of The Times of India and Nav Bharat Times from a press to be established at Lucknow. Three agreements dated June 4, 1983, July 30, 1983 and October 1, 1983 were entered into. In pursuance of the agreement, necessary applications were made under the Press and Registration of Books Act, 1867. On October 17, 1983, the first edition of the The Times of India and Nav Bharat Times were issued from Lucknow. The City Magistrate at Lucknow commenced proceedings under the Press and Registration of Books Act it regard to complaints received that the provisions of that Act had been contravened. These proceedings were stayed in a writ petition filed by Jansevak in the High Court at Calcutta. The stay order with slight modifications, remains operative, and the writ petition is yet to be disposed of.

  2. The appellants by their letter dated October 5, 1983 asked the company to explain, in view of complaints that had been received why prior approval under section 22 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter called "the Act") had not been obtained before the company had set up the new undertaking at Lucknow. The company relied. It was then served with a notice to show cause why penal action should not be taken against it for violation of the provisions of the Act. The company showed cause. By his order dated July 20, 1984, the Secretary, Department of Company Affairs, the second appellant held that the company controlled Jansevak and Jansevak was acting on behalf of the company. The provisions of the Act were applicable and the action of the company in starting the undertaking at Lucknow was in breach of the provisions of section 22 thereof. Consequent upon the order, the company was asked to show cause why penal action should not be commenced.

  3. The company and as shareholder and director then filed the writ petition herein. Thereby, they sought a declaration that the Act and section 2(r) thereof in particular, were void and had no effect insofar as they related to the printing of news, the publication of newspapers and periodicals, and the establishment of printing presses for the purpose and incidental reliefs. They also sought a writ against the appellants prohibiting them from acting upon the order dated July 20, 1984.

  4. The writ petition was heard and disposed of by Pendse, J. He held that sections 21 and 22 of the Act were void and had no effect insofar as they applied to newspapers undertakings. He restrained the appellants from applying the provision of sections 21 and 22 to the company's newspapers, periodicals and printing presses, and from giving effect to the order dated July 20, 1984. He held, however, that if sections 21 and 22 were found to be constitutional, the order dated July 20, 1984, could not be held to be erroneous or invalid.

  5. No challenge has been raised before us on behalf of the company to the learned Single Judge's finding that the order dated July 20, 1984, is valid if section 22 of the Act is found to be constitutional. The challenge is restricted to the vires of sections 21 and 22 of the Act.

  6. The case with which the company came to Court, and which we have to consider is, broadly, this:

    (a) sections 21 and 22 of the Act infringe the fundamental right conferred by Article 19(1)(a) and are not protected by Article 19(2);

    (b) sections 21 and 22 are not entitled to the protection of Article 31-B because the Constitution (39th Amendment) Act placing the Act in the Ninth Schedule was, insofar as it contained sections 21 and 22, contrary to the basic structure of the Constitution. This was because democracy was a part of the basic structure. Freedom of expression was inherent in the freedom of expression;

    (c) sections 21 and 22 are not entitled to the protection of Article 31-C inasmuch as the Act was pre-article 31-C enactment.

  7. It is necessary to set out first some of the relevant provisions of the Act and then of the Constitution of India.

  8. The statement of objects and reasons of the Act to which Mr. Dhanuka, learned Counsel for the appellants, made reference shows that the Act is intended to regulate the expansion, mergers, amalgamations and the start of new undertakings by undertakings covered by the Act and to exercise control over and prohibit monopolistic and restrictive trade practices which are prejudicial to public interest. The preamble to the Act states that it is meant" 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." Section 2 of the definition section and under sub-clause (g) thereof, interconnected undertakings are defined. Where the undertakings are owned by bodies corporate, inter-connected undertakings exist where, inter alia, one body corporate exercises control over the other body corporate in any manner. Clause (r) of section 2 defines service as "service of any description which is made available to potential users, and includes the provision of facilities in connection with.... Purveying of news or other information..." An undertaking is defined by Clause (v) of section 2 to be "an enterprise which is, or has been or is proposed to be, engaged in... the provision of services, of any kind either directly or through one or more of its units of divisions, whether such unit or division is located at the same place... or at a different place or places."

  9. We are here concerned with the provisions of Chapter III of the Act which deals with "Concentration of Economic Power". Part A thereof by reason of section 20 within it, applies to an undertaking. If the total value of the assets of such undertaking or of such undertaking and its interconnected undertakings is not less than Rs. 20 crores. The figures of 20 crores has in 1985 been substituted by the figure of Rs. 100 crores. Section 21 deals with the expansion of undertakings. We are not concerned therewith on the present facts; We may only note that its provisions are substantially similar to those of section 22, with which we are directly concerned.

  10. Section 22 read thus at the relevant time:

    "22 Establishment of new undertaking.---(1) No person or authority, other than Government, shall after the commencement of this Act, establish any new undertaking which, when established would become an inter-connected undertaking of an undertaking (to which this part applies), except under, and in accordance with, the previous permission of the Central Government;

    (2) Any person or authority intending to establish a new undertaking referred to in sub-section (1) shall, before taking any action for the establishment of such undertaking, make an application to the Central Government in the prescribed form for that Governments' approval to the proposal of establishing any undertaking, and shall set out in such application information with regard to the inter-connection. If any, of the new undertaking (which is intended to be established) with every other undertaking, the scheme of finance for the establishment of the new undertaking and such other information as may be prescribed.

    (3) (a) The Central Government may call upon the person or authority to satisfy it that the proposal to establish a new undertaking or the scheme of finance with regard to such proposal is not likely to lead to the concentration of economic power to the common detriment or is not likely to be prejudicial to the public interest in any other manner and thereupon, the Central Government may, if it is satisfied that it is expedient in the public interest so to do, by order accord approval to the proposal.

    (b) If the Central Government is of opinion that no such approval as is referred to in Clause (a) can be made without further inquiry, it may refer the application to the Commission for an enquiry and the Commission may, after such hearing as it thinks fit, report to the Central Government its opinion thereon.

    (c) Upon receipt of the report of the Commission, the Central Government may pass such order with regard to the proposal for the establishment of a new undertaking as it may think fit.

    (d) No scheme of finance on the strength of which the establishment of a new undertaking has been approved by the Central Government shall be modified except with previous approval of the Government".

  11. By Act No. 30 of 1984, sub-section (1) of section 22 was substituted and sub-section (1-A) was added thereto. The substituted sub-section (1) and the newly added sub-section (1-A) read thus:

    22 Establishment of new undertaking.---(1) No person or authority other than Government, shall, after the commencement of this Act, establish-

    (i) any new undertaking which, when established would become an inter-connected undertaking of an undertaking to which this Part applies; or

    (ii) add any new unit or division to an undertaking to which this part applies, except under, and in accordance with the previous permission of the Central Government;

    Provided that except where as a result of the establishment of new undertaking, unit or division an undertaking would come into existence to which Clause (b) of section 20 would apply, no permission shall be required, if the new undertaking, or as the case may be, the new unit or division, when established, would not produce the same goods or provide the same services in relation to which the undertaking-

    (a) of which such new undertaking would be an interconnected undertaking,

    (b) to which such new unit or division is proposed to be added, is a dominant...

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