|
THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT, 1969 |
No.54 OF 1969[27th December, 1969]
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 concerned therewith or incidental thereto.
BE it enacted by Parliament in the Twentieth Year of the Republic of India as follows :–
CHAPTER I
PRELIMINARY
1.Short title, extent and commencement.- (1) This Act may be called the Monopolies and Restrictive Trade
practices Act, 1969.
(2) It extends to the whole of India except the State of Jammu and Kashmir.
(3) It shall come into force on such date {1-6-1970: vide No.S.O.1981dated 30th May, 1970, Gazette of India 570,
Extraordinary, Pt.II, Sec.3 (ii) p.833.} as the Central Government may, by notification in Official Gazette, appoint.
2.DefinitionsIn this Act, unless the context otherwise requires, —-
(a) “agreement” includes any arrangement or understanding, whether or not it is intended that such agreement
shall be enforceable (apart from any provision of this Act) by legal proceedings;
(b) “Commission” means the Monopolies and Restrictive Trade Practices Commission Established under the
section 5;
(c) “Director” means the Director of investigation appointed under section 8;
(d) “dominant undertaking” means as undertaking which either by itself or along with inter-connected undertaking,
—-
(i) produces, supplies, distributes or otherwise controls not less than
one-third of the total goods of any description that are produced,
supplied or disturbed in India or any substantial part thereof , or
(ii) provides or otherwise controls not less than one-third of any
services that are rendered in India or any substantial part thereof:
Provided that for the purposes of this clause, the goods produced by an undertaking
which does not employ ——
(a) more than fifty workers on any day of the relevant year, and in any part of which
a manufacturing process is being carried on with the aid of power of is ordinarily so
carried on, or
(b) more than fifty workers on any day of the relevant year, and in any part of which
a manufacturing process is being carried on with the aid of power of is ordinarily so
carried on, or
shall not be taken into account.
Explanation I :– Where is not less than one-third of the production, supply, distribution or control of any goods or
the provision or control of any service is shared by inter-connected undertakings, each such undertaking shall be
deemed, for the purposes of this Act, to be a dominant undertaking.
Explanation II :— Where any goods of any description are the subject of different forms of production, supply,
distribution or control, every reference in this Act to such goods shall be constructed as reference to any to those
forms of production, supply, distribution or control, whether taken separately or together or in such groups as may
be prescribed.
Explanation III :– Any undertaking which, either by itself or along with inter-connected undertakings, produces,
supplies, distributes, or controls one-third of any goods or provides or controls one-third of any services
according to any of the following controls namely, value, lost, price, quantity or capacity, of the goods or services
or the number of workers employed for the production, supply, distribution or control of such goods or for the
rendering of such services shall be deemed to be dominant undertaking.
Explanation IV :— In determining the question as to whether an undertaking 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.
Explanation V :—- For the purposes of Explanation IV, production includes supply, distribution or control of
goods.
Explanation VI :– For the purposes of the clause, “relevant year” means any one year out of the three calendar
years immediately preceding calendar year in which the question whether an undertaking is or is not a dominant
undertaking is determined.
(E) “goods” includes goods produced in India, and, in relation to any goods supplied, distributed or controlled in
India, also includes goods imported into India;
(f) “India” means, for the purposes of this Act, the territories to which this Act extends;
(g) “inter-connected undertakings” means two or more undertakings which are inter-connected with each other in
any of the following manner, namely :—
(i) if one owns or controls the other,
(ii) where the
undertakings are owned
by firms, if such firms
have one or more
common partners,
(iii) where the undertakings are owned by bodies corporate, ——
(a) if one managers the other, or
(b) if one is a subsidiary of the other, or
(c)
if
they
are
under
the
same
management
within
the
meaning
of
section
370
of
the
companies
Act,
1956(1
of
1956),
or
(d) if one exercises control over the other in any other manner,
(iv) where on
undertaking is owned by
a body corporate and
the other is owned by a
firm, if one or more
partners, of the firm —–
(a)
hold,
directly
or
indirectly,
not
less
than
fifty
per
cent.Of
the
shares,
whether
preference
or
equity,
of
the
body
corporate,
or
(b)
exercise
control,
directly
or
indirectly,
whether
as
director
or
otherwise,
over
the
body
corporate,
(v) if one is owned by a
body corporate and the
other is owned by a firm
having bodies corporate
as its partners.If such
bodies corporate are
under the same
management within the
meaning of the said
section 370,
(vi) if the undertakings
are owned or controlled
by the same person or
group or persons,
(vii) if one is connected
with the other either
directly or through any
number of undertakings
which are
inter-connected
undertakings within the
meaning of one or more
of the foregoing
sub-clauses.
Illustration
Undertakings B is inter-connected with undertaking A and undertaking C is
inter-connected with undertaking A; if undertaking D is inter-connected with
undertaking C, undertaking D, will be inter-connected with undertaking B and
consequently with undertaking A; and so on.
Explanation.– For the purpose of clause (g), two or more undertakings shall be
deemed to be inter-connected, ——
(a) if one or more undertakings which are
inter-connected undertakings [as defined in clause (g)]
jointly or severally, own, manage or control the other,
(b) if one or more individuals together with the it
relatives, or firms in which such individuals or their
relatives are partners, jointly or severally, own, manage
or control the other,
(c) if inter-connected undertakings referred to in
sub-clause (a) and persons, relatives or firms referred
to in sub clause (b), jointly or severally, own, manage
or control the other;
(h) “member” means a member of the Commission;
(i) “monopolistic trade practice” means a trade practice which has, or
is likely to
have, the effect of, —
(i) maintaining prices at an
unreasonable level by limiting, reducing
otherwise controlling the production,
supply or distribution of goods of any
description or the supply of any
services or in any other manner,
(ii) unreasonably, preventing or
lessening competitions of the
production, supply or distribution of
any goods or in the supply of any
services,
(iii) limiting technical development, or
capital investment to the common
detriment or allowing the quality of any
goods produced, supplied or
distributed, or any service rendered in
India to deteriorate;
(j) “monopolistic undertaking” means ———
(i) a dominant undertaking which, or
(ii) an undertaking
which, together with not
more than two other
independent
undertakings, ——
(a) produces, supplies, distributes or
otherwise controls not less than
one-half of the total goods of any
description that are produced, supplied
or distributed in India or any
substantial part thereof, or
(b) provides or otherwise controls not
less than one-half of the services that
are rendered in India or any substantial
part thereof:
Provided that for the purposes of this clause, the goods produced by an undertaking which does not employ ——
(A) more than fifty workers on any day
of the relevant year, and in any part of
which a manufacturing process is being
carried on with the aid of power or is
ordinarily so carried on, or
(B) more than one hundred workers on
any day of the relevant year, and in any
part of which a manufacturing process
is being carried on with the aid of
power or is ordinarily so carried on,
shall not be taken into account.
Explanation I — Any undertaking which, either by itself or along with
not more than two other independent undertakings, produces,
supplies, distributes or controls one-half of any goods or provides or
controls one-half of any services according to any one of the
following criteria, namely, value cost, price, quantity or capacity, of
the goods or services or the number of workers employed for the
production, supply, distribution or control of such goods or of the
rendering of such services, shall be deemed to be a monopolistic
undertaking.
Explanation II — In determining the question as to whether an
undertaking is or is not a monopolistic 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.
Explanation III —- For the purposes of Explanation II, production
includes supply, distribution or control of goods.
Explanation IV — For the purposes of this clause, “relevant year”
means any one year out of the three calendar years immediately
proceeding the preceding calendar year in which the question
whether an undertaking is or is not a monopolistic undertaking is
determined.
(K) “prescribed” means prescribed by rules made under this Act;
(l) “price”, in relation to the sale of any goods or to the performance of any services,
includes every valuable consideration, whether direct or indirect, and includes any
considerations which in effect relates to the sale of any goods or to the performance
of any services although ostensibly relating to any other matter or thing;
(m) “register” means the register kept by the Register under section 30;
(n) “Register” means the Registrar of Restrictive Trade Agreements appointed under
section 34, and includes every Additional, Joint, Deputy or Assistant Registrar
appointed under that section;
(o) ” restrictive trade practice” means a trade practice which has, or may have the effect or preventing, disporting or restricting
competition in any manner and in particular :—
(i) which tends to obstruct the flow of capital or
resources into the streams of production, or
(ii) which tends to bring about manipulation of prices
or conditions of delivery or to effect the flow of
supplies in the market relating of goods or services in
such manner as to impose on the consumers
unjustified costs or restrictions;
(p) “retailer”, in relation to the sale of any goods, includes every person, other than
the wholesaler, who sells the goods to any other person; and in respect of the sale of
goods by a wholesaler, to any person for any purpose other than re-sale, includes
that wholesaler;
(q) “scheme of finance” means a scheme indicating the sources from which and the
terms and conditions on which, finances are proposed, to be obtained by an
undertaking;
(r) “service” means service of any description which is made available to potential
users and includes the provision of facilities in connection with banking, insurance,
transport, supply of electrical or other energy, board or lodging or both,
entertainment, amusement or the purveying of news or other information, but does
not include the rendering of any service free of charge or under contract of personal
service;
(s) “trade” means the trade, business, industry, profession or occupation relating to
the production, supply, distribution or control of goods and includes the provisions
of any service;
(t) “trade” association means a body of persons (whether incorporated or not) which
is formed the purpose of further in the interests of its members or of persons
represented by its members ;
(u) “trade practice” means any practice relating to the carrying on of any trade, and
includes —
(i) anything done by any person which controls or affects the price charged by, or
the method of trading of, any trader or any class of traders,
(ii) a single or isolated action of any person in relation to any trade;
(v) “undertaking” means as undertaking which is engaged in the production, supply,
distribution or control of goods of any description or the provisions of service of
any kind;
(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;
(x) ” wholesaler” in relation to the sale of any goods, means a person who sells the
for goods to any person for the purpose of resale;
(y) words and expressions used but not defined in this Act and defined in the
Companies Act, 1956(1 of 1996), have the meanings respectively assigned to them in
that Act.
3.Act not to apply in certain cases.- Unless the Central Government, by notification in the Official Gazette, otherwise directs, this Act shall not
apply to —-
(a) any undertaking owned or controlled by a Government company,
(b) any undertaking owned or controlled by a Government,
(c) any undertaking owned or controlled by a corporation (not being a company) established by or
under any Central, Provincial or State Act,
(d) any trade union or other association of workmen or employees formed for their own reasonable
for protection as such workmen or employees,
(e) any undertaking engaged in an industry, the management of which has been taken over by any
person or body of persons in pursuance of any Authorisation made by the Central Government
under any law for the time being in force.
4.Application of other laws not barred.- (1) save as otherwise provided in sub-section (2) or elsewhere in this Act,
the provisions of this Act shall be in addition to, and not in derogation of, any other law for the time being in force.
(2) Notwithstanding anything contained in section 3 or elsewhere in this Act, so much of the
provisions of this Act, as relate to matters in respect of which specific provisions exist in the ——-
(i) Reserve Bank of India Act, 1934( 2 of 1934), or the Banking Regulation Act, 1949( 10 of 1949), or
(ii) State Bank of India Act, 1955(22 of 1955), or the State Bank of India (Subsidiary Banks) Act,
1959(38 of 1959), or
(iii) Insurance Act, 1938(4 of 1938),
shall not apply to a banking company, the State Bank of India or a Subsidiary bank, as defined in
the State Bank of India (Subsidiary Books) Act, 1959(38 of 1959), or an insurer, as the case may be.
CHAPTER II
MONOPOLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION
5.Establishment and Constitution of the Commission.- (1) For the purposes of this Act, the Central Government shall establish, by notification in
the Official Gazette, a commission to be known as the Monopolies and Restrictive Trade Practices Commission which shall consist of a Chairman
and not less than two and not more than eight other members, to be appointed by the Central Government.
(2) The Chairman of the Commission shall be a person who is, or has been or is qualified to be, a Judge of the Supreme Court or of a High Court
and the members thereof shall be persons of ability, integrity and standing who have adequate knowledge or experience of, or have shown
capacity in dealing with, problems relating to economics, law, commerce, accountancy, industry public affairs or administration.
(3) Before appointing any person as a member of the Commission, the Central Government shall satisfy itself that the person dues not, and will
not, have, and such financial or other interest as is likely to affect periodically his functions as such members.
6.Terms of conditions of service, etc., of members.- (1) Every member shall hold office for such period, not exceeding five years, as may be
specified by the Central Government in the notification made under sub-section (1) of section 5, but shall be eligible for re-appointment.
Provided that no member shall hold office as such for a total period exceeding years or after he has attained the age of sixty-five years, whichever
is earlier.
(2) Notwithstanding anything contained in sub-section (1), a member may–
(a) by writing under this hand addressed to the Central Government resign his office at any time;
(b) be removed from his office in accordance with the provisions of section 7.
(3) A casual vacancy caused by the resignation or removal of the Chairman or any other member of
the Commission under sub-section (2) or otherwise shall be called by the fresh appointment.
(4) No act or proceeding of the Commission shall be invalid by reason only of the existence of any vacancy among
its members or any defect in the constitution thereof.
(5) The Chairman of the Commission and other members shall receive such remuneration and other
allowances and shall be governed by such conditions of service as may be prescribed.
Provided that the remuneration of the Chairman or any other member shall not be varied to his
disadvantage after his appointment.
(6) In the case of a difference of opinion among the members of the Commission, the opinion of the
majority shall prevail and the opinion or orders of the Commission shall be expressed in terms of the
views of the majority.
(7) The Chairman of the Commission and every member shall, before entering upon his office, make
and subscribe to an oath of office and of secrecy in such from, in such manner and before such
authority as may be prescribed.
(8) Any member ceasing to hold office as such shall not hold any appointment, in, or be connected
with the management or administration of, any industry or undertaking to which this Act applies for
a period of five years from the date on which he ceases to hold such office.
7.Removal of members from office in certain circumstances.- (1) The Central Government may remove from office any member, who —-
(a) has been adjudged an insolvent, or
(b) has been convicted of an offence which, in the opinion of the Central Government, involves moral turpitude, or
(c) has become physically or mentally incapable of acting as such member, or
(d) has acquired such financial or other interest as is likely to affect prejudicial his functions as a member, or
(e) has so abused his position as to render his continuance in office prejudicial to the public interest.
(2) Notwithstanding anything contained for sub-section (1), no member shall be removed from his office on the ground specified in clause (d) or
clause (e) of that subsection unless that Supreme Court, on a reference being made to it in this behalf by the Central Government, has, on an of
ability, integrity and standing who have adequate knowledge or experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry inquiry held by it in accordance with such procedure as it may specify in this behalf, reported
that the member ought, on such grounds, to be removed.
8.Appointment of Director of the Commission.- The Central Government may, in consultation with the Commission, appoint a Director of
Investigation for making investigation for the purpose of this Act and may, in addition, make provision with respect to the number of members of
the staff of the Commission and their conditions of service :
Provided that the conditions of service of the Director or any member of the staff of the Commission shall not be varied to his disadvantage after
his appointment.
9.Salaries, etc., to be defrayed out of the Consolidated Fund of India.- The salaries and allowances payable to the members and the administrative
expenses, including salaries, allowances and pensions payable to or in respect of officers and other employees of the Commission, shall be
defrayed out of the Consolidated Fund of India.
10.Inquiry into monopolistic or restrictive trade practices by Commission.- The Commission may inquire into —
(a) any restrictive trade practice —-
(i) upon receiving a complaint of facts which constructive such practice from any trade or
consumers’ association having a membership of not less than twenty- five persons or from
twenty-five or more consumers, or
(ii) upon a reference made to it by the Central Government or a State Government, or
(iii) upon a application made to it by the Registrar; or
(iv) upon its own knowledge or information;
(b) any monopolistic trade practice, upon a reference made to it by the Central Government or upon
its own knowledge or information.
11.Investigation by Director before issue of process certain cases.- In respect of any restrictive trade practice was
of which complaint is made under sub-clause (i) or clause (a) of section 10, the Commission shall, before issuing
any process requiring the attendance of the person complained against, cause of a preliminary investigation to be
made by the Director, in such manner as it may direct, for the purpose of satisfying itself that the complaint
requires to be inquired into.
12.Powers of the Commission.- (1) The Commission shall, for the purposes of any inquiry under this Act have the same powers as are vested in
a Civil Court under the Code of Civil Procedure, 1908(5 of 1908), while trying a suit, respect of the following matters, namely : —
(a) the summoning and enforcing the attendance of any witness and examining him on oath
(b) the discovery and production of any document or other material object producible as evidence;
(c) the reception of evidence on affidavits;
(d) the requisitioning of any Public Record from any Court or office;
(e) the issuing of any commission for the examination of witnesses.
(2) Any proceeding before the Commission shall be deemed to be a judicial proceeding within the meaning of sections 193 and 228 of the Indian
Penal Code(43 of 1860), and the Commission shall be deemed to be a Civil Court for the purposes of section 195 and Chapter XXXV of the Code
of Criminal Procedure, 1898( 5 of 1898).
(3) The Commission shall have powers to require any person —
(a) to produce before, and allow to be examined an kept by, an officer of the Commission specified in this behalf,
such books, accounts or other documents in the custody or under the control of the person so required as may be
specified or descried in the requisition, being documents relating to any trade practice the examination of which
may be required for the purposes of this Act ; and
(b) to furnish to an officer so specified such information as respects the trade
practice as may be required for the purposes of this Act or such other information as
may be in his possession in relation to the trade carried on by any other person.
(4) For the purposes of enforcing the attendance of witnesses the local limits of the Commission’s
jurisdiction shall be the limits of the territory of India.
13.Orders of commission may be subject to conditions, etc..- (1) In making any order under this Act, the commission may make such Provisions
not inconsistent with this Act, as it may think necessary or desirable for the proper exception of the order and any person who commits a breach
of or fails to comply with any obligation imposed on him by any such provision shall be deemed to be guilty of an offence under this Act.
(2) Any order made by the Commission may be amended or revoked at any time in the manner in which it was made.
(3) An order made by the Commission may be general in its application or may be limited to any particular class of traders or a
particular class of trade practice or a particular trade practice or a particular locality.
14.Orders where party concerned does not carry on business of India.-Where any practice substantially falls within monopolistic or restrictive
trade practice, or both relating to the production, supply, distribution or control of goods of any description or the provisions of any services
and any party to such practice does not carry on business in India, an order may be under this Act with respect its that part of the practices
which carried on in India.
15.Restriction of application of orders in certain cases.- No order made under this Act with respect to any monopolistic or restrictive trade
practice shall operate so as to restrict ——-
(a) the right of any person to restrain any infringement of a patent granted in India, or
(b) any person as to the condition which the attaches to a license to do anything, the
doing of which but for the license would be an infringement of a patent granted in
India, or
(c) the right of any person to export goods from India the extent to which the
monopolistic or restrictive trade practice relates exclusively to the production,
supply, distribution or control of goods for such export.
16.Sittings of the Commission.- (1) The Central office of the Commission shall be in Delhi but the Commission may sit at such places in India and
at such times as may be most convenient for the exercise of its powers or functions under this Act.
(2) The powers or functions of the Commission may be exercised or discharged by Benches formed by the Chairman of the Commission from
among the members.
17.Hearing to be in public except in special circumstances.- (1) subject to the provisions of sub-section (2), the hearing of proceedings before
the Commission shall be in the Public.
(2) Where the Commission is satisfied that it is desirable to do so by reason of the confidential nature of any offence or matter or for any other
reason, the Commission may —
(a) hear the proceeding or any part thereof in private ;
(b) give directions as to the persons who may be present thereat;
(c) Prohibit or restrict the publication of evidence given before the Commission
(Whether in Public or in Private) or of matters contained in documents filed before
the Commission.
18.Procedure of the Commission.- (1)Subject to the provisions of this Act, the Commission shall have power to regulate —
(a) the procedure and conduct of its business ;
(b) the procedure of Benches of the Commission;
(c) the delegation to one or more members of such powers or functions as the Commission may specify.
(2) In particular, and without prejudice to the generality of the foregoing provisions, the powers of the commission shall include the power to
determine the extent to which persons interested, or claiming to be interested in the subject-matter of any proceeding before it are allowed to be
present or to be heard, either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceeding.
19.Orders of Commission to be noted in the register.-The commission shall cause an authenticated copy of every order made by it in respect of
a restrictive trade practice to be forwarded to the Registrar who shall have it recorded in such manner as may be prescribed.
CHAPTER III
CONCENTRATION OF ECONOMIC POWER
Part A
20.Undertakings to which this part applies.-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 it s inter -connected undertaking.
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 is consists of more than one undertaking, the sum of 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 proceeding the calendar year in which the question arises
as to whether this Part does or not apply to such undertaking; and
(ii) in the case of the inter-connected undertaking, the value of its assets on the last
day of its financial year which closes during the calendar year immediately
proceeding the calendar year in which the question arises as to whether this Part
does or not apply to such undertaking referred to in clause (a) or clause (b).
21.Expansion of undertakings.- (1) Subject to the provisions of section 23, where an undertakings to which this part applies proposes to
substantially expand its activities by the issue of fresh capital or by the installation of new machinery or other equipment or in any manner, it
shall, before the taking any action to give effect to the proposal for such expansion, give to the Central Government notice, in the of ability,
integrity and standing who have adequate knowledge or experience of, or have shown capacity in dealing with, problems relating to economics,
law, commerce, accountancy, industry prescribed form, of its intention to make such expansion, stating therein the scheme of finance with regard
to the proposed expansion, whether it is connected with any other undertaking or undertakings and if so, giving particulars relating to all the
inter-connected undertakings and such other information as may be prescribed.
(2) Notwithstanding anything contained any of the other law for the time being in force no
undertaking shall give effect to any proposal for its substantial expansion unless such proposal has
been approved by the Central Government.
Explanation — For the purpose of this section, an undertaking shall be deemed to expand
substantially if, after such expansion —–
(a) in the case of an undertaking to which clause (a) section 20 applies , –
(i)
the
value
of
its
assets,
before
the
expansion,
would
result
in
an
increase
by
not
less
than
twenty-five
per
cent.Of
such
value,
or
(ii)
the
production
of
,
supply
or
distribution
of
any
goods
or
the
provision
of
any
services
by
it
before
the
expansion,
would
result
in
an
increase
by
not
less
than
twenty
-five
per
cent
of
the
goods
produced,
supplied,
distributed
or
controlled,
or
services
provided,
by
it;
(b) in the case of an undertaking to which clause (b) of
section 20 applies, the production, supply, distribution
or control of any goods or the provision of any
services by it would result in an increase by not less
than twenty-five per cent of the goods produced,
supplied, distributed or controlled, or services
provided, by it before the expansion.
(3) (a) The Central Government may call upon the undertaking concerned to satisfy it that the proposed expansion or the scheme of finance with
regard to such expansion is not likely to lead to the concentration of economic power to the common detriment or is not likely to be prejudice 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 for such expansion.
(B) If the Central Government is of opinion that no such order as is referred to in clause (a) can be made without a further inquiry, it may refer the
application to the Commission for an inquiry and the Commission may, after such hearing as it thinks fit, report to the Central Government its
opinion thereon.
(C) Upon receipts of the report of the Commission, the Central Government may pass such orders with regard to the proposal for the expansion of
the undertaking as it may think fit.
(D) No Scheme of the expansion approved by the Central Government and no scheme of finance with regard to such expansion shall be modified
except with the previous approval of the Central Government.
(4) Nothing in this section shall apply to any industrial undertaking (which is not a dominant undertaking) to which sections 13 of the Industries
(Development and Regulation) Act, 1951, applies, in so far as the expansion relates to production of the same or similar type of goods.
22.Establishment of new undertakings.- (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 clause (a) of section 20
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 the Government’s approval to the
proposal of establishing any undertaking an shall set out for such application information with of ability, integrity and standing who have
adequate knowledge or experience of, or have shown capacity in dealing with, problems relating to economics, law, commerce, accountancy,
industry 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 of ability, integrity and standing who have adequate
knowledge or experience of, or have shown capacity in dealing with, problems relating to economics, law, commerce, accountancy, industry may,
if it is satisfied that it is expedient in the public interest so to do so, 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 inquiry 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 orders 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 the previous approval of that Government.
23.Merger, amalgamation 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 the part applies with any other undertaking,
(b) no scheme of merger or amalgamation of an undertaking to which the part applies with any other 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 recognized 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 of amalgamation with any other undertaking, or a scheme of merger or
amalgamation is proposed between two or more an undertakings, and, if 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 of ability, integrity and standing who have adequate knowledge or
experience of, or have shown capacity in dealing with, problems relating to economics, law, commerce, accountancy, industry 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) sub-section (2) shall apply to the scheme of merger or amalgamation of such inter-connected undertakings a share
not dominant undertakings and as produce the same goods.
(4) If an undertaking to which this Part applies proposes to acquire by purchase, take over or otherwise the whole or part of an undertaking which
will or may result either —–
(a) in the creation of an undertaking to which this Part would apply; or
(b) in the undertaking becoming an inter-connected undertaking of an undertaking to which this Part applies;
it shall, before living any effect to its proposals, make an application in writing to the Central Government in the prescribed form of its intention to
make such acquisition, stating therein information regarding its inter-connection with other undertakings, the scheme of finance with regard to
the proposal acquisition and such other information as may be prescribed.
(5) No proposal referred to in sub-section (4) which has been approved by the Central Government and no scheme of finance with regard to such
proposal shall be modified except with the previous approval of the Central Government.
(6) On receipt of an application under sub-section (2) or sub-section (4), the Central Government nay, if it thinks fit, refer the matter to the
commission for an inquiry and the Commission may, after such hearing as it thinks fit, report to the Central Government its opinion thereon.
(7) On receipt of the Commission’s report the Central Government may pass such orders as it may think fit.
(8) Notwithstanding, anything contained in any other law for the time being in force, no proposal to acquire by purchase, take over the otherwise
of an undertaking to which the Part applies shall be given effect to unless the Central Government has made an order according its approval to
the proposal.
(9) Nothing in sub-section (4) shall apply to the acquisition by an undertaken, which is not a dominant undertaking, of another undertaking
which is not also a dominant undertaking, if both such undertakings produce the same goods :
Provided that nothing in this sub-section shall apply if as a result of such acquisition an undertaking comes into existence to which clause (a) or
clause (b) of section 20 would apply,
24.Merger, amalgamation or take over in contravention of section 23.- Where any merger, amalgamation or take over is being, or has been,
effected in contravention of the provisions of section 23, the Central Government may, after such consultation with the Commission as it may
consider necessary, direct, without prejudice to any penalty which may be imposed under this Act for such contravention, the undertaking
concerned to cease and of ability, integrity and standing who have adequate knowledge or experience of, or have shown capacity in dealing with,
problems relating to economics, law, commerce, accountancy, industry desist from such contravention, to divest itself of the stock or other share
capital or assets so acquired and to carry out such further directions as the Central Government may, in all the circumstances of the case, issue.
25.Directors of undertakings not to be appointed directors of other undertakings.-(1) Notwithstanding anything to the contrary contained in
any other law for the time being in force, no person, who is director of an undertaking to which the Part applies, shall be appointed, after the
commencement of this Act, as a director of any other undertaking exempt with the prior approval of the Central Government and any appointment
contrary to the provisions of this and shall be void :
Provided that the approval of the Central Government shall not be necessary to the appointment of a person as a
director of an undertaking unless he holds such office in more than ten inter-connected undertakings.
(2) Notwithstanding anything contained in sub-section (1), no act done by a person as a director shall be invalid merely on the
ground that his appointment was void by reason of this section or of any provision of this Part :
Provided that nothing in this section shall be deemed to give validity to any act done by a director after his
appointment has been shown to the undertaking and the director concerned to be void.
(3) Notwithstanding anything to the contrary contained in any other law for the time being in force, every director holding such
directorship as is not consistent with the provisions of this section shall, unless his appointment expires earlier, obtain within a
period of one year from the commencement of this Act, the approval of the Central Government to such appointment shall, on the
expire of the said period, become void.
(4) The provisions of sub-sections (1), (2) and (3) shall, as far as may be, apply to partners of any firm which is an undertaking within the meaning
of this Act, as they apply of directors of companies.
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 the 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 the making such inquiry as it may think fit, cancel the
registration of such undertaking and notify such cancellation in the Official Gazette.
Part B
27.Division of undertakings.- (1) Notwithstanding anything contained in the Act or in any other law for the time being in force, the Central
Government may, if is of opinion that the working of an undertaking to which Part A of this Chapter applies, is prejudicial to the public interest, or
has led, or is leasing, or is likely to lead, to the adoption of any monopolistic or restrictive trade practices, refer the matter to the Commission for
an inquiry as to whether it is expedient in the public interest to make an order, —
(a) for that division of any trade of the undertaking by the sale of the any part of the undertaking or assets thereof, or,
(b) for that division of any trade of the undertaking by the sale of the any part of the undertakings into such number of undertakings as the
circumstances of the case may justify,
and the Commission may, after such hearing as it thinks fit, report to the Central Government its opinion thereon and shall, where it is of opinion
that a division ought to be made, specify the manner of the division and compensation,, if any,, payable for such division.
Explanation —- For the purposes of this section all activities carried on by way of trade by and undertaking or two or more inter-connected
undertakings may be treated as a single trade.
(2) If the Commission so recommends, the Central Government may, notwithstanding anything contained in any other law for the time being in
force, by an order in writing, direct the division of any trade of the undertaking or of the undertaking or inter-connected undertakings.
(3) Notwithstanding anything contained in any other law for the time being in force, the order referred to in sub-section (2) may provide for all
such matters as may be necessary to give effect to the division of any trade of the undertaking or of the undertaking or inter-connected
undertakings, including, ——
(a) the transfer or vesting of property, rights, liabilities or obligations;
(b) the adjustment of contracts either by the discharge or reduction of
any liability or obligation or otherwise;
(c) the creation, allotment, surrender or cancellation, of any shares
stock or securities;
(d) the payment of compensation ;
(e) the formation, or winding up of an undertaking or the amendment
of the memorandum and articles of association or any other
instruments regulating the business of any undertaking;
(f) the extent to which the circumstances in which provisions of the
order affecting an undertaking may be altered by the undertaking and
the regulation thereof;
(g) the continuation, with such changes as may be necessary, of
parties to any legal proceeding.
(4) Where the Central Government makes, or intends to make, an order for any purpose mentioned in sub-section (3), it may, with a view to
achieving that purpose, prohibit or restrict the doing of anything that might impede the operation or making of the order and may impose on any
of ability, integrity and standing who have adequate knowledge or experience of, or have shown capacity in dealing with, problems relating to
economics, law, commerce, accountancy, industry person such obligations as to the carrying on of any activities or the safeguarding of any
assets, as it may think fit, or it may, by order, provide for the carrying on of any activities or safeguarding of any assets either by the appointment
of a person to conduct, or supervise the conduct of, any such activities or in any other manner.
(5) Notwithstanding anything contained in any other law for the time being in force or in any contract or in any memorandum or articles of
association, an officer of a company who ceases to hold office as such in consequences of the division of an undertaking or inter-connected
undertakings shall not be entitled to claim any compensation for such cesser.
Part C
28.Matters toe consideration by the Central Government before the according approval.-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 the 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 economical means, of goods of
such types and qualities in such volume and at such
prices as will best meet the requirements of the
defence 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 contravention of
economic power to the common detriment ;
(f) to regulate the control of the material resources of
the community to sub serve the common good; and
(g) to reduce disparities in development between
different regions and more especially in relation to
areas which have maintained markedly backward.
29.Opportunity of being heard.-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, its opinion, interested in the matter under the consideration of the Government.
30.Time within which action should be taken.- (1) Where the Central Government is of opinion that no approval can be accorded under section
21 or section 22, or no order under then section 23 can be made, unless a further inquiry has been held into the matter by the Commission, it shall
refer the matter to the Commission within sixty days from the date of receipt of the notice under section 21 , application under section 22 or the
proposal under section 23, as the case may be :
Provided that where the further particulars in connection with any such notice, application or proposal are called for by the Central Government,
the said period the sixty days shall be computed from the date on which such further particulars are furnished to that Government.
(2) Where any notice, application or proposal under this Chapter is referred to the Commission for an inquiry, it
shall be the duty of the Commission to make its report on the matter referred to it within ninety days from the date
on which the reference is received by it, except where the Commission, for special reasons recorded by it in writing,
is of opinion, that the report cannot be made by it within the said period of ninety days.
(3) Every notice, application or proposal in respect of which a report has been submitted by the Commission to the Central Government shall be
disposed of by that Government within sixty days from the date of receipt of the report of the Commission.
(4) Every notice, application or proposal which has not been submitted referred to t
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