Monopolies and Restrictive Trade Practices Commission
Director-General Of Investigation And ... vs Universal Luggage Manufacturing Co. ... on 29 January, 1987
Equivalent citations: [1987]62COMPCAS275(NULL)
JUDGMENT
G.R. Luthra, J. (Chairman)
1. The present application is under Section 12A of the Monopolies and Restrictive Trade Practices Act. It has been filed along with an application under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act.
2. The respondent against whom the present application is filed was incorporated as a private limited company on May 18, 1974. It was converted into public limited company on November 10, 1986. It is carrying on the business of manufacture and sale of plastic moulded luggage.
3. Respondent issued a prospectus announcing public issue of 10,00,000 equity shares of Rs. 10 each for cash at par linked to 3,60,000 15% secured redeemable non-convertible debentures of Rs. 100 each for cash at par. The public issue opens on February 2, 1987, both for nonresident Indians and Indian public. The respondent has already obtained consent of the office of the Controller of Capital Issues, New Delhi.
4. As per the terms and conditions contained in the prospectus, the investors are required to purchase 20 debentures of Rs. 100 each worth Rs. 2,000 in order to subscribe for 100 equity shares of Rs. 10 each for Rs. 1,000 only.
5. It is contended by the applicant, Director-General (Investigation and Registration), that the approval of the Controller of Capital Issues (Department of Economic Affairs) under the Capital Issues (Control) Act, 1947, is no bar to the institution of enquiry proceedings by virtue of Section 37(3)(b) of the Act because the Capital Issues (Control) Act, 1947, does not contemplate the concept of linked issues. It is further contended that under the guidelines for approval of the issue of secured convertible/non-convertible debentures (as amended on March 8, 1985), issue of shares linked with debentures may be permitted by the Controller of Capital Issues only in cases where the interest rate offered in respect of non-convertible debentures is not more than the maximum for the convertible debentures.
6. The Director-General (Investigation and Registration) has also described the linking of the allotment of the equity shares with the debentures as a restrictive trade practice within the meaning of Section 2(o) and Clause (e) of Section 33(1) of the Monopolies and Restrictive Trade Practices Act because the respondent has restricted the sale of shares to those persons or classes of parsons only who purchase debentures also along with shares and that such linking has the effect of restricting, preventing or distorting competition because when an investor is compelled to subscribe for debentures in order to subscribe to the equity shares, large amounts of the. subscriber are blocked in the share-linked debentures.
7. The Director-General (Investigation and Registration), applicant, prays for the following reliefs by way of this application :
(i) ex parte ad interim injunction may be granted against the respondent restraining the respondent from carrying on the restrictive trade practice of tie-up of debentures with the issue of equity shares until the conclusion of the enquiry by this hon'ble Commission ;
(ii) The respondent be directed not to proceed with the allotment of equity shares if the same are offered in the manner proposed by the respondent.
8. According to Rule 3 of Order XXXIX, Civil Procedure Code, an ex parte injunction can be issued only if the delay in issuing the same will defeat the very purpose. In the present case, the issue is to open on February 2, 1987, which is only three days from today and, hence, issue of an ex parte injunction is necessary.
9. We have to take note of an application under Section 148 of the Civil Procedure Code which deals with filing of caveats because in the present case a caveat was filed by Shri C.K. Barfetia on behalf of the respondent. It appears that the aim of filing such application was that before any adverse order could be passed against the respondent, a notice should be issued to the said respondent under Sub-section (3) of Section 148A which reads as under :
"Where, after a caveat has been lodged under Sub-section (1), any application is filed in any suit or proceeding, the court shall serve a notice of the application on the caveator."
10. Here the question is whether such a fetter of not issuing any order ex parte can be placed on the Commission which is governed by the provisions of the Monopolies and Restrictive Trade Practices Act. Section 12A of the Monopolies and Restrictive Trade Practices Act prescribes as to under what circumstances an injunction can be issued and also lays down the procedure in that respect. Sub-section (2) of Section 12A says that all the provisions of Rules 2A to 5 of Order XXXIX, Civil Procedure Code, shall apply in the matter of issue of injunction. Rule 3 of Order XXXIX says that an ex parte injunction can be issued if the delay in issuing the injunction shall defeat the very purpose of the same provided reasons are given for issuing ex parte injunction. That means that the power of issuing ex parte injunction, which is given to the Commission under the provisions of the Monopolies and Restrictive Trade Practices Act (i.e., Sub-section (2) of Section 12A) is taken away by Section 148A, Civil Procedure Code. It is a fundamental principle of law that when a certain statute creates any authority (like the Commission created by the Monopolies and Restrictive Trade Practices Act), the provisions of those statute have overriding effect against all other laws in the matter of exercise of functions and powers by the said authority in accordance with the law creating it. So in this case, the Commission has to follow the Monopolies and Restrictive Trade Practices Act as against all inconsistent provisions of the Civil Procedure Code like Section 148A. That being so, ex parte injunction can be issued in accordance with Rule 3 of Order XXXIX, Civil Proceduce Code, read with Sub-section (2) of Section 12A.
11. Further, it may also be mentioned that the provisions of the Civil Procedure Code have been applied only to some extent by Section 12(1) of the Monopolies and Restrictive Trade Practices Act. Section 148A is not included in those provisions. However, the Commission applied the provisions of the Civil Procedure Code, vide regulation 15(2) of the Monopolies and Restrictive Trade Practices Commission Regulations 1974, which were framed under Section 18 of the Monopolies and Restrictive Trade Practices Act. In regulation 15(2), it has been clearly stated that provisions of the Civil Procedure Code will apply only where there is no specific provision in these regulations. That means, the Civil Procedure Code cannot override the regulations and that being so, obviously, it cannot override the parent statute, i.e., the Monopolies and Restrictive Trade Practices Act under which the regulations have been framed.
12. In a similar case against Modern Suiting Ltd., In re (RTPE No. 93 of 1986--[1987] 61 Comp Cas 404 (MRTPC)), the Bench, consisting of Shri D.C. Aggarwal and Shri M. Satyapal, directed the respondent in that case to make the allotments of shares and debentures subject to the ultimate decision of the enquiry. Hence, following that precedent, we issue an injunction to the effect that allotment of shares and debentures can go on only if the respondent makes adequate arrangements for refund to the subscribers of the amounts collected on non-convertible debentures along with interest from the date of receipt of the application money till date of actual refund to the subscribers, at the option of the subscribers, in the event the Commission were to come to the conclusion that linking of debentures with equity shares is a restrictive trade practice prejudicial to public interest. A copy of this injunction order, a copy of the application under Section 10(a)(iii) and 12A of the Monopolies and Restrictive Trade Practices Act shall be sent to the respondent for showing cause as to why the aforesaid injunction be not continued till the decision of the enquiry.
13. As required by Rule 3 of Order XXXIX, Civil Procedure Code, a copy of the application under Section 12A of the Monopolies and Restrictive Trade Practices Act, a copy of the affidavit and intimation of this order be sent by the Director-General (Investigation and Registration) by registered post to the respondent and an affidavit of compliance in this respect be filed by the Director-General (Investigation and Registration).
14. It is made clear that whatever is stated above will not prejudice the decision of the enquiry on merits as well as the final decision of this very application.
15. This application under Section 12A of the Monopolies and Restrictive Trade Practices Act shall be taken up on February 10, 1987.
16. Pronounced.