The Court held that the notice and explanatory statement issued for the purpose of two General Meetings of the company were not tricky or misleading and there was no deliberate suppression of facts which ought to have been communicated to the share-holders to enable them to decide if they would attend the Meeting or not. The Court further held that the balance of convenience is entirely against an order of Injunction at this stage, restraining the 8th appellant from investing Rupees One Crore in the share capital of Swadeshi Polytex Ltd.

( 1 ) THIS is an appeal from an interlocutory order of S. K. Mukherjea, J. , dated the 16th March, 1971.

( 2 ) THIS was an application in a representative action by a shareholder for an injunction restraining the company, Swadeshi Cotton Mills Ltd. and its directors from holding any meeting pursuant to a notice dated September 14, 1970 or from passing any of the resolutions set out in the said notice, or from Riving effect to the resolutions, if passed. This notice dated Sep. 14, 1970 was accompanied by an explanatory statement under Section 173 (2) of the Companies Act. On the 12th Oct. , 1970, the said resolution was unanimously passed by a general meeting held in pursuance of the said notice.

( 3 ) THE notice and the explanatory statement are challenged in the petition on the three following grounds: (a) Neither document disclosed whether permission has been obtained from the Central Government as required under the Monopolies and Restrictive Trade Practices Act for establishing the undertaking of Swadeshi Politex Ltd. which, when established, would be an inter-connected undertaking of the respondent company. (b) The said documents informed the members that the work of the said polyester fibre plant has commenced; no disclosure was made whether a licence has been obtained in respect thereof as required by Section 11 of the Industries Act. (c) None of the terms and conditions of the collaboration agreement --financial, technical or otherwise -- were disclosed.

( 4 ) THE learned trial Judge held that, in his opinion the undertaking of Swadeshi Polytex Ltd. transpires to be an inter-connected undertaking of the respondent company to which Section 22 of the Monopolies and Restrictive Trade Practices Act, 1969 will apply. The learned Judge also held that the shareholder plaintiff had a legal right to bring an action against the company of which he is a share-holder, to restrain it from committing an illegal act under the Monopolies and Restrictive Trade Practices Act or from questioning the sufficiency or validity of the notice of the resolution.

( 5 ) THE learned Judge also gave a meaning and interpretation of the word "inter-connected undertaking". He held that if a relative of the managing director of the company is the manag ing director of another company, their undertakings must be deemed to be inter-connected undertakings in the sense of the statute, even though the under takings may have nothing to do with each other, even though their constitu tion or organs of control may be total ly different. He said, "this may be bad logic or poor law, but it is good Monopolies and Restrictive Trade Prac tices Act. " Therefore, he held that because Rajaram Jaipuria and Sitaram Jaipuria were interested and were re lated, therefore it became an inter connected undertaking. Rajaram Jai puria is the managing director of the respondent company and Sitaram Jai puria is the managing director of Swadeshi Polytex Ltd, They are bro thers.

( 6 ) THE learned Judge also came to a certain conclusion with regard to Clause (b) of the Explanation of interconnected under takings in Section 2 (g) of the Monopolies and Restrictive Trade Practices Act, 1969, which reads as follows:"explanation-- For purposes of Clause (g) two or more undertakings shall be deemed to be inter-connected (b) if one or more individuals together with, the relatives or firms in which such individuals or their relatives are partners jointly or severally own manage or control the other". On the interpretation of Clause (b), the learned Judge said,"no doubt, Clause (b) is one of the glaring instances of bad drafting in an ill-drafted statute. The syntax is defective but nevertheless, the sense is clear. It means that two or more undertakings shall be deemed to be inter-connected, if one or more individuals who own manage or control one undertaking, together with his or their relatives jointly or severally own, manage or control the other undertaking or o