The shareholding of a subsidiary company cannot be aggregated with the shareholding of the holding company to determine whether the holding company holds 1/3rd shares of another company.

( 1 ) IN this writ petition the question which arises for consideration is as to what is the full scope and effect of the term inter-conneeted undertaking , as defined in Section 2 (g) of the Monopolies and Restrictive Trade Practices Act 1969 (hereinafter referred to as the said Act ).

( 2 ) PETITIONER No. 1. is a company incorporated under the Indian Companies Act, 1930. Petitioners 2 to 4 are its Directors. A number of undertakings, carrying on different businesses, are owned by petitioner No. 1. One of the undertakings of petitioner No. 1 is, inter alia, engaged in the marketing of paints. The said Company also acts as selling agents and|or agents of various other Companies.

( 3 ) PETITIONER No. 1 also has two subsidiary companies, namely, Tangpani Tea Co. Ltd. (hereinafter referred to as T. T. C.) in which it holds 53 per cent (approximately) of the equity capital and the Jutilibari Tea Co. Ltd. (hereinafter referred to as J. T. C.) in which it holds 56 per cent (approximately) of the equity capital of the said Company.

( 4 ) IT is an admitted case that petitioner No. 1 also has investments in shares of various joint stock companies, other than its aforesaid subsidiaries. One such company, of which petitioner No. 1 holds shares, is Waldies Limited (hereinafter referred to as Waldies ). It appears that prior to July, 1977 the petitioner-company held approximately 36 per cent shares of the said Waldies. It, however, transferred 4 per cent of its shares of Waldies with the result that as in July, 1977 it held only 32 per cent shares of Waldies.

( 5 ) AS on 31st March, 1981 some of the shares of Waldies were also held by T. T. C. and J. T. C. (the subsidiary companies of petitioner No. 1 ). T. T. C. held 2 per cent of the equity share capital of Waldies while I. T. C. held 1. 99 per cent approximately of the said Company s equity share capital.

( 6 ) THE majority of the shares of Waldies were held by an English Company, namely. Lead Industries Group Limited (hereinafter referred to as LIG ). This was a company incorporated in the United Kingdom and it held approximately 63. 88 per cent of the equity shares capital of Waldies. LIG also holds more than 1|3rd of equity capital of two other companies, namely, Eyre Smelting Pvt. Limited, Calcutta (hereinafter referred to as Eyre) and Gondlass Nerolac Paints Ltd. , Bombay (hereinafter referred to as Goodlass ).

( 7 ) IN order to understand, more clearly, the connection and the link between the various companies, reference may usefully be made to the following illustration : LIG Petitioner No. 1 -------------------------------- ------------------------------------------ | | | | | | |more | More |63. 88% | | 53% |56% |than | than | | 32. 1% | Tengapani |tulibari | 1/3 | 1/3 | | | | | | | |1. 99% | | | | |2% | | | | | | | ------------------------------- ------------------------------------------ Eyre Goodlass Waldies

( 8 ) ON 2nd June, 1977 petitioner No. 1 received a notice from the Joint Director, Ministry of Law, Justice and Company Affairs, Department of Company Affairs (respondent No. 2) asking the petitioner-company to make an application for registration under section 26 of the said Act. The reason given for this in the notice was as follows :

"gillanders Arbuthnot and Co. Ltd. (GACL) (S. No. 1) is the holding Co. of the four subsidiaries (S. No. 2 to 5) and controls 36 per cent of equity in Waldies Ltd. (S. No. 6)"waldies Ltd. is also the subsidiary of a foreign Company namely Land Industries Group Ltd. of U. K. which also controls not less than 1|3rd voting rights in the companies at S. No. 7 and 8. These two companies and Waldies Ltd. are therefore under the same management in terms of Expl. I (iii) and (vii) of Section 2 (g) of the MRTP Act".

( 9 ) IN its reply dated 19th July, 1977 petitioner No. 1 contended that it held less than 1|3rd of the paid-up capital of Waldies. It was also stated that the petitioner-company was not under the same management as W