Decided on August 11,1994



A.N. Varma, J. - (1.) THIS Full Bench was constituted to determine certain preliminary objections raised in each of these enquiries and the compensation application. As the preliminary objections raised are identical, we are disposing of the same by means of this order. The enquiries and the compensation application were concerned with public issues of debentures offered by the various respondents upon certain terms and promises. These issues were assailed on the ground that the respondent companies had in the prospectus for raising capital through the issue of debentures made false and misleading claims. The respondents are hence liable to be proceeded against under Section 36A of the Monopolies and Restrictive Trade Practices Act, they having indulged in unfair trade practices. Each of the respondents appeared in response to the notices issued by the Commission and raised an objection questioning the jurisdiction of the Commission to deal with the subject-matter on diverse grounds which will be elaborated in the discussion that follows.
(2.) The Benches before which these matters came up for consideration felt that haying regard to the importance of the preliminary issue as to the jurisdiction of the Commission, it would be appropriate that the same be considered and decided by a larger Bench as a preliminary issue. It was also observed by the then chairman Mr. Justice G. R. Luthra, that while considering these issues the pronouncements of the Full Bench of this Commission in Consumer Education and Research Centre v. T. T. K. Pharma Ltd. [1990] 68 Comp Cas 89 and of the Division Bench comprising Shri D. C. Aggarwal and Shri H. C. Gupta in J. P. Shartna v. Reliance Petrochemicals Ltd. [1991] 70 Comp Cas 38 may be kept in view. From a perusal of the referring orders passed by the various Benches, particularly from the order dated February 3, 1989, passed by the learned chairman disposing of I. A. No. 6 of 1989 in UTPE No. 4 of 1989 in Deepak Fertilizers and Petrochemicals Corporation Ltd., In re and from an analysis of the preliminary objections raised by the respondents in their replies it seems to us that three issues arise for our consideration and these are: 1(a) Whether having regard to the true legal nature and characteristics of debentures, the same could be considered as "goods" within the meaning of Section 2(e) of the Monopolies and Restrictive Trade Practices Act, 1969, even before they are allotted to the debenture holder ? (b) Whether it makes any difference to the answer to the foregoing question, if the debentures offered by the company are compulsorily or optionally convertible into equity shares ? 2. Assuming the debentures are even prior to their allotment "goods", whether any trade practice is involved where the company simply invites applications for allotment of debenture for the purpose of raising capital for its trade or business ? 3. Whether the company provides or makes available any service to the prospective investors where it simply issues debentures and invites applications therefor within the meaning of Section 2(r) of the Monopolies and Restrictive Trade Practices Act.
(3.) WE will first have a look at the relevant statutory provisions as they stood prior to their amendment by the Monopolies and Restrictive Trade Practices (Amendment) Act, 1991, which came into effect and was inserted on September 27, 1991, the unamended Section 2(e) provides : " 'goods' includes goods produced in India, and, in relation to any goods, supplied, distributed or controlled in India, also includes goods imported into India ;" Cause (ii) of Section 2(e) was amended in 1991 and it now reads : "(ii) shares and stocks including issue of shares before allotment;" Section 2(s) defines the term "trade" as follows : "(s) 'trade' means any trade, business, industry, profession or occupation relating to the production, supply, distribution, or control of goods and includes the provision of any services ; " The term "trade practice" has been defined under Section 2(u) and 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." Section 2(r) defines "service" as : "service which is made available to potential users and includes the provision of facilities in connection with banking, financing, insurance, chit fund, real estate, transport, process, 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 a contract of personal service." Section 2(y) is important for our purpose and it provides : "words and expressions used but not defined in this Act and defined in the Companies Act, 1956 (1 of 1956), have the meanings respectively assigned to them in that Act.";

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