The Monopolies and Restrictive Trade Practices (Amendment) Ordinance, 1991

9• 62] No. 62] !!l!ll!ll'{O! EXTRAORDINARY ll'lt1'11~ 1 PART II-Section 1 !!lfa~m: ~ lHnft@ PUBLISHED BY AUTHORITY ~ f.1..ft, "!'-'1'1<, f«c,"<i!< 27, 1991/:!flft!f'f 5, 1913 NEW DELHI, FRIDAY, SEPTEMBER 27, 1991/ASVINA 5, 1913 {9 'I'll'! ft flm' ~ «!i!ITT ~; .irl'fr ~ flilffll' f"1 'fi! 'Jti'i'T fflfll'i,I ii; l!"f if ~1 ill '"' I Separate paging is given to this P:Jrt in ordet that it may be filed :\5 a scpar.ate- compilation. MINJSTRY OF LAW,. JUSTICE AND COMPANY A.FFAIRS (Le,g:sJativc De,artment) New Delhi, the 27th September, 1991/ Asvina 5, 1913 (Saka) UIE MONOPOLIES AND RESTRICTIVE TRADE PRACIICES (AMENDMEN ; ) ORDINANCE, 1991 No. 8 OF 1991 Promulgated by the President in the Forty-second Year of the Republic of India. An Ordinance further to amend the Monopolies and Restrictive Trade Practices Act, 1969 and the Companies Act, 1956. WHEREA~ Parliament is not in session and the President is satisfied that eircurnstances exist which render it necessary for him to take immediate action; Now, THEREFORE, in exercise of the powers conferred by clause (1) of article 123 of the Constitution, the President is pleased to promulgate the following Ordinance:- 1. (1) This Ordinance may be cnlle<l the Monopolies and Restrictive Trade Practices (Amendment) Ordinance, 19Gl, (2) It shall come into force at once. (I) Short title and com~ mence~ ment. Amend .. ment of section 2. Amend .. ment of section 10. Amend .. ment of section 11. Amend­ ment of section 12. PART I AMENDMENTS TO THE MONOPOLIES AND REsTRICTIVE TilADE l'RAC~ AcT, 1969 ' 2. In section 2 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the principal Act),- 54 of 1969. (a) in clause (e), for sub-clause (ii), the · following sub-clause shall be substituted, namely:-- .. (ii) shares and stocks including issue of shares before allotment;"; (b) clause (q) shall be omitted; (c) in clause (r) ,- (i) after the word ''insurance", the words "chit fund, real estatei• shall be inserted; (ii) the following Explanation shall be inserted at the end, namely:- 'Explanation.-For the removal of doubts, it is hereby declared that any dealings in real estate shall be included and shall be deemed always to have been included within the definition of "service'';'; (d) clause (w) shall be omitted. 3. In section 10 of the principal Act, in clause (b), after the words "the Central Government", the words "or upon an application made to it by the Director General" shall he inserted. 4. In section 11 of the principal Act,- ( a) for sub-section (1), the following sub-section shall be substituted, namely:- " (1) The Commission may, before issuing any process re­ quiring the attendance of ·the person against whom an inquiry ( other than an inquiry upon an application by the Director General) may he made under section 10, by an order, require the Director General to make, or cause to be made, a prelimi­ nary investigation in ruch manner as it may direct and submit a report to the Commission to enable it to satisfy itself as to whether or not the matter requires to be inquired into.''; (b) in sub-section (2), the words, brackets, figures and l~tter "sub-clause (iii) of clause (a) of" shaJI be omitted. 5. In section 12 of the principal Act,- (a) in sub-section (1), after clause (e). the following clause shall be inserted, namely:- " (f) the appearance of parties and consequence of non­ appearance.''; (b) in sub-section (2), for the words and figures "and Chapter XXXV of the Code of Criminal Procedure, 1898", the words and 5 of 1898. figures "and Chapter XXVI of the Code of Criminal Procedure, 1973" shall be substituted. 2 of 1974. tl> 6. In Chapter III of the principal Act,­ (a) Part A shall be omitted; (b) the word and letter "Part B" occurring before section 27 shall be omitted. 7. In section 27 of the principal Act, in sub-section (1), for the por- Am•nd- • ' tion beginning with the words "Notwithstanding anything" and ending mentof with the words "for an inquiry", the following shall be substituted, section 27•• namely:- "Notwithstanding anything contained in this Act or in any other law for the time being in force, the Commission may,- (i) upon receiving a complaint of facts from any trade association or from any consumer or a registered consumers' association, whether such consumer is a member of that consu­ mers' association or not, or (ii) upon a reference made to it by the Central Govern­ ment or a State Government, or (iii) upon its own knowledge or information, if it is of opinion that the working of an undertaking is prejudicial to the public interest, or has led. or is leading, or is Hkely to lead, to the adoption of any monopolistic or restrictive trade prac­ tices, inquire into". 8. In section 27A of the principal Act, in sub-section (1), for the portion beginning with the words "Notwithstanding anything" and ending with the words "for an inquiry", the following shall be substitu­ ted, namely: - "Notwithstanding anything contained in this Act or in any other , law for the time being in force, the Commission may,- (i) upon receiving a complaint of facts from any trade association or from any consumer or a registered consumers• association, whether such consumer is a member of that consu­ mers' association or not, or (ii) upon a reference made to it by the Central Government or a State Government, or (iii) upon its own knowledge or information, if it is of opinion that the continuance of inter-connection 'Jf an undertakin•g (hereinafter in this section referred to as the principal undertaking) with any other undertaking is detrimental to- (a) the interests of the principal undertaking; or (b) the f;_,ture development of the principal und€rtaking; or (c) the steady growth of the industry to which the principal undertaking pertains; or (d) the public interest, inquire into". Amend­ mento,1- tectioa 27A.-· Amend- 9. Part C of Chapter III of the principal Act shall be omitted. ment et chapter llL omJssion of 10. Chapter III-A of the principal Act shall be omitted Chapter ill-A. Amend- 11. In section 31 of the principal Act, in sub-section (1), in the mcnt t>f proviso, after the words "Commission receives", the words "any appli- -tion 31. cation from the Director General or" and after the words "it may", the words "on such application or" shall be inserted. Amend- 12. In section 36A of the principal Act,- ment of section 36A. Substi­ tution of new section • for­ lion 36C. lnvestiga. lion by Director General before an issue of process in i:ertain cases, Amend­ ment of section 36D. Omimon of section 45. Amend­ ment of IOClion 46. Omisrion of section 47, (a) for the portion beginning with the words "adopts one or more" and ending with the words ''or otherwise'', the following shall be substituted, namely:- ''adopts any unfair met.hod or unfair or deceptive practice in­ cluding any of the following practices"; (b) in clause (1), in sub-clause (i), after the word "quality,'', the word "quantity,'' shall be inserted. 13. For section 36C of the principal Act, the following section shall be substituted, namely: - "36C. The Commission may, before issuing any process requiring the attendance of the person against whom an inquiry ( other than an inquiry upon an app!icatio:1 by the D1rector General) may be made under section 36B, by an order, require the Director General to make, or cause to be made, a preliminary investigation in such manner as it may direct and submit a report to the Commission, for the purpose of satisfying itself that the matter requires to be Inquired into.''. U. In section 36D of the principal Act, in sub-section (1) ,- (a) in clause (a), the word "and" occurring at the end shall be omitted; (b) after clause (b), the following clause shall be name'ly:- imerted, 1 "(c) any information, statement or advertisement relating to such unfair trade practice sha11 be disclosed, issued or pub­ lished, as the case may be, in such manner as may be specified in the order.". 15, Section 45 of the principal Act shall be omitted. 18. In section 46 of the principal Act, the words and figures "section 22 or section 23 or section 24 or'' shall be omitted. 17. SecUon 47 Qf the principal Act shall be Qmi_tted, 18. In sedion 48 of the principal Act, sub-section (2) shall _ be Amend- omitted 1® 19. For section 48B of the principal Act, the following section sl>all be substituted, n2mely:- "48B. (1) Every person who exercises any voting right in respect of any share in contravention of any order of the Central Government referred to in sub-section (1) of section 27B shall be punishable with ;mprisonment for a term which may extend to five years, and shalJ also be liable to fine. (2) If any company gives effect to any voting or other right exercised in relati0n b any share heH in contravention of an order of the Central Government referred to in sub-section (1) of section 27B, the company shall be punishable with fine which may P.xtend to five thousand rupees, and every officer of the company who is in default shall b~ punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both.". 20. In section 48C of the principal Ad, for the words "which may extend to three years. or with fine which may extend to ten thousand rupres, or with both", the following sh.o!l be substituted, namely:- "which shall not be less than six r,1onths but which may extend to three years and with fine which may extend to ten lakh rupees: Provided that the court may. for reasons to be recorded in writing, impose a sentence of imprisonment for a term lesser than the minimum term specified in iMs section."_ 21. In section 50 of the principal Act, for sub-sections (1) and (2), the following sub-sections shall be svb 0 tituted, namely:- "(1) A person, who is dc0meJ 1,rnkr ,wclion 13 to be guilty of an cffence under this Act, ,:h;,Jl be punishable with imprisonment for a term which may extend to three years. or with fine which may extend to fifty thousand rupees, or with both, and where the offence is . a continuing one, with a furt':ier fine which may extend to five thousand rupees for every day, after the first, during which such contravention continues. I (2) If any person contrave,,.es, without any reasonable excuse, any order made by the Central Government under section 31 or any order made by the Commiss'on under section 37, he shall be punish­ able with imprisonment for a 1crm which shall not be less than,- (a) in the case of the first offence. six months but not more than three years, and (b) in the case of any second or subsequent offence in rela­ tion to the goods or services in respect of which the first offence was committed. two years hut not more than seven years, 48. Sub_stitu­ tion of new sectiqn for 5~C­ tion 4.88. Penalty for con­ travention of sec- tion 27B. Ame~d­ ment of section 48C. Amend­ men~ _of section. so. r ... rtion of new aection S3A. Power to com~und offences. Amend­ ment of section .u. Amend­ ment of section 55. Amend­ ment of section 67- 0mission of the Schedule. (osertion o(DeW sections 108A ti> 108-J. Restric­ tion on. acquisi­ tion of certain shares. and, in either case, where the contravention is a continuing one. also with fine which may extend to five thousand rupees f day, after the first, during which such contravention c ________ _ Provided that the court may, for reasons to be recorded in writing, impose a sentence of imprisonment for a term lesser than the minimum term specified in this sub-section.". - • 22. After s,,ction 53 of the principal Act, the following section shall be inserted, namely:- "53A. The Commission· may, for reasons to be -recorded in writing, either · before or after the institution of proceedings, com­ pound any offence under section 48C or section 50 relating to con­ travention of any order made by it .". 23. In section 54 of the principal Act,- (a) sub-section (2) shall be omitted; (b) in sub-section (3) , the words, bracltets and figure "or any term of a scheme of finance, as modified under sub-section (Z)," shall be omitted . 2,. In section 55 of the principal Act, after the words "the Com­ mission under", the words, figures and letter ''.section 12A or" shall be inserted. 25. In section 67 of the principal Act, in sub-section (2), clauses (ac), (ba) and (g) shall be omitted. 26, The Schedule to the principal Act shall be omitted. PART II AMENDMENTS TO THE C OM PANIES AcT, 1956 27, In the Companies Act, 1956 (hereinafter referred to as the Com- 1 of 1956. panics Act) , after section 108, the following sections shall be inserted, namely:- "108A. (1) Except with the previous approval of the Central Government, no individual, firm, group, constituent of a group, body corporate or bodies corporate under the same management, shall jointly or severally acquire or agree to acquire, whether in his or its own name or in the name of any other person, any equity shal'es in a public company, or a private company which is a rnbsi­ diary of a public company, if the total nominal value of the equity shares intended to be so acquired exceeds, or would, together with the total nominal value of any equity shares already held in the company by such individual, firm , group, constituent of a group, body .corporate . or bodies corporate under the same management, • exceed twenty-five per cent. of the paid-up equity share capital of such company. (2) Where any individual, firm, group, constituent of a group, body corporate. or bodies corporate under the same management ® (hereinafter in this Act referred to as the acquirer), is proMhit..il by sub-section (1), from acquiring or agreeing to acquire with the previous approval of the Central Government, any snare of a public company or a private company which is a subsidiary of a public company, no- (a) company in which not less than fifty-one per cent. of the share capital is held by the Central Government; or (b) corporation (not being a company) established by or under any Central Act; or (c) financial institution, shall transfer or agree to transfer any share to such acquirer unless such acquirer has obtained the previous approval of the Central Government for the acquisition, or agreement for the acquisition, of such share., i 108B. (1) Every body corporate, or bodies corporate under the same management, holding, whether singly or in the aggregate, ten per cent. or more of the nominal value of the subscribed equity share capital of any other company, shall, before transferring one or more of such shares, give to the Central Government an intima­ tion of its or their proposal to transfer such share, and every such intimation shall include a statement as to the particulars of the share proposed to be transferred, the name and address of the person to whom the share is proposed to be transferred, the share holding, if any, of the proposed transferee in the concerned company and such other particulars as may be prescribed. (2) Where, on receipt of an intimation given under sub-section (1) or otherwise, the Central Government is satisfied that as a result of such transfer, a change in the composition of the Board of directors of the company is likely to take place and that such change would be prejudicial to the interests of the company or to the public interest, it may, by order, direct that- ;! (a) no such share shall be transferred to the proposed i~ . .., transferee: Provided that no such order shall preclude the body corpol"ate or bodies corporate from intimating, in accordance with the provisions of sub-section (1), to the Central Govern­ ment • its or their proposal to transfer the share to any other person, or ., (b) where such share is held in a company engaged in any industry specified in Schedule XV, such share shall be trans­ ferred to the Central Government or t0 such corporation owned or controlled by that Government as may be specified in the direction. (3) Where a direction is made by the Central Government under clause (b) of sub-section (2), the share referred to in such direction shall stand transferred to the Central Government or to the corporation specified therein, and the Central Government or the specified corporation, as the case may be, shall pay, in cash, to the body corporate or bodies corporate from which such share atandl lle$1ric­ tion on transfer Of .shares. Restric­ tion on the transfer of shares of foreign companies. Power of Central Govern­ ment to direct companies not to give effect to the tramfer. transft?rred, an amount equal to the market value of such share, within the time specified in sub-section (4). j Explanation,-In this sub-section, "market value'' meians, in the case of a share which is quote<l on any recognised stock exchange, the value quoted at such stock exchange on the date imme,Jiately preceding the date on which the 6irection is made, and, in any other case, such value as may be mutually agreed upon between the holder of the share and the Central Government or the specified corporation, as the case may be, or in the absence of such agreement, as may be determined by the court. (4) The market value referred to in sub-section (3) shall be &iven forthwith, where there is no 9-ispute as to such value or where such value has been mutually agreed upon, but where there is a dispute as to the market value, such value as is estimated by the Central Government or the corporation, as the case may be, shall be given forthwith and the balance, if any, shall be given within thirty days from the date when the market value is deter­ mined by the court, (5) If the Central Government does not make any direction under sub-section (2) within sixty days from the date of receipt by it of the intimation given uncler sub-section (1), the provisions contained in sub-section (2) with regard to the transfer of such share shall not apply. 108C. No body corporate, or bodies corporate under the same management, which holds, or hold in the aggregatt,, ten per cent, or more of the nominal value of the equity share capital of a foreign company, having an established place of business in India, shall transfer any share in such foreign company to any citizen of India or any body corporate incorporated in India except with the previous approval of the Central Government and such pre­ vious approval shall not be refused unless the Central Government is of opinion that such transfer would be prejudicial to the public interest. 108D. (1) Where the Central Government is satisfied that as a result of the transfer of any share or block of shares of a company, a change in the controlling interest of the company is likely to take place and that such change would be prejudicial to the interests of the company or to tbe public interest, that Government may direct the company not to give effect to the transfer of any such share or block of shares and- (a) wheire the transfer of such share or block of shares has already been registered, not to permit the transferee or any nominee or proxy of the transferee, to exercise any voting or other rights attaching to such share or block of shares; and (b) where the transfer of such share or block of shares has not been registere,d, not to permit any nominee or ·proxy I of the transferor to exercise any voting or other rights attaching to such share or block of shares. ! ~ • (2) Where • any direction is given by the Ce~tral Government under sub-section (1), the share or the block of ishares referrep to therffl! shall stand retransferred to the person from whom it was acquired, and thereupon the amount paid by the . transferee for the acquisition ol such share or block of shares slall be refunded to libn ~ the penon 1o whom such share or block of shares stands ff stand retransfem!d, (3) U the refund referred to in sub-section (2) is not made within the period_ of thirty days from the date of the direction referred to in sulHection (1), the Central Gove1'Il!J).ent shall, on the application of the person entitled to get the refund, direct, by order, .the refund of such amount and such order may be enforced as if it l!fere a decree made by a civil court. (4) The person to whom any share or block of shares stands or stand retransferred under sub-section (2) shall, on making refund under sub-section (2) or sub-section (3), be eligible to exercise voting or other rights attaching to such share or block of • shares. 108E. Every request made to the Central , Government for according its approval to the proposal for the acquisition of any share referred to in section 108A or the transfer of any share referred to in section 108C shall be presumed to have been granted unless, within a period of sixty days from the date o'f receipt of such request, the Central Government · communicates to the person by whom the request was made, that the approval prayed for ilannot be granted. 108F. Nothing contained in section 108A [except sub-section (2)' thereof] shall apply to the transfer of any share to, and nothing in section 108B or section 108C or section 108D shall apply to the transfer of any sliare by- Time within which refusal to be commu­ nicated.. Notblnc in sections 108A to 1080 to •~Pb to Go,ern• (a) any company in which not Jess than fifty-one per cent. meni of the share capital is held by the Central Government; companies. (b) any corporation (not. being a company) established by or under any Central Act; ( c) any financial institution. 108G. The provisions of sections 108A . to 108F : (both inclusive) • • sh.all apply to the acquisition or transfer of share~ or share capital . by, or to, an individual, firm, group, constituent ()f a group, body corporate, or bodies corporate under the same ma'lagement, who or _which- (a) is the owner in relation to _a dominan~ undertaking, or • • • (b) . would be, as a result cif such acquisitipn or transfer of etc. Applica­ bility of the pro­ visions of sections 108Aw 108P, , · :.:.· . shares or share capital, the owner of a domin1nt undertaking. !. ® Construe­ tion of certain exp,.._ siOl!l; used in sections 108A to 108G. Penalty for acqui­ sition or transfer of share in cont­ raven­ tion of sections 108A to 108D. 108H. The expressions, "group", "same management", "fin~ al institution", ''dominant under.taking" and "owner" used in si 108A to 108G (both inclusive), shall have the meanings respectivel.Y assigned to them in the Monopolies and Restrictive Trade Practices Act, 1969. 108-I. (1) Any person who acquires any share in contravention of the provisions of section 108A shall be punishable with imprison­ ment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both- (2) (a) Every body corporate which makes any transfer of shares without giving any intimation as required by section 106B, shall be punishable with fine whlch may extend to five thousand rupees. (b) Where any contravention of the provisions of section 108B has been made by a company, every officer of the company who is in default shall be punishable with imprisonment for a ·term which may extend to three years, or with, fine which may extend to five thousand rupees, or with both. (3) (a) Every body corporate which makes any transfer of shares in contravention of the .provisions of section 108C, shall be punish­ able with fine which may extend to five thousand rupees. (b) Where any contravention of the provisions of section 108C has been made by a company, every officer of the company who is in default shall be punishable with imprisonment for a term which may extend to three years, or with fine which may extend to five thousand rupees, or with both. ( 4) (a) Every person who transfers any share in contravention of any order made by the Central Government under section 108B, or gives -.rect to any transfer of shares made in contravention of any direction made by the Central Government under section 108D, or who exercises any voting right in. respect of any share in contraven­ tion of any direction made by the Central Government under section 1080, shall be punishable.with- imprisonment for a term which may extend to five years, and shall also be liable to fine. (b) If any company gives effect to any voting or other right exercised in relation to any share acquired in contravention of the provisions of section 108B, or which gives effect to any voting right in contravention of any direction made by the Central Government under section 108D, the company shall be punishable with fine which may extend to five thousand rupees, and every officer of the company who is in default sh,all be punishable with imprisonment for a term which may extend to three years, or With fine which may extend to five thousand rupees, br with both." .• 54of 11169. 21. After Schedule XIV to the Companies Act, the following Sch, dule shall 'be inserted, namely:- "SCHEDULE XV [See section 108B(2) (&)] 1. Arms and ammunition and allied items of defence equipmeat, defence aircrafts and warships. 2. Atomic energy. 3. Coal and lignite. 4. Mineral oils. 5. Mining of Iron ore, manganese ore, chrome ore, gypsum, sul­ phur, gold and diamond .. 6- Mining of copper, lead, zinc, tin, ·molybdenum and wolfram. 7. Minerals specified in the Schedule to the Atomic Energy (Con­ trol of Production and Use) Order, 1953- 8. Railway transport.". R. VRNKATARAMAN, President. K. L- MOHANPURIA, Addit.ional Se.cretary to \lie Gove. of hdia,