1994 (3) TMI 285 - Commission - Companies Law

Compensation - Power of Commission to award - Taken in by advertisements issued by respondent-company under which company guaranteed a return of double amount invested, applicant invested ₹ 18,000 - An agreement was entered into between applicant and respondent and respondent issued 3 post-dated cheques to appellant - When applicant presented first cheque for encashment it bounced and respondent did nothing to meet applicant s claim - Whether applicant was entitled to compensation of a sum of ₹ 29,250 for loss suffered by him as a result of unfair trade practice indulged in by respondent - Held, yes - Whether applicant was also entitled to further compensation of ₹ 10,000 for mental agony allegedly suffered by him - Held, no

Summary

Issues: Unfair trade practices, false promises, compensation for loss suffered, mental agony damages, compliance with Commission's order, ex parte proceedings.

Analysis:
The judgment by the Monopolies and Restrictive Trade Practices Commission dealt with a case involving unfair trade practices by a private limited company. The respondent had been issuing advertisements promising attractive investment schemes, guaranteeing a doubling of the invested amount in two years. The Commission found these practices to be unfair, attracting clauses (iv) and (viii) of section 36A(1) of the MRTP Act, 1969. The applicant, a victim of such practices, invested Rs. 18,000 based on false promises made by the respondent. Despite an agreement and post-dated cheques issued by the respondent, the applicant was deceived, leading to a loss of money. The Commission noted that such practices were prejudicial to public interest, as they misled investors into parting with their money based on false assurances.

The respondent failed to rebut the applicant's claims, leading the Commission to accept the applicant's uncontroverted assertions of suffering a loss of Rs. 29,250. The Commission ordered the respondent to pay this amount to the applicant, along with interest at 18% per annum from a specified date. However, the claim for Rs. 10,000 as compensation for mental agony was dismissed due to lack of reliable evidence supporting it. The judgment highlighted the importance of holding entities accountable for unfair trade practices and ensuring compensation for victims of such practices.

In conclusion, the Commission allowed the application for compensation in part, issuing a decree against the respondent for the specified amount. The respondent was directed to pay the amount along with interest and costs within a stipulated timeframe. The judgment underscored the significance of upholding fair trade practices and protecting individuals from falling prey to misleading advertisements and false promises in the investment sector.