1997 (12) TMI 543 - SC - Companies Law

Whether the discretionary order of temporary interim injunction granted by the Commission pending the passing of final orders in the injunction application filed by the respondents-complainants, is liable to be set aside or modified ? Held that - Appeal dismissed. The order passed by the Commission was a purely discretionary order and was also an interim order pending the passing of a final order of temporary injunction and is not liable to be interfered within this appeal. The matter being technical in nature, if the Commis-sion felt, as suggested by the appellant in its reply, that a panel of experts could go into the correctness of rival claims and give its opinion and if the Commission further said that after the opinion was given, parties could make their final submissions in the injunction application and if the Commission felt that till then, an order of an interim nature should operate, we do not think that it is a fit case for interference with such a discretionary order.

Issues Involved:
1. Maintainability of the complaint under sections 10, 36A, and 36B of the Monopolies and Restrictive Trade Practices Act, 1969.
2. Allegations of unfair trade practice under section 36A(vii) and (x) of the Act.
3. Grant of temporary injunction under section 12A of the Act.
4. Prima facie case for interim relief.
5. Balance of convenience and potential prejudice to parties.

Issue-wise Detailed Analysis:

1. Maintainability of the Complaint:
The Commission held that the objection regarding the maintainability of the complaint based on sections 36B and 10 was not tenable. It stated that the Commission was empowered to act upon its own knowledge or information for the purpose of inquiry under the Act. Additionally, the 2nd complainant, being a consumer, could rely upon sections 10 and 36B.

2. Allegations of Unfair Trade Practice:
The respondents alleged that the appellant engaged in unfair trade practice by making misleading representations in their advertisements, claiming that 'New Pepsodent' was '102% better than the leading toothpaste.' The Commission found that the reference to the 'leading toothpaste' in the advertisements was a reference to 'Colgate Dental Cream,' manufactured by the 1st respondent. The Commission concluded that the appellant's claims of anti-bacterial superiority implied that Colgate was 102% inferior, which amounted to 'disparagement' under section 36A(x).

3. Grant of Temporary Injunction:
The appellant contended that no temporary injunction could be granted unless the respondents proved the falsity of the appellant's claims. However, the Commission, considering the conflicting expert opinions presented by both parties, decided that it was not in a position to form a prima facie opinion on the scientific claims. Therefore, the Commission suggested appointing a panel of experts to verify the claims and granted a temporary interim injunction pending the final decision.

4. Prima Facie Case for Interim Relief:
The Commission held that a prima facie case for interim relief was made, as the advertisements were referable to Colgate and the claims of anti-bacterial superiority could mislead consumers. The Commission referred to a similar case, Colgate Palmolive (P.) Ltd. v. Rexona Pty. Ltd., where a temporary injunction was granted against making 'tall claims' until the truthfulness of the claim was established at trial.

5. Balance of Convenience and Potential Prejudice:
The Commission considered the balance of convenience and noted that the representation through media, especially TV, could make consumers believe the appellant's claims as true. Evidence showed a reduction in Colgate's sales following the advertisements. The Commission observed that the appellant would not suffer much from the interim relief and would save on advertisement expenses. Therefore, the temporary injunction was granted to protect consumer interests and prevent potential prejudice to the respondents.

Conclusion:
The Supreme Court dismissed the appeal, upholding the Commission's discretionary order of temporary interim injunction. The Court emphasized that the Commission's decision to appoint a panel of experts was based on the technical nature of the claims and the conflicting expert opinions. The Supreme Court refrained from expressing any opinion on the merits of the case to avoid prejudicing the parties' claims and contentions. The appeal was dismissed without any order as to costs.

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