2000 (5) TMI 951 - SC - Companies Law

Whether the order passed by the Commission that appellant has indulged in restrictive trade practice and further directions to file affidavit not to repeat such practices in future are at all justifiable ? Whether the decision rendered by the Commission in UTPE/RTPE No. 15 of 1994 holding that appellant has indulged in restrictive and unfair trade practice attracting section 2(o)( ii) and section 36A(1)(i) and (vi) is at all justifiable? Held that - There is no allegation or evidence to hold that the appellant has indulged in restrictive trade practice. In this view of the matter the learned counsel for the respondents were not in a position to support the said finding. Hence, the direction given by the Commission that the appellant shall discontinue alleged restrictive trade practices and not repeat the same in future and shall file an affidavit in compliance within six weeks from the date of the order passed in both the matters requires to be set aside. The Commission has not considered the necessary evidence and has accepted the plea of the respondent in arriving at the conclusion that the appellant board has indulged in unfair trade practice. We would again note that the Commission was not very clear about the application of the provisions of section 2(o)( ii) and it proceeded on the basis that the said section is also applicable. Further, as there is no proper finding of facts based on necessary evidence, we are of the opinion that the impugned order dated 30-5-1996 passed by the Commission in UTPE/RTPE No. 15 of 1994 holding that the appellant Board has indulged in unfair trade practices under section 36A(1)(i) and (vi) is unsustainable.

Issues Involved:
1. Whether the appellant indulged in restrictive trade practices.
2. Whether the appellant engaged in unfair trade practices.

Issue-wise Detailed Analysis:

Issue 1: Restrictive Trade Practices

The primary contention was whether the Rajasthan Housing Board's actions constituted restrictive trade practices under section 2(o)(ii) of the MRTP Act. The Commission had previously held that the Board's actions fell under this category, particularly the part of the clause that mentions "services in such manner as to impose on the consumers unjustified costs."

The Supreme Court found this interpretation erroneous. It emphasized that for a practice to be deemed restrictive, it must have the effect of preventing, distorting, or restricting competition. The Court referenced the Mahindra & Mahindra Ltd. v. Union of India case, which clarified that not every restraint of trade qualifies as a restrictive trade practice. The definition is pragmatic and result-oriented, focusing on whether the trade practice affects competition. The Court concluded that there was no evidence or allegation that the Board's actions had such an effect.

Thus, the direction given by the Commission for the Board to discontinue the alleged restrictive trade practices and file an affidavit was set aside.

Issue 2: Unfair Trade Practices

The second issue was whether the Board engaged in unfair trade practices as defined in sections 36A(1)(i) and (vi) of the MRTP Act. The respondent had alleged that the Board's delay in constructing and handing over possession of houses and the increased cost amounted to unfair trade practices.

The Supreme Court noted that the Commission needed to consider the terms and conditions agreed upon by the parties and whether the Board's actions misled the consumers. The Court emphasized that the Commission must determine if the representation made by the Board contained false statements and if it misled the buyers. The Commission should also consider whether the Board adopted unfair methods or deceptive practices to promote its services.

The Court cited the Nirma Industries Ltd. v. Director General of Investigation & Registration case, which highlighted the need for cogent material to support a finding of unfair trade practice. The Commission must be satisfied that the necessary ingredients of unfair trade practice are met, including actual or probable loss or injury to consumers.

The Supreme Court found that the Commission had not considered necessary evidence and had incorrectly concluded that the Board engaged in unfair trade practices. The impugned order holding the Board guilty of unfair trade practices was thus unsustainable.

Conclusion:

The Supreme Court quashed and set aside the Commission's orders in both RTPE No. 100 of 1994 and UTPE/RTPE No. 15 of 1994. The matters were remitted back to the Commission for fresh disposal in accordance with the law, allowing both parties to present evidence. The appeals were disposed of with each party bearing their own costs.

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