1999 (8) TMI 810 - HC - Companies Law

Summary

Issues Involved:
1. Refusal to sell products below the maximum retail price.
2. Compliance with the Monopolies and Restrictive Trade Practices Act, 1969.
3. Use of products as loss-leaders.
4. Maintainability of writ petitions against Co-operative Societies.

Detailed Analysis:

1. Refusal to Sell Products Below Maximum Retail Price:
The petitioners, dealers in consumer goods, were selling products at prices lower than the maximum retail prices set by the manufacturer. The distributor (5th respondent) refused to supply products to the petitioners on this basis. The court examined whether this refusal was lawful.

2. Compliance with the Monopolies and Restrictive Trade Practices Act, 1969:
The court noted that the transactions fell under the Monopolies and Restrictive Trade Practices Act, 1969. Section 39 of the Act voids any contract term establishing minimum resale prices. Therefore, retailers can sell products at any price below the maximum retail price, provided they do not use the goods as loss-leaders.

3. Use of Products as Loss-Leaders:
The respondents argued that the petitioners were using the products as loss-leaders to attract customers to their establishments and advertise their business. However, the court found that the petitioners sold the products at a slight profit, not a loss, thus not meeting the definition of loss-leaders as per the Act. Consequently, the refusal to supply products was deemed unlawful.

4. Maintainability of Writ Petitions Against Co-operative Societies:
The respondents contended that writ petitions against Co-operative Societies were non-maintainable. The court referenced the Supreme Court ruling in U.P. State Co-operative Land Development Bank Ltd. v. Chandra Bhan Dubey, which allowed writ petitions against Co-operative Societies if they perform statutory public duties. Since the 3rd respondent was under state control and the petitioners were regulated by the Act, the court held that the writ petitions were maintainable.

Conclusion:
The court concluded that the refusal to supply products to the petitioners was not in accordance with the law. The petitions were allowed, and the 5th respondent was ordered to pay costs of Rs. 2,000 in each case.