2003 (4) TMI 432 - SC - Companies Law

Whether there was a prima facie case against the respondent for institution of a regular inquiry under the provisions of the Act or not? Held that - Appeal dismissed. In the case in hand admittedly after negotiations failed the respondent had sold the flats at a lower price to others. It is thus clear that no undue advantage was sought to be extracted by respondent by dropping the matter much less from the applicant. There is no allegation that the respondent had demanded or expected higher price from the complainant. It is also not the case of the complainant that the respondent created such a situation which could compel the complainant to purchase the flats from the respondents on respondent s term to the detriment of the complainant. The applicant could also not compel the respondent to sign the Memorandum of Understanding on applicant s own terms. The respondent could validly suggest a change in draft Memorandum of Understanding sent by the complainant and if on that point the negotiations broke and the transaction fell through the case would not fall within the ambit of section 2(o)(i ) or (ii) of the Act. Thus the view taken on the point by the Chairman commends approval. Also in absence of relevant and proper facts mere use of words as used in the provision would not be of any help and it would not constitute restrictive trade practice. In the present case as find that no such facts have been averred which may be said to have constituted restrictive trade practice on the part of the respondent.

Summary

Issues Involved:
1. Whether there was a concluded contract between the parties.
2. Whether the respondent's actions constituted restrictive trade practices under Section 2(o)(ii) of the Monopolies and Restrictive Trade Practices Act.
3. Whether the complainant should seek remedy through a civil suit instead of an MRTP Act inquiry.

Issue-wise Detailed Analysis:

1. Concluded Contract:
The core issue was whether the negotiations between the complainant and the respondent resulted in a concluded contract. The Commission, particularly Shri N.C. Gupta, concluded that there was no agreement between the parties. He noted:
- "The negotiations between the parties did not result into a concluded contract and as such there has been no agreement between the parties."
- "No money whatsoever was paid or advanced by the complainant by way of consideration or otherwise in continuation or furtherance of the negotiations for purchase of the flats."

2. Restrictive Trade Practices:
The complainant alleged that the respondent manipulated conditions to cause unjustified cost increases, invoking Section 2(o)(ii) of the Act. However, the Commission's majority opinion, led by the Chairman, held that:
- "A distinction must, in my view, be drawn between a mere refusal of non-fulfilment of a contractual obligation simplicitor without having any overtones of preventing or distorting competition in any manner and one involving a conscious and calculated manipulation of prices or conditions of delivery in such a manner as to impose unjustified costs or restrictions on the consumer, and, of course, gaining some advantage for itself."
- The Chairman emphasized that the respondent's actions did not fit the definition of "manipulation" as per Black's Law Dictionary, which involves creating a false or misleading appearance of active trading or artificially affecting prices.
- The Commission found no evidence of manipulation or intent to impose unjustified costs on the complainant. The flats were sold at a lower price post-negotiations, indicating no undue advantage was sought by the respondent.

3. Civil Suit as Remedy:
The Commission also considered whether the complainant should pursue a civil suit for specific performance or damages instead of an MRTP Act inquiry. Shri N.C. Gupta noted:
- "Assuming without admitting that any right accrued in favour of the complainant as a result of such negotiations the same is a right of a civil nature and the proper remedy, if any, is by way of civil suit. The Commission has not jurisdiction in the matter."

Conclusion:
The Supreme Court upheld the Commission's decision, agreeing that the appeal lacked merit. The Court emphasized that:
- The conduct of the respondent did not amount to restrictive trade practices under Section 2(o)(ii) of the Act.
- The negotiations did not culminate in a concluded contract.
- The appropriate remedy for the complainant, if any, would be through a civil suit rather than an inquiry under the MRTP Act.

The appeal was dismissed with costs, reinforcing that mere breach of contract terms without evidence of manipulation or intent to impose unjustified costs does not constitute restrictive trade practices.