2004 (2) TMI 377 - SC - Companies Law

Whether the Monopolies & Restrictive Trade Practices Commission had the jurisdiction to entertain a complaint filed by the respondent No. 1 relating to an irrigation programme sought to be implemented by the appellant-State? Held that - Appeal allowed. The present case does not involve any agreement of the kind specified in section 33. It will therefore have to come under the definition of section 2(o) to be a restrictive trade practice at all. It has not been alleged by learned counsel appearing on behalf of the respondents that there is any element of competition involved between the State and any other party. Even if one were to assume that the State was an undertaking as defined in section 2(v) and that the activity of arranging for the supply of water is a service as contemplated under the Act in the absence of this vital element of competition the Commission could not have held that there was any restrictive trade practice within the meaning of section 10 of the Act giving it the jurisdiction to entertain the respondent No. 1 s complaint.

Summary

Issues:
1. Jurisdiction of the Monopolies & Restrictive Trade Practices Commission to entertain a complaint regarding an irrigation programme implemented by the State.

Detailed Analysis:
The judgment revolves around the jurisdiction of the Monopolies & Restrictive Trade Practices Commission to address a complaint filed by the respondent concerning an irrigation program initiated by the State. The complaint alleged that the State's irrigation program, known as "warbandi," would negatively impact the complainant's agricultural crops. The complaint accused the State of manipulating the conditions of delivering irrigation water, constituting restrictive trade practices under the Monopolies and Restrictive Trade Practices Act, 1969. The Commission issued an inquiry notice against the State after finding that it was providing a "service," but the proceedings were halted by the Supreme Court upon the State's appeal.

The primary issue addressed in the judgment is the interpretation of what constitutes a restrictive trade practice under the Act. The Court emphasized that for the Commission to have jurisdiction, the alleged conduct must meet the criteria of a restrictive trade practice as defined in section 2(o) of the Act. The definition includes practices that obstruct competition, manipulate prices, or impose unjustified costs on consumers. The Court highlighted that the presence of competition is crucial in determining whether a trade practice is restrictive. Citing previous cases, the Court clarified that competition must be present for a trade practice to be considered restrictive, emphasizing that the concept of competition should be understood commercially.

Furthermore, the judgment delves into the impact of an amendment to section 33(1) of the Act in 1984, which introduced a deeming clause for certain agreements as restrictive trade practices. The Court noted that agreements falling under this clause would be considered restrictive trade practices under the Act. However, the case at hand did not involve agreements specified in section 33, necessitating an analysis under section 2(o) to determine if a restrictive trade practice existed. The Court highlighted the absence of competition between the State and other parties, crucial for establishing a restrictive trade practice under the Act.

In conclusion, the Court set aside the Commission's decision, ruling that the complaint was not maintainable due to the lack of a restrictive trade practice as defined in the Act. The judgment allowed the State's appeal, rejecting the complaint and indicating no costs to be awarded in the matter.