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2008 (9) TMI 555 - SC - Companies LawWhether a party can be held guilty of unfair trade practice as referred to in section 36A of the MRTP Act, although he did not supply any goods at all? Held that - Allow the appeal. Even without actual sale of goods, such an act on the part of the supplier could also amount to unfair trade practice and section 36A cannot in absolute terms be said not to apply to a situation where goods may not have been sold at all. In fact, such a situation may also be covered even by the provisions of sub-clause (ii) or ( vi) of sub-section (1) of section 36A of the above Act. Therefore agree with my learned brother that the judgment of the MRTP Commission cannot be sustained and is required to be set aside.
Issues Involved:
1. Validity and acceptance of the First Offer and Second Quotation. 2. Alleged breach of obligations by Respondent No. 1. 3. Allegations of unfair trade practices under Section 36A of the MRTP Act. 4. Interpretation of Section 36A of the MRTP Act. Detailed Analysis: 1. Validity and Acceptance of the First Offer and Second Quotation: The appellant, a company incorporated in New York, USA, engaged in manufacturing and selling medical diagnostic equipment, sent a proforma invoice (First Offer) to Respondent No. 1 for the supply of a new CT Scanner at a price of US$ 1,282,500. The First Offer was valid for 90 days, but Respondent No. 1 neither communicated acceptance nor opened a Letter of Credit (L/C) within this period. Consequently, the First Offer lapsed. Subsequently, the appellant offered a refurbished CT Scanner (Second Quotation) at US$ 595,000, which was accepted by Respondent No. 1 with modifications, including shipment by air. However, Respondent No. 1 opened an L/C for US$ 700,000, referring to the old proforma invoice instead of the Second Quotation. 2. Alleged Breach of Obligations by Respondent No. 1: The appellant alleged that Respondent No. 1 breached its obligations by not amending the L/C to conform to the Second Quotation and by not obtaining the necessary Indian Import Certificate. The appellant returned the L/C as it was not encashed. The MRTP Commission issued a notice to the appellant and others, leading to a complaint by Respondent Nos. 1 & 2 alleging false representation and inducement into an agreement. 3. Allegations of Unfair Trade Practices under Section 36A of the MRTP Act: The MRTP Commission found the appellant guilty of unfair trade practices and ordered compensation. The appellant contended that Section 36A did not apply as no goods were supplied. The Supreme Court examined whether a party could be held guilty of unfair trade practices under Section 36A without supplying any goods. 4. Interpretation of Section 36A of the MRTP Act: Section 36A defines "unfair trade practice" to include false representations about the quality, standard, or model of goods. The court noted that the 1984 amendment aimed to protect consumers from misleading advertisements and false representations. The 1991 amendment made the definition inclusive but did not change the object of protecting consumers from defective or misrepresented goods. The court applied principles of ejusdem generis and noscitur a sociis, concluding that Section 36A only applies where goods are sold, not where no goods are supplied. Judgments: First Judge's Judgment: The court held that Section 36A was meant to protect consumers from defective goods or false representations about goods sold. Since no CT Scanner was sold, Section 36A did not apply. The MRTP Commission's judgment was set aside, and the appeals were allowed without costs. Second Judge's Judgment: While generally agreeing with the first judgment, the second judge added that Section 36A could apply in situations where a promise to supply goods, knowing they cannot be supplied, could constitute an unfair trade practice. However, the judgment of the MRTP Commission was still set aside, and the appeal was allowed without costs.
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