2015 (12) TMI 914 - SC - Indian Laws

Monopolies and Restrictive Trade Practices Act, 1969 - Commission directed the appellant to cease and desist from continuing with the practices complained of and not to repeat the same in future - Held that - Commission failed to keep in mind the precise allegations against the appellant with a view to find out whether the facts could satisfy the definition of Unfair Trade Practice(s) as alleged against the appellant in the Notice of Enquiry. The Commission was apparently misled by the Preliminary Investigation Report also which claimed to deal with reply received from the appellant in course of the preliminary enquiry but patently failed even to notice the stipulation as regards payment of interest on the booking amount although this fact was obvious from the terms and conditions of the booking and was reportedly relied upon by the appellant in its reply even at the stage of preliminary investigation. The Commission noticed the relevant facts including provision for interest while narrating the facts, but failed to take note of this crucial aspect while discussing the relevant materials for the purpose of arriving at its conclusions. Such consideration and discussion begins from paragraph 32 onwards but without ever indicating that the booking amounts had to be refunded within a short time or else it was to carry interest at the rate of 10% per annum. The order of the Commission appears to be largely influenced by a conclusion that the appellant should not have asked for deposit of an amount above the basic price because in the opinion of the Commission it was unfair for the appellants to keep excise and sales tax with itself for any period of time. Such conclusion of the Commission is based only upon subjective considerations of fairness and do not pass the objective test of law as per precise definitions under Section 36A of the Act. The submissions and contentions of Mr. Desai merit acceptance. Even after stretching the allegations and facts to a considerable extent in favour of respondent Commission, we are unable to sustain the Commission s conclusions that the allegations and materials against the appellant make out a case of unfair trade practice against the appellant. Nor there is any scope to pass order under Section 36-D(1) of the Act when no case of any unfair trade practice is made out. Hence, we are left with no option but to set aside the order under appeal.

Summary

Issues Involved:
1. Allegations of Unfair Trade Practices (UTP) under Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969.
2. Validity of the high booking amount for Tata Indica cars.
3. Locus standi of the complainants.
4. Compliance with procedural fairness and natural justice by the Commission.

Issue-Wise Detailed Analysis:

1. Allegations of Unfair Trade Practices (UTP):
The appellant was accused of indulging in unfair trade practices as defined under Section 36A (1) (i), (ii), (iv), and (vi) of the Act. The Notice of Enquiry alleged that the appellant made false representations about the standard, quality, and usefulness of the Tata Indica cars. The Supreme Court noted that the definition of "unfair trade practice" is specific and limited, requiring a false statement that misleads the buyer. The Court emphasized that the representation must be examined to determine if it leads a reasonable person to a wrong conclusion. The Court found no evidence or material in the Preliminary Investigation Report (PIR) to support the allegations under the specified clauses of Section 36A (1).

2. Validity of the High Booking Amount:
The appellant required a high booking amount close to the estimated final price, including taxes and transportation charges. The Commission concluded that the appellant should not have asked for an amount above the basic price, deeming it unfair to retain excise and sales tax amounts. The Supreme Court disagreed, stating that the Commission's conclusion was based on subjective fairness rather than objective legal standards. The Court found that the high booking amount was a strategic decision to gauge market demand and discourage speculative bookings, which did not constitute an unfair trade practice.

3. Locus Standi of the Complainants:
The complainants claimed they intended to book the car but were dissuaded by the high deposit amount. The appellant argued that the complainants lacked locus standi as they never actually applied for the booking. The Supreme Court noted that the Commission entertained complaints from individuals who did not deposit the booking amount, which was procedurally questionable. The Court emphasized that the scope of the enquiry should have been limited to those who had made bookings or deposits, as per the principles of fairness and natural justice.

4. Compliance with Procedural Fairness and Natural Justice:
The Supreme Court found that the Commission violated procedural fairness by not precisely communicating the allegations through the Notice of Enquiry. The Commission relied on the PIR without adequately informing the appellant of the specific charges, thus breaching the audi alteram partem rule. The Court highlighted that any enlargement of the enquiry's scope required further notice with detailed allegations, which the Commission failed to provide. This procedural lapse rendered the Commission's order invalid and bad in law.

Conclusion:
The Supreme Court set aside the Commission's order, finding no case of unfair trade practice against the appellant. The Court emphasized the need for precise allegations and adherence to procedural fairness in such enquiries. The appeal was allowed, and the Commission's cease and desist order was invalidated.