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TMI Blog2008 (5) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... er dated 12-10-2000 passed by the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as the Commission ) in R.T.P. Enquiry No. 204 of 1988. 2. Brief facts which are necessary to dispose of this appeal are as under : A Notice of Enquiry under section 10( a )( iv ) and section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the MRTP Act ) was issued to the appellants wherein it was alleged that the appellants had indulged in restrictive trade practice within the meaning of section 2( o )( ii ) and section 33(1)( b ) and of the MRTP Act. 3. In order to comprehend the controversy involved in this case properly, sections 2( o )( ii ) and 33 (1)( b ) of the MRTP Act are reproduced as under : 2. Definitions. -In this Act, unless the context otherwise requires- ( o ) restrictive trade practice means a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular, - ( i )****** ( ii )which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p H. Hiranandani appeared as a witness on behalf of appellant No. 2 herein. He stated that the readymade garments including trousers manufactured and marketed by appellant No. 2 enjoyed good demand in the market and the supply of garments was made to the dealers on the basis of order placed by them and subject to availability of stock. It was also stated by him that the manufacture of readymade garments was reserved for the small scale sector and the appellants had a negligible market share. 11. The Commission, after evaluating the evidence, observed that 133 trousers were supplied to the complainant/informant in the year 1985-86. However, no record of the order placed with the appellants could be produced, but the complainant/informant stated that he was compelled by the appellants to place substantial order for trousers in order to get supplies of blazers, safaris and suits. The invoices which were produced as part of evidence revealed the quantity of garments supplied by the appellants and undoubtedly, the quantity of trousers was substantial. It was further observed that there was pressure on the dealers to accept higher quantity of trousers than required and when he showe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowledge or information; 17. It was submitted on behalf of the appellants that a complaint under the said provisions could only be filed by any trade association, or from any consumer or a registered consumers association, the said complaint was treated as information and dealt with by the Commission under section 10( a )( iv ) upon its own knowledge or information and a suo motu enquiry was initiated in respect of the aforesaid allegation of tie-up of sales. 18. According to the appellants, the allegation of tie up of sales is to be considered in the light of the above provisions of the MRTP Act, before any order directing that such practice shall be discontinued and shall not be repeated, can be passed. Such an order is also referred to as a cease and desist order . For passing such an order under section 37 of the MRTP Act, the followings have to be established : ( i )That the evidence clearly establishes that a practice of tie up of sales of trousers as a condition of sales and supply of other garments like blazers, coats, safaris, suits was insisted upon. ( ii )That the aforesaid trade practice, in fact, had the effect of restricting or di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alleged tie-up sale of trousers with other garments like blazers, coats, safaris, cannot and does not arise. 23. The evidence of P.H. Hiranandani reveals that all garments including trousers were in short supply and had great demand. Therefore, the allegation that the supply of trousers had been tied-up with any other garment for sale is without any basis. 24. The appellants also submitted that the allegation of tie-up of sales is not established, in any event, it is submitted that section 2( o ) of the MRTP Act relating to the existence of restrictive trade practice can only be invoked when as a result of the alleged practice, competition is in fact restricted or affected. In the absence of any such proof of competition having been restricted, no allegation of restrictive trade practice can be established. 25. In support of their submissions, the appellants have placed reliance on the judgment of this Court in Tata Engineering Locomotive Co. Ltd. v. Registrar of the Restrictive Trade Agreement [1977] 2 SCC 55. In this case, the scope of restrictive trade practice, as defined under section 2( o ) of the MRTP Act, has been considered by this Court. The practi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old in the same territory by other dealers. Therefore, there will be competition between the manufacturers of different commercial vehicles and as far as exclusive dealership of Telco commercial vehicles is concerned, it will be in public interest and not be a restriction in competition. (p. 70) 28. With regard to territorial restriction and exclusive dealings , this Court held in para 61 that these conditions were not prejudicial to public interest and that both these restrictions were in public interest. 29. The appellants have also relied upon the judgment of this Court in the case of Mahindra Mahindra Ltd. v. Union of India [1979] 2 SCC 529 and laid stress on paras 14 and 15 of the said judgment. 30. Clause ( h ) of section 38(1) of the MRTP Act provides that it is only when the restriction directly or indirectly restricts or discourages competition to any material degree in any relevant trade or industry that such restriction would be considered as prejudicial to public interest . In a case where the alleged restrictive trade practice does not have the impact of restricting competition to any material degree in any relevant trade or industry, s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld still be necessary to determine whether the alleged restrictive trade practice is prejudicial to public interest within the meaning of section 38 of the MRTP Act. In a case where the alleged restrictive trade practice does not restrict competition to any material degree in the relevant trade or industry, it could not be considered as prejudicial to public interest and no order under section 37 can be passed. 36. The learned senior counsel for the respondents referred to the preliminary investigation report submitted by the Director General (I R). The preliminary investigation report cannot be taken into consideration as it is not produced in evidence. It is only a report submitted in terms of section 11 of the MRTP Act for initiating the enquiry. Only those facts contained therein, which are proved on record by evidence, can be looked into. The preliminary investigation report, as such, is not evidence on record. As such, any reference to the contents thereof, which have not been put in evidence and subjected to cross examination, cannot be looked into. This is without prejudice to the contention that there is nothing stated in the preliminary investigation repo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of the security deposit which was refunded to us by the respondent No. 2 along with their aforesaid letter dated 28-9-1987. In fact we received the refund as per memo dated 28-9-1987. It is not a letter as such and this is Exh. AW1/R-18. 41. The appellants submitted that, in any event, mere termination of dealership agreement does not affect competition within the meaning of section 2( o ) of the MRTP Act and cannot be treated as a Restrictive Trade Practice . Further, the termination, if any, of a single retail dealer cannot affect competition to any material degree in the relevant trade or industry, within the meaning of clause ( h ) of section 38(1) of the Act. 42. The appellants submitted that the Commission was not justified in passing any order regarding termination of dealership. The appellants also submitted that appellant No. 1 is only a holding company of which appellant No. 2 is a subsidiary company. There is no transaction of sale or dealing by appellant No. 1. No manufacturing or selling activity is carried out by appellant No. 1 and as such, no tie-up of sales could be resorted to by appellant No. 1. Therefore, the Commission was not justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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