Important Point
The appellants were not guilty of an unfair trade practice within the meaning of Section 36A(3)(a) or (b) of the MRTP Act, 1969 for advertisement of their scheme called “Hidden Wealth Prize Offer” for their consumer product “Horlicks” in September 1985.

Headnote:(i) Monopolies and Restrictive Trade Practices Act, 1969-Section 36A(3)(b)-Unfair Trade Practice-The conduct of a lottery for the purpose of promoting the sale, use or supply of a product-Appellants manufacture “Horlicks”-They advertised a scheme called “Hidden Wealth Prize Offer” in September, 1985-Coupons were inserted in some bottles of horlicks-Buyers in Delhi City to get prizes-Whether an unfair trade practice? (No).
       Held : There is no material that indicates that there was a draw of lots or that a price was charged for participation in the draw. The fact that some bottles of Horlicks contained a slip of paper which entitled the buyer to a prize is not a lottery in the ordinary sense of the word. (Para 10)
       (ii) Monopolies and Restrictive Trade Practices Act, 1969-Section 36A(3)(a)-Unfair trade practice-Offer of Prizes-Offered free of charge for sale of “Horlicks”-MRTP Commission holding it was covered in the increase of price some time prior to scheme-That particular increase not indicated in notice of enquiry-No proof on record-Whether holding of Commission right? (No)-No loss to consumers-Appeal allowed.
       Held : For the purposes of finding that the offering of prizes under the said scheme was with the intention of creating the impression that something was being given free of charge when it was fully or partly covered by the amount charged for the Horlicks, the Commission resorted to speculation about a price increase in the cost of Horlicks some time prior to the said scheme. We find from the notice of enquiry given to the appellants and the application of the Director General annexed thereto that it was nowhere indicated to the appellants that it was the case of the Director General that the particular price increase that the Commission relied upon was intended by the appellants to offset the cost of prizes under the said scheme. Had this been indicated in the notice of enquiry the appellants would have had an opportunity to deal with it. It was unfair in the circumstances to urge that the particular price increase was attributable to the cost of prizes under the said scheme and the Commission ought not to have so held. The appellant averred in their reply to the notice of enquiry that the consumer was not required to make any payment towards the prizes and there is no proof on the record to the contrary. It was the Director General who made this allegation and it was for him to establish it. Since he did not, the allegation ought to have been rejected. The Commission should have noted with advantage the expenditure incurred by the appellants in the year 1984-85 and 1985-86 on advertisements marketing of Horlicks, namely, Rs. 2,33,33,637 and Rs. 2,96,69,208 respectively, and contrasted it with the expenditure on the prizes under the said scheme, namely, Rs. 52,250/-. That would have indicated fairly clearly that the appellants were right in stating that no part of the comparatively insignificant expenditure on the prizes had been recouped from the consumers of Horlicks. (Para 11)
       Lastly, it is difficult to hold that a consumer who bought a bottle of Horlicks that did not entitle him to a prize suffered a loss. (Para 12)
       In the result, the appeal is allowed and the order under appeal is set aside. There shall be no order as to costs. (Para 13)

Judgment

Bharucha, J.-Under appeal is the judgment and order dated 11th May, 1989 passed by the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as “the Commission). It held that the appellants were guilty of an unfair trade practice within the meaning of The Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as “the said Act”). It required the appellants to desist from indulging in trade practices similar to that which had been held to be an unfair trade practice.

2. The appellants manufacture and market consumer products, including Horlicks. In September, 1985 the appellants advertised a scheme they called the “Hidden Wealth Prize Offer”. Coupons were inserted in some bottles of Horlicks in the various pack sizes. Some of these coupons indicated that the purchasers of the bottles in which they were placed would get prizes. The prizes that were offered were 5 Hotline Colour TVs, 10 gift vouchers of Rs. 2,000/- each for Hotline appliances and 1400 cash prizes of Rs. 100/-, Rs. 50/- and Rs. 20/- each. The advertisements of this scheme made it clear that the prizes were available only to buyers in Delhi city and they were required to claim their prizes by 15th January, 1986. The advertisements stated that even if the buyers’ coupon did not carry a winning message, he had “several more chances to try. So get the goodness of Horlicks, now. Because with it, you surely can’t lose.”

3. The appellants were served with a notice dated 28th January, 1986 by the Assistant Director General of Investigation of the said Commission. The notice stated that the said scheme required investigation with a view to find out whether it attracted the provisions of the said Act. It required the appellants to furnish the following information/documents within 10 days :

“1. Detail note about the organisation, products manufactured and sold, composition of board of directors;

2. Date on which Company took the decision to hold the Hidden Wealth Prize Scheme.

3. Details of level at which the decision was taken in the Company about the contest.

4. Detail note about the “Horlicks Prize Offer” containing copies of rules and regulations, number of participant, description of winners under the scheme together with complete printed material about the scheme;

5. Total expenditure incurred on the scheme with requisite break-up such as Expenditure on Prizes, Advertisement, Published material, Cost of Administration etc.;

6. A copy of standard dealership agreement;

7. Price lists issued during the last 18 months including date and reasons for revisions in prices of the products including Horlicks; and

8. Copies of various incentives/discount schemes for dealers introduced in the last 2 years with detail note containing reasons therefor.”

4. The requisite information was supplied by the appellants on 7th March, 1986. They explained the said scheme and stated that the expenditure thereon was :

“Expenditure on prizes Rs. 52,250.00

Advertisements Rs. 184,101.25

Published Material Rs. 45,312.32

Misc. Expenditure Rs. 626.55"

The appellants stated that there had been no violation of the provisions of the said Act.

5. On 24th July, 1986 the Secretary of the Commissioner gave to the appellants a notice of enquiry under the said Act. It stated that the appellants had organised the said scheme from which it “appeared that as prizes were offered by draw of lots, the respondent had indulged in Unfair Trade Practice of organising a lottery for purpose of promotion of its sales and thereby resorted to the Unfair Trade Practice as defined in Section 36A(3)(b) of the Act. Such a scheme has caused loss and injury to the consumer as stated in the application. (b) Further such a scheme also falls under Section 36A(3)(a) of the Act in-as-much as it appears that cost of scheme

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Judicial Analysis

SupremeToday

1998 Supreme(SC) 786

Important PointThe appellants were not guilty of an unfair trade practice within the meaning of Section 36A(3)(a) or (b) of the MRTP Act, 1969 for adver­tisement of their scheme called “Hidden Wealth Prize Offer” for their consumer product “Horlicks” in September 1985.

Judicial Analysis

Important Point
The appellants were not guilty of an unfair trade practice within the meaning of Section 36A(3)(a) or (b) of the MRTP Act, 1969 for advertisement of their scheme called “Hidden Wealth Prize Offer” for their consumer product “Horlicks” in September 1985.