IMPORTANT POINT
The notice issued under Section 37 read with Section 2(o) of the MRTP Act either itself must provide or an accompanying or subsequent document must indicate to the person to whom notice is served the case which is required to be met.

Headnote:(i) Monopolies and Restrictive Trade Practices Act, 1969-Sections 2(o) and 37-Monopolies and Restrictive Trade Practices Commission Regulations, 1974-Regulation 58-Restrictive trade practice-Cease and desist order-Legality of-Charge that practice of tie up sales to stockist resulted in preventing or restricting competition among dealers-No categorical finding recorded that alleged trade practices resulted in preventing, distorting or restricting competition among dealers-Nor any finding that alleged trade practice had effect of imposing unjustified costs on restrictions or consumers-Cease and desist order unsustainable.
       The charge which the appellant was called upon to meet was that its trade practices resulted in preventing, distorting or restricting competition amongst the dealers and may have the effect of imposing unjustified costs or restrictions on the consumer s. Even though oral evidence had been led, the order of the Commission does not record any categorical finding to the effect that the trade practices alleged to have been carried on by the appellant had resulted in preventing, distorting or restricting competition amongst the dealers. We need not go into the question whether terminating the agreements of the dealers would result in the attraction of the provisions of Section 2(o), but what we have to see is as to whether the appellant has been guilty of preventing, distorting and restricting competition amongst the dealers which was the allegation levelled against it. In the absence of such a finding and there not being even a whisper in the order that any action of the appellant had the effect of imposing unjustified costs or restrictions on the consumers, the Commission fell in error in passing the order against the appellant. (Para 11)
       (ii) Monopolies and Restrictive Trade Practices Act, 1969-Section 37-Monopolies and Restrictive Trade Practices Commission Regulations, 1974-Regulation 58-Restrictive trade practices-Refusal to deal with stockist-Tie-up sales-Cease and desist order-Direction to resume dealings with stockist-Alleged termination of stockistship agreement of J -Investigation and consequent show cause notice-No mention in notice about allegation of J-Nor appellant was called upon to meet any allegation of J-Direction to resume dealings with J against principles of natural justice-Order contrary to law and set aside.
       Apart from the fact that the evidence on record does not show that there was any protest by Jain General Stores to the appellant against the so-called practice of sending more slow moving goods and less of fast moving goods, we find that neither in the show cause notice nor in the additional particulars was there any mention with regard to Jain General Stores. Principles of natural justice would require that the appellant against whom an order of cease and desist could be passed under the provisions of the M.R.T.P. Act is entitled to know the case which it has to meet. Passing of an order like the present one results in civil consequences and it is now well settled that in such an event principles of natural justice have to be followed. It is for this reason that the Act and the Regulations required a notice to show cause to be issued. We would expect that the notice which is issued either itself must provide or an accompanying or subsequent document must indicate to the person to whom notice is served the case which is required to be met. It does appear that there was a complaint by Jain General Stores which had been filed with the Commission and if the Commission wanted to take that allegation/complaint into consideration, then the least which could have been expected was that the appellant should have been put to notice thereof. This was not done. On this ground alone, therefore, no order could be passed against the appellant in relation to the termination of its agreement with Jain General Stores. (Para 13)

JUDGMENT

Kirpal, J.-The challenge in this appeal is to a cease and desist order passed by the Monopolies and Restrictive Trade Practices Commission (for short "the Commission") against the appellant herein.

2. It seems that certain complaints by erstwhile stockists of the appellant were received by the Commission. These stockists used to sell detergents, soaps, chemicals, etc., manufactured by the appellant and their grievance had arisen by reason of their agreements having been terminated by the appellant.

3. A preliminary inquiry was conducted by the Director General of Investigation & Registration whereupon a Restrictive Trade Practices Inquiry Notice No.48/1983 dated 28th December, 1983 was issued to the appellant. This notice was issued by the Commission acting suo motu and in exercise of the powers conferred on it under Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 read with Regulation 58 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974. The relevant part of the said notice is as follows :

"WHEREAS the Respondent above mentioned (M/s. Hindustan Lever Limited) is the manufacturer of detergents, detergent cakes, chemicals, bathing soaps, foods etc.;

AND WHEREAS it has come to the notice of the Commission that the Respondent has been indulging in the following trade practices :-

(i) Tie-up sales of soaps and detergents, manufactured by the Company which are in demand;

(ii) Area restriction on re-distribution stockists;

(iii) Re-sale Price Maintenance;

(iv) Refusal to deal or supply;

(v) Obtaining interest free and discriminatory security deposits/advance from dealers;

(vi) Discriminatory dealings with Dealers;

AND WHEREAS it appears to the Commission that the said trade practices have or may have the effect of preventing, distorting or restricting competition amongst the dealers and may have the effect of imposing unjustified costs or restrictions on the consumers;

AND, THEREFORE, in exercise of powers conferred upon it by Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices? Act, 1969, the Commission has ordered that an inquiry be instituted against the respondent above mentioned at its office at New Delhi to enquire into as to whether :-

(a) The Respondent above mentioned has been and/or is indulging in the trade practices as alleged;

(b) the said trade practices have or may have the effect of preventing/distorting or restricting competition;

(c) the said trade practices have or may have the effect of imposing unjustified costs or restrictions on the consumers; and

(d) `such trade practices are prejudicial to public interest."

4. The appellant was required to inform the Commission if it wished to be heard, failing which the Commission would proceed with the inquiry. The said notice does not indicate that any document or complaint or report was furnished to the appellant along with the said notice. According to the appellant, and there does not appear to be any serious dispute about it, it requested the Commission to supply to it the material or report on the basis of which the show cause notice had been issued. Along with an affidavit dated 8th October, 2000, the appellant has placed on record in this Court a document containing further and better particulars which were supplied to the appellant.

5. On the receipt of the said particulars, reply was filed by the appellant to the show cause notice denying the allegations and the charge levelled against it. In particular, it stated in the said reply that there had been a denial of principles of natural justice because all information and material which was available with the Commission on the basis of which the notice had been issued had not been furnis

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2001 Supreme(SC) 46

IMPORTANT POINTThe notice issued under Section 37 read with Section 2(o) of the MRTP Act either itself must provide or an accompanying or subsequent document must indicate to the person to whom notice is served the case which is required to be met.

IMPORTANT POINT
The notice issued under Section 37 read with Section 2(o) of the MRTP Act either itself must provide or an accompanying or subsequent document must indicate to the person to whom notice is served the case which is required to be met.