Judgment

RAY, C.J.I. :- This appeal is under Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (referred to as the Act) against the judgment and order of the Monopolies and Restrictive Trade Practices Commission (referred to as the Commission) dated 25 July, 1975.

2. The principal question for consideration in this appeal is whether the agreement between the appellant referred to as Telco and its dealers allocating territories to its dealers within which only the dealers can sell bus and truck chassis referred to as the vehicles produced by the company constitutes a "restrictive trade practice."

3. Section 2 (o) of the Act defines "restrictive trade practice" to be a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular (i) which tends to obstruct the flow of capital or resources into the stream of production or (ii) which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions.

4. Section 33 of the Act provides that any agreement relating to a restrictive trade practice falling within one or more of the categories (a) to (1) specified in sub-section (1) thereof shall be subject to registration.

5. Section 37 of the Act provides that the Commission may enquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been 976 registered under Section 35 or not which may come before its enquiry, and if, after such enquiry it is of opinion that the practice is prejudicial to the public interest the Commission may, by order direct that (a) the practice shall be discontinued or shall not be repeated; (b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order.

6. Section 38 of the Act provides that a restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more circumstances mentioned in that section. The circumstances mentioned inter alia are these. The restriction is reasonably necessary having regard to the character of the goods to which it applies to protect the public against injury in connection with the consumption, or installation or use of those goods. The removal of the restriction would deny to the public as purchasers, consumers or users of any goods, other specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements for operations resulting therefrom. The restriction is reasonably necessary to counteract measure taken by any one person not party to the agreement with a view to preventing or restricting competition in or in relation to the trade or business in which the persons thereto are engaged. The restriction is reasonably required for purposes in connection with the maintenance of any other restriction accepted by the parties whether under the same agreement or under any other agreement between them, being a restriction which is found by the Commission not to be contrary to the public interest upon other grounds other than specified in this paragraph. The restriction does not directly or indirectly restrict or discourage competition to any material degree in any relevant trade or industry and is not likely to do so. The Commission is also to be satisfied that the restriction is reasonable having regard to the balance between the circumstances and any detriment to the public or to persons not parties to the agreement being purchasers, consumers or users of goods produced or sold by such parties or persons engaged or seeking to become engaged in the trade or business of selling such goods or of producing or selling simila