The judgment established that for a conduct to constitute a restrictive trade practice under the Monopolies and Restrictive Trade Practices Act, it must result in the imposition of unjustified costs or restrictions on the consumer. Mere manipulation of prices or conditions of delivery without imposing unjustified costs or restrictions does not amount to a restrictive trade practice.

Brijesh Kumar, J.—This is an appeal preferred by the complainant - M/s. Pawan Hans Ltd. against the order of the Monopolies and Restrictive Trade Practices Commission (for short ‘the Commission’), New Delhi rejecting the complaint preferred against the respondent No. 2 - M/s. Lokhandwala Construction Industries Ltd. (hereinafter to be referred to as ‘respondent’ only) under Section 10 of the Monopolies and Restrictive Trade Practices Act (for short ‘the Act’) for inquiry. The order refusing to initiate inquiry proceedings under Section 10(a)(i) of the Act has been dismissed as per the majority opinion of the Commission.

2. The complainant - M/s. Pawan Hans Ltd. needed some flats of its employees at Bombay and for that purpose issued a tender notice in Times of India dated 4.5.1991 in response whereof the respondent Lokhandwala Construction Industries Ltd. made an offer for sale of 40 flats at Kandiwall, Bombay. The respondent, it is said, had also offered to sell some more flats in Green Meadows. Negotiations, in regard to the above flats, started between the parties. Offers and revised offers were exchanged between them. Apart from other conditions it is said to be agreed that price of the flat would be at the rate of 780 per sq. ft. of the saleable area. It is also said to have been given out that the respondent would be able to complete the construction within 12 months of receiving the letter of intent alongwith the first instalment. As against the advance payments which were to be made by the complainant, the respondent is said to have agreed to furnish bank guarantee on release of the amount by the complainant. The offer was valid up to 31.8.1991.

3. Further correspondence, however, ensued raising the question regarding costs as quoted which also said to have included the cost of bank guarantee. The validity of the offer was extended up to 31.12.1991. The complainant is also said to have issued confirmation letter of intent dated 7.1.1992 for purchase of 40 flats. they had also written for providing bank guarantee towards 5% of the total consideration by January 25, 1992. But it appears that there has been one or the other query from either side regarding furnishing of the bank guarantee etc. It is said that the respondent had again by letter dated 10.4.1992 asked for some more time to provide bank guarantee. The complainant also furnished a draft Memorandum of Understanding to the respondent on 16.3.1992. Certain changes are said to have been suggested by the respondent in regard to furnishing of the bank guarantee. According to the complainant though the respondent had agreed to furnish unconditional bank guarantee regarding the advance release of amount by the complainant but by letter dated 18.5.1992 they wanted waiver of that condition. Ultimately the Memorandum of Understanding was not signed, nor bank guarantee was furnished by the respondent. Resultantly the deal fell through. According to the complainant the respondent avoided the agreement without any lawful cause but with a view to enhance the prices of the flats. It is further alleged in the complaint that the respondent in order to cause wrongful gain to itself and wrongful loss to the complainant had backed out to sign the Memorandum of Understanding. It is averred in the complaint “...the respondent wants to take benefit of the enhanced prices of the flats. Had the respondent not assured the complainant to furnish the bank guarantee, the complainant would have negotiated with some other builder for purchase of the flats”. According to the complainant, the respondent exercised pressure upon the complainant to pay the enhanced prices.

4. The case of the complainant on the basis of the facts indicated above in a nut-shell is that the respondent manipulated conditions of rendering services with a view to cause unjustified cost increase to the detriment of the complainant attracting Section 2(o)(ii) of the Act. Hence a prayer was made to institute an in