Judicial Analysis Court Copy Headnote Facts Arguments Court observation

1979 Supreme(SC) 69

SUPREME COURT OF INDIA
P.N. BHAGWATI, JASWANT SINGH AND A.P. SEN, JJ.
Mahindra and Mahindra Ltd., Appellant
Versus
The Union of India and another, Respondents.
Civil Appeal No. 860 of 1978, D/- 24-1-1979.
Advocates appeared
Mr. Ashok H. Desai Sr. Advocate (M/s. B. H. Wani, Ravinder Narian, Talat Ansari, A. N. Haksar and Narain Advocates with him), for Appellant; Mr. Soil J. Sorabjee, Addl. Sol, Gen. (M/s. R. B. Datar and Girish Chandra Advocates with him), for Respondent No. 2.
what amounts to restrictive trade practice — duty of commission or court to consider relevant facts - the definition of restrictive trade practice the legislature drew upon the concept and rationale underlying the “rule of reason” - contents and necessity of statement of facts in an application under this section - a wide and unusual power is conferred on the commission under the provisions of this section - an application under section 13(2) being an alternative and a more effective remedy available to a party the failure to prefer an appeal cannot be construed as acquiescence on its part - there can be no estoppel against the appellant precluding it from challenging the order by an application under section 13(2) - there are two conditions precedent which must be satisfied before a cease and desist order can be made by the commission in regard to any trade practice complained of before it - order should disclose the reasons on which it was based otherwise it would be difficult to attack the order on appeal under section 55 - interpretation of the provisions contained under this section - scope and ambit of the provisions contained in this section - order should disclose the reasons on which it was based otherwise it would be difficult to attract the order on appeal under section 55

Advocates:
A.N.HAKSAR, ASHOK H.DESAI, B.H.VANI, GIRISH CHANDRA, K.B.Datar, Ravindra Narayan, Shri Narain, SOLI J.SORABJI, Talat Ansari

Headnote:
Monopolies and Restrictive Trade Practices Commission Regulations, 1974 – Regulations 53, 65, 67 – Monopolies and Restrictive Trade Practices Act, 1969 – Sections 55, 10, 37, 33, 13 – Registration – Appeal under S. 55 of the Monopolies and Restrictive Trade Practices Act, 1969 raises interesting questions of law relating to the interpretation and application of certain provisions of the Act – Appellant is a public limited company engaged in manufacture and sale of jeep motor vehicles and their spare parts and accessories – Since 1947 the appellant was marketing and distributing jeep motor vehicles and it had set up a large and complex network of dealers, who were described as distributors, for marketing and after sale service of such vehicles – In or about 1956 the appellant started manufacturing its own jeep motor vehicles and since then it has been distributing such vehicles and distributing and marketing the same through its network of distributors – Appellant has appointed these distributors for marketing and sale of jeep motor vehicles on certain terms and conditions contained in a standard distributorship agreement – Held, It consisted merely of bad directions given by the Commission and did not set out any reasons whatsoever why the Commission had decided to issue those directions – It had a sphynx-like face, which goes ill with the judicial process – It is true that the Order was an ex parte order, but the ex parte character of the order did not absolve the Commission from the obligation to give reasons in support of the order – Even though the Order was ex parte, the appellant would have been entitled to prefer an appeal against it under S. 55 and it is difficult to see how the appellant could have possibly attacked the order in the appeal, when the order did not disclose the reasons on which it was based – It is now settled law that where an authority makes an order in exercise of a quasi judicial function, it must record its reasons in support of the order it makes – Every quasi judicial order must be supported by reasons – This view taken by court renders it unnecessary to consider whether there was any material change in the relevant circumstances justifying invocation of the power under S. 13 (2) and hence we do not propose to deal with the same – Commission has devoted a part of the order impugned in the present appeal to a consideration of this question and taken the view that there was no material change in the relevant circumstances subsequent to the making of the Order – Court do not wish to express any opinion on the correctness of this view taken by the Commission, since court is setting aside the impugned order made by the Commission and also revoking the Order and sending the matter back so that the application of the Registrar under S. 10 (a) (iii) may be disposed of afresh. – Appeal Disposed of

Judgement Key Points

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Question 1?

What is the true scope and ambit of the power of the Monopolies and Restrictive Trade Practices Commission under Section 13(2) to amend or revoke an order?

Question 2?

What constitutes a "restrictive trade practice" under Section 2(o) and how must the factual material be presented to show such a practice in proceedings under Section 37?

Question 3?

Whether an appeal under Section 55 is maintainable when the grounds have been affected by the modernization of Section 100, and how the rule of incorporation governs the grounds for appeal?

Judgment

BHAGWATI, J.:- This appeal under S. 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Act) raises interesting questions of law relating to the interpretation and application of certain provisions of the Act. The facts giving rise to the appeal are for the most part undisputed and they may be briefly stated as follows:

2. The appellant is a public limited company engaged in manufacture and sale of jeep motor vehicles and their spare parts and accessories. Since 1947 the appellant was marketing and distributing jeep motor vehicles and it had set up a large and complex network of dealers, who were described as distributors, for marketing and after sale service of such vehicles. In or about 1956 the appellant started manufacturing its own jeep motor vehicles and since then it has been distributing such vehicles and distributing and marketing the same through its network of distributors. The appellant has appointed these distributors for marketing and sale of jeep motor vehicles on certain terms and conditions contained in a standard distributorship agreement. The material clauses of this agreement read as follows :

"Section (3) : Territory of Distributor - The Company grants to Distributor the non-exclusive privilege (except as hereinafter provided) of selling at retail and the right (except hereinafter provided) to appoint in writing by forms of agreements approved by the Company, Dealers to sell at retail the products enumerated in Sec. 2 of this agreement, within the following territory and also demarcated in the map attached hereto and which forms a part of this agreement.

Distributor accepts the above retail selling privileges and agrees to develop with diligence the sales of sale products in said territory in accordance with this agreement and undertakes to achieve the quantum of sales in the territory as may be fixed by the Company from time to time.

Section(4) : Limitations on territorial Rights - (i) Distributor agrees not to solicit outside of the territory described in S. 3 - the purchase of any products.

X X X X

Section (6) : Price and Payment- Distributor will pay for products the Companys established Distributor net prices in effect on date on dispatch. Prices lists will be furnished to Distributor by the Company, but the Company reserves the right to change prices at any time without notice.

X X X X

Section (11) : Price Changes - if the Company reduces its published suggested retail list price, for any current model of Jeep motor vehicles, the company will make an allowance to Distributor as hereinafter provided. The allowance shall be made in respect of new and unused Jeep Motor vehicles of the then current model in respect of which the price change has been made which have been purchased by Distributor from the Company within a period of 30 (thirty) days prior to the effective date of such decrease in suggested list price, and which distributor shall have in his unsold stock on such effective date. The allowance shall be equal to the difference between the net amount paid to the Company for such Jeep Motor Vehicle (less all allowance thereto granted), and the net amount which would have been paid had such Jeep motor vehicles been purchased at the reduced price. No allowance, however, shell be made unless there is a reduction in the RETAIL list price and increases in discounts, bonuses and the like shall in no event be considered as a reduction in price.

X X X X

Section (17) : Care or owner and customer Relations

XXX Distributor agrees -

X X X X

(e) To refrain from selling or offering for sale any competing product. The Company shall be the sole judge as to whether a product is competing or not." The appellant by its letter dated 27th January, 1971 submitted to the Registrar of Restrictive Trade Agreements (hereinafter referred to as the Registrar) certified copies of agreements entered into by the appellant with the Distributors for registration, since in the opinion of t

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1979 Supreme(SC) 69

Question 1?

What is the true scope and ambit of the power of the Monopolies and Restrictive Trade Practices Commission under Section 13(2) to amend or revoke an order?

Question 2?

What constitutes a "restrictive trade practice" under Section 2(o) and how must the factual material be presented to show such a practice in proceedings under Section 37?

Question 3?

Whether an appeal under Section 55 is maintainable when the grounds have been affected by the modernization of Section 100, and how the rule of incorporation governs the grounds for appeal?

Cases Referred (7)