Skip to content


In Re: Anil Starch Products Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1975)45CompCas600NULL
AppellantIn Re: Anil Starch Products Ltd.
Excerpt:
1. these are two applications--one by m/s. maize products, ahmedabad, and the other by m/s. laxmi starch ltd., bombay (hereinafter referred to as " the opponents")--praying that certain documents be furnished to them either by m/s. anil starch products ltd. (hereinafter referred to as " the applicants ") or by the commission. m/s. maize products have asked for disclosure of about 21 items. some of these items are again groups of documents and the others are requisitions for information collected by the commission from the applicants, central government departments, research institutions and other persons. maize products have also applied for disclosure of evidence, if any, produced by the applicants in support of their application and market surveys conducted by them or on their behalf,.....
Judgment:
1. These are two applications--one by M/s. Maize Products, Ahmedabad, and the other by M/s. Laxmi Starch Ltd., Bombay (hereinafter referred to as " the opponents")--praying that certain documents be furnished to them either by M/s. Anil Starch Products Ltd. (hereinafter referred to as " the applicants ") or by the Commission. M/s. Maize Products have asked for disclosure of about 21 items. Some of these items are again groups of documents and the others are requisitions for information collected by the Commission from the applicants, Central Government Departments, research institutions and other persons. Maize Products have also applied for disclosure of evidence, if any, produced by the applicants in support of their application and market surveys conducted by them or on their behalf, the methodology of such surveys and statistical principles employed in such surveys, etc., M/s. Laxmi Starch have applied for disclosure only of the application filed by the applicants under Section 22 of the Act, collaboration agreement between them and National Starch of U.S.A., questionnaire sent by the Commission to applicants and replies thereto, details of speciality starches proposed to be manufactured by the applicants, the composition of such starches and minutes of the Council of Scientific and Industrial Research along with report of that body.

2. The applicants are manufacturers of starch products from maize in a large way of business in India and are based in Ahmedabad. Their application is for permission to establish a new undertaking owned by a proposed company wherein they will own 40 per cent, of the share capital, National Starch & Chemical Corporation of U.S.A. will own another 40 per cent. of the capital and the remaining 20 per cent, will be taken up by others. The proposed company will manufacture 12,000 metric tonnes per annum of speciality starch products with the technology supplied by National Starch. The two opponents are the business rivals of the applicants though Laxmi Starch is in a small way of business.

3. The contention of the opponents is that the enquiry before the Commission is a judicial enquiry and it is, therefore, essential in order to meet the ends of justice that the entire evidence produced by the applicants in support of the application be made available to those who oppose the application to enable them to " show cause ". It is contended that the opportunity to " show cause" becomes illusory and a mere formality unless all the evidence and information, whether oral or documentary, is made available to the opponents. It is further contended that unless the opponents are furnished with all the information in support of the application it is not possible for them sufficiently to " show cause " and satisfy the Commission that the proposal of the applicants should not be granted. On behalf of M/s.

Laxmi Starch Ltd., Mr. Bhandare contended that in order effectively to oppose the proposal of the applicants, his clients should at least be furnished 5 documents covered by his application and if on the application of Maize Products discovery of other documents is ordered, his clients be also given the benefit of such discovery.

4. The applicants oppose the application of the opponents for discovery and inspection, inter alia, on the ground that they have no locus standi or right to inspect or obtain inspection of documents. They have no right to "show cause". They are business rivals. Maize Products have themselves applied for a similar licence. That the intention of the opponents is to secure confidential information furnished by the applicants for ulterior use. That such information cannot be furnished to the opponents by virtue of the provisions of the Monopolies and Restrictive Trade Practices Act.

5. As this is the first application of its kind during the existence of this Commission in respect of applications under Chapter III for prevention of concentration of economic power, we have given full hearing to the parties. Such hearing lasted for about 20 hours. We have given careful consideration to the rival contentions of the parties. We shall now proceed to deal with them.

6. At the outset it will be useful to discuss some of the relevant provisions of the law. The Act was passed to give effect to the directive principles of the Constitution enshrined in Articles 38 and 39 so that social and economic justice may be done and to secure that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment. The preamble to the Monopolies and Restrictive Trade Practices Act also states that the Act is intended to secure that the operation of the economic system does not result in concentration of economic power to the common detriment. Chapter III with which we are concerned in this matter pertains to the prevention of concentration of economic power. Section 20 defines large and dominant undertakings to which the said Chapter applies. Sections 21 to 23 provide that any such undertaking wishing to expand, establish a new undertaking or proposing to merge in or amalgamate with any other undertaking shall apply to the Central Government for permission. The applicants have applied to the Central Government under Section 22 for permission to establish a new undertaking. Section 22 provides that on receiving such application the Central Government may call upon the applicant to satisfy the Central Government that the proposal to establish a new undertaking or the scheme of finance with regard to such proposal is not likely to lead to concentration of economic power to the common detriment or is not likely to be prejudicial to the public interest in any other manner and thereupon the Central Government may if it is satisfied that it is expedient in the public interest to do so by order accord approval to the proposal. But if the Central Government is of the opinion that approval cannot be made without further enquiry, it may refer the application to the Commission for enquiry and the Commission may " after such hearing as it thinks fit" report to the Central Government its opinion on the application. The Central Government may thereafter pass orders on the application but before making an order, by virtue of Section 29, the Central Government shall give reasonable opportunity of being heard to any person who is or may be interested in the matter.

7. Section 8 of the Monopolies and' Restrictive Trade Practices Act provides that the Central Government may in consultation with the Commission appoint a director of investigation for making investigations for the purposes of the Act. In fact, a senior Government officer has been appointed as a director of investigation and he has a complement of joint, deputy and assistant directors and other staff to assist him in the work of investigations for the purposes of the Act. Section 12(1) confers on the Commission for the purposes of any enquiry under the Act certain powers of a civil court.

Sub-section (2) provides that any proceedings before the Commission shall be deemed to be judicial proceedings for certain purposes and the Commission shall be deemed to be a civil court for certain other purposes. The provisions of Sections 12 and 18 would indicate that the proceedings before the Commission are judicial proceedings for certain purposes. But at the same time the Commission is also an investigating body and has a director of investigation appointed by the Central Government and other staff under him at the disposal of the Commission for causing investigations to be made for the purposes of the Act.

Unlike the judicial proceedings in a court, the Commission has at its disposal machinery for making investigations and gathering information on its own. There, however, does not appear to be any doubt that the Commission is a quasi-judicial body.

" 17. (1) Subject to the provisions of Sub-section (2), the hearing of proceedings before the Commission shall be in public.

(2) Where the Commission is satisfied that it is desirable to do so by reason of the confidential nature of any offence or matter or for any other reason, the Commission may- (c) prohibit or restrict the publication of evidence given before the Commission (whether in public or in private) or of matters contained in documents filed before the Commission.

18. (1) Subject to the provisions of this Act, the Commission shall have power to regulate- (c) the delegation to one or more members of such powers or functions as the Commission may specify.

(2) In particular, and without prejudice to the generality of the foregoing provisions, the powers of the Commission shall include the power to determine the extent to which persons interested or claiming to be interested in the subject-matter of any proceeding before it are allowed to be present or to be heard, either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceeding." 9. Section 28 provides that the Commission shall take into account all matters which appear in the particular circumstances of each case to be relevant having regard to the need consistently with the general economic position of the country in making recommendations about approving the proposal of the applicants. One such consideration would be to achieve the production, supply and distribution by most efficient and economical means of goods of such types, in qualities, in such volume and at such prices as will best meet the requirements of the defence of India and home and overseas markets. Section 29 provides that before making a final order the Central Government shall give a reasonable opportunity to all persons who may be interested of being heard.

10. The other relevant provisions of the Act are: Section 60 which provides restrictions on the disclosure of information obtained by or on behalf of the Commission; Section 52 provides the penalty for wrongful disclosure of such information; Section 66 empowers the Commission to make regulations for the efficient performance of its functions under the Act. Subject to such regulations the Commission has under Section 18(1) the power to regulate its own procedure and conduct of its business.

11. The Commission has made regulations for enquiries. These are called the Monopolies and Restrictive Trade Practices Commission Regulations, 1971. Regulation 5(2) provides that where a reference has been received from the Central Government under, inter alia, Section 22, the Commission may " where it considers necessary" hold an open enquiry after giving notice to the parties concerned and to the Central Government. It may also " if it considers necessary " permit persons interested in the subject-matter to be present or to be heard either by themselves or by their representatives or to cross-examine witnesses or otherwise take part in the proceedings. Sub-regulation (3) provides that the parties concerned may be represented by a counsel or by a chartered accountant specifically authorised by them to act on their behalf. Regulation 6 provides that the Commission shall notify to the Government and to the parties concerned the date and the place of hearing. Regulation 8 provides that on such date or the date to which the hearing may be adjourned, the parties concerned shall be heard in support of their replies. Regulation 9 provides that the material gathered by the director may be brought on record at such stage of the proceedings as the Commission may think fit in which case the Commission shall communicate the gist of the said material to the parties concerned and give them an opportunity to rebut the material gathered by the director. After the hearing, the Commission shall make its report to the Government under Regulation 11.

12. At this stage it may be mentioned that on receiving a reference from the Government the Commission has made a practice of issuing a public notification in the Press giving material particulars of the proposals of the applicants contained in their application. The notification invites "all those persons who are in a position to give any information/comments which will be of assistance to the Commission in its enquiry to do so ". The notification also states that such persons may send the information/ comments to the Secretary to the Commission by a particular date and while sending the information/comments they may also indicate whether they would like to participate in the public hearing regarding the proposals.

13. Such notification in this particular case was issued on 24th September, 1973, and the two opponents have entered appearance and sent their information/comments to the Commission pursuant to such notification and have also stated that they would like to participate in the public hearing regarding these proposals. Thereafter, they have made the present application for discovery.

14. As we have stated hereinabove there is no doubt that the proceedings before this Commission are quasi-judicial proceedings. The purpose of the Act is to provide that the operation of the economic system does not result in the concentration of economic power to the common detriment and to control monopolies. There appears to be no doubt that every citizen of India is concerned to prevent the concentration of economic power to the common detriment and is entitled to appear before this Commission and to participate in the proceedings at the public hearing if he enters appearance and furnishes information/comments in compliance with the Regulations framed by the Commission and the public notification issued by it. This right is, however, subject to the limitations imposed by Sections 17 and 18 and the other provisions of the Act and the regulations made thereunder.

There is, therefore, no doubt as to the locus standi of the opponents to appear in these proceedings subject, however, to the restrictions mentioned hereinabove. But it must be said that the proceedings before the Commission are not adversary proceedings and are not inter-parties.

The opponents are not entitled " to show cause " against the application and are not parties to the proceedings in the strict sense contemplated by the Code of Civil Procedure. They are members of the public who are entitled to furnish information and assistance to the Commission to the extent permitted by the Commission under Sections 17 and 18 and other provisions of the Act and Regulations to enable the Commission to discharge its duty of controlling monopolies and preventing concentration of economic power to the common detriment. The participation by the opponents in the proceedings of the Commission is strictly limited to the assistance required by the Commission under Sections 17 and 18 and other provisions of the Act and Regulations framed thereunder.

15. The Commission has other sources of information and assistance to which it resorts in the discharge of its duties. Immediately after the issuing of the public notification the Commission causes investigation to be made and information to be gathered from Government departments with regard to requirements of the Defence of India and home and overseas markets, statistics with regard to the anticipated national demands for the article proposed to be produced under the application, about the total licensed capacity in India and the total production.

The Commission also gathers information from Government and private bodies with regard to the possibility of production of such articles in India without foreign technology or machinery if the applicant has shown a desire to acquire such technology or machinery and also the reaction of several Ministries about foreign exchange and other requirements of the proposals. Such information is of a highly confidential nature which the Commission may take into consideration but may not disclose to opponents of the proposal like the present opponents. An extreme example is the collecting by the Commission of information as to requirements of the Defence of India. It will be dangerous and not in public interest to disclose such information to members of the public.

16. Similarly, applications under Section 22 of the Act contain information of a confidential nature disclosed by the applicants to the Central Government, which it may pass on to the Commission. Such information may pertain to the details of proposed collaboration agreement for obtaining foreign technology, capital or assistance or market surveys conducted by the applicants for their own use at considerable expense to guage the market requirements of the country.

There can be other reasons for which some of the information contained in the application cannot be disclosed.

17. Sections 17 and 18 empower the Commission to hear any proceedings in private and to prohibit or restrict the publication of evidence or of matters contained in documents filed before the Commission. Grant of a copy of such document even to a single person would, in our opinion, amount to publication. Section 18(2) empowers the Commission to determine the extent to which persons like the opponents are to be allowed to be present or to be heard. These provisions indicate that persons like the opponents may be allowed to participate only in part of the proceedings and may be kept out of the remaining part of the proceedings. The power to prohibit or restrict publication of matters contained in documents filed before the Commission is to be exercised if the Commission is satisfied that it is desirable to do so. In such cases the Commission may refuse to furnish persons like the opponents copies of any documents filed before it or parts of such documents.

This may be done for the reason that such matters or information is of a confidential nature or it may do so for other reasons. Section 30 of the Act prescribes a period of 90 days within which the Commission must make its report subject, however, to the power of the Commission to extend this time for good reasons. The limitation of time within which the Commission must make its report is absolutely necessary. If the making of the report is delayed too long the figures furnished by an applicant with regard to the cost of the project may become obsolete due to the rising prices. Similarly, other information furnished in the documents may become obsolete. Undue delay may also result in impeding the industrial progress of the country, discouraging new enterprises and affect the flow of supplies causing shortages and price rise. It may exasperate the entrepreneur or his foreign collaborator. For these and other reasons, it becomes necessary to limit the extent to which persons interested or claiming to be interested in the subject-matter of any proceeding are to be allowed to be present or to be heard only to the extent of assistance required by the Commission in the circumstances of each case. Disclosure of information and documents to such persons has also of necessity to be limited so as to provide that matters of confidential nature are not disclosed including processes of manufacture which are the private property of parties. Bearing these considerations in mind each application for disclosure of documents and information or the extent of participation in proceedings before the Commission has to be determined by the Commission. If the Commission were to function like a court of law in every respect the proceedings would take too long and the above-mentioned purposes would be defeated.

18. It is true that in cases of large or dominant undertakings which are registered under Section 26 of the Act they have to satisfy the Government or the Commission that their proposals to expand are not to the common detriment. But the nature and extent of the participation in the proceedings by any person interested or claiming to be interested has to be limited by virtue of the provisions of Sections 17 and 18 and other provisions of the Act and Regulations framed thereunder. They have not " to show cause " but to render information and assistance to the extent permitted by the Commission. With regard to the documents and information to be furnished to such persons also the matter has to be governed by the orders of the Commission in each case bearing the above considerations in mind. Such persons would not be entitled to all the information gathered by the Commission from the several sources indicated herein above including the applicant. There has of necessity to be an area of information which cannot be disclosed to such persons but which the Commission may take into account in making its report.

There is, however, a stage at which some of the information may become available to the persons like the opponents. The Commission includes in its report the material on which its conclusions are based the report is made available to such persons by the Government at the stage of hearing by the Government under Section 29 of the Act.

19. It is, however, open to the persons who have entered appearance and have been permitted by the Commission to participate in the proceedings to place all the information and render all the assistance that they can to the Commission.

20. Mr. B.A. Desai contended that granting approval to the proposal of the applicants would adversely affect his clients who are the business rivals of the applicants, and, therefore, they are entitled " to show cause ". We are afraid we cannot accept this contention. If this proposition were correct there would be provisions in the Act for joinder of business rivals as parties. Mr. Desai's clients are themselves in a large way of business. One of the purposes of the Act is to promote competition as a countervailing force to monopoly power.

We have to consider the applicants' proposal in that light. It does not confer the status of an adversary on Mr. Desai's clients.

21. Mr. B.A. Desai contended that under Section 29 of the Act the opponents would be entitled to a '' reasonable opportunity of being heard " by the Government, and therefore, such reasonable opportunity of being heard would be co-extensive with " after such hearing as the Commission thinks fit" in Section 22 of the Act. He further contended that because the Commission was a judicial body the rules of natural justice require that a reasonable opportunity of being heard should be co-extensive with opportunity which a civil court gives a party to the proceedings. He contended that his clients would, therefore, be entitled to all the documents and the other information on which the Commission may rely for making its report. We are afraid that for reasons hereinabove discussed we cannot accept this contention.Union of India v. T.R. Varma, AIR 1957 SC 882 and State of Madhya Pradesh v.Chintaman Sadashiva Waishampayan, AIR 1951 SC 1623. These are cases under Article 311 of the Constitution where material to be used against an employee of the State is to be disclosed to him with a view to give him a reasonable opportunity of being heard before he is penalised. We are afraid these cases have no application to the proceedings under Chapter III of the Monopolies and Restrictive Trade Practices Act.

There is no material intended to be used against the opponents which must be disclosed to them in order to give them also a reasonable opportunity of being heard. It is not intended to punish or penalise them. Mr. Desai has also invited our attention to the judgment of the Supreme Court in Naresh Shridhar Mirajkar v. State of Maharashtra, AIR 1967 SC 1 and Alien Berry & Co. P. Ltd. v. Vivian Bose, AIR 1960 Punj 86 . We are afraid these cases have also no application to the facts of the case and we do not consider it necessary to deal with them in detail.

23. Dr. L.M. Singhvi invited our attention to the case of Russell v.Duke of Norfolk, [1949] 1 All ER 109, 118 (CA) where Tucker L.J. has observed that: " There are, in my view, no words which are of universal application to every kind of inquiry and every kind of domestic tribunal. The requirements of natural justice must depend on the circumstances of the case, the nature of the inquiry, the rules under which the tribunal is acting, the subject-matter that is being dealt with, and so forth. Accordingly, I do not derive much assistance from the definitions of natural justice which have been from time to time used. But, whatever standard is adopted, one essential is that the person concerned should have a reasonable opportunity of presenting his case." 24. In a separate judgment Denning L.J. has affirmed the above proposition. The above words have become almost a legal classic. Dr.

Singhvi also cited the case of Official Solicitor to the Supreme Court v. K, [1965] AC 201 (HL) decided by the House of Lords in England, wherein in the speech of Lord Evershed the above quotation from the judgment of Lord Tucker has been quoted with approval. The above quotation was also affirmed with approval in the speech of Lord Hailsham in the case of Pearlberg v. Varty, [1972] 1 WLR 534 (HL) decided by the House of Lords in England.

25. Dr. Singhvi has invited our attention to two cases decided by our own Supreme Court. The first case is that of Bharat Barrel & Drum Manufacturing Co. v. L.K. Bose, AIR 1967 SC 361 wherein it has been held that rules of natural justice are not inflexible rules or of universal application. Court has to consider in each case whether, in the light of the facts and circumstances of the case, the nature of issues involved in an enquiry, the nature of the order passed and interest affected thereby, a fair and reasonable opportunity of being heard was furnished to the person affected. The other case is Union of India v. J.N. Sinha, AIR 1971 SC 40 where it has been held that rules of natural justice are not embodied rules nor can they be elevated to the position of fundamental rights. Their aim is to secure justice or to prevent miscarriage of justice. These rules can operate only in areas not covered by any law validly made. They do not supplant the law but supplement it. If a statutory provision can be read consistently with the principles of natural justice, the courts should do so. But, if a statutory provision either specifically or by necessary implication excludes the application of any rules of natural justice, then the court cannot ignore the mandate of the legislature or the statutory authority and read into the concerned provision the principles of natural justice. Whether the exercise of a power conferred should be made in accordance with any of the principles of natural justice or not depends upon the express words of the provision conferring the power, the nature of the power conferred, the purpose for which it is conferred and the effect of the exercise of that power.

26. In this case we must remember that the opponents are the business rivals of the applicants although Laxmi Starch is in a smaller way of business. Maize Products have themselves applied to the Central Government for permission to expand their business with foreign collaboration. As we have indicated hereinabove, the opponents are not parties in an adversary proceeding. They have come before us as citizens of India or members of the public in answer to an invitation contained in a public notification to furnish information and assistance to the Commission. They are not called upon " to show cause " against the application. The public notification itself contains the material particulars of the proposal of the applicants contained in their application. There could, however, be some particulars which are omitted from the public notification. We have, therefore, decided that in order to enable the opponents effectively to assist the Commission in the discharge of its duty, it is necessary as well as sufficient to furnish to the opponents a copy each of the application under Section 22 of the Monopolies and Restrictive Trade Practices Act which contains the proposals of the applicants with regard to the proposed new undertaking. We have, however, decided to omit from the copies the details of the chemical composition of some of the products, the quantities of production other than starch as these are irrelevant and copy of the collaboration agreement.

27. We have carefully gone through the application filed by the applicants under Section 22 of the Act and the other information available to us and have also considered the confidential nature of the information, the time that the enquiry must take and the desirability of the publication of matters contained in the documents filed before us in the public interest. We have also considered the consequences that full disclosure will have on industrial development of the country, integrity and fidelity of commercial transactions and impingement of certain disclosures on the proprietary rights in the results of research and survey.

28. Taking into consideration the express words of Sections 17 and 18 of the Monopolies and Restrictive Trade Practices Act, the purpose for which these provisions were incorporated and the effect of the exercise of the power of discovery and inspection and the matters discussed hereinabove we have decided not to make available to the opponents the remaining information in the possession of the Commission and we propose to make the order hereinafter made.

29. M/s. Maize Products and M/s. Laxmi Starch Ltd. be furnished a copy each of the application made by M/s. Anil Starch Products Ltd. to the Government under Section 22 of the Monopolies and Restrictive Trade Practices Act along with its covering letter and annexures with the following being omitted from such copies : (a) From para. 12 of the application the names of individual chemicals shall be omitted.

(b) From annexure " B-1 " to the application particulars of products manufactured by Anil Starch Products Ltd. other than starch shall be omitted.

(c) Annexure "B-2" shall be omitted. (This annexure pertains to products other than starch of undertakings interconnected with Anil Starch Products Ltd.).

(d) Annexure " D " shall be omitted. (This annexure is a copy of the proposed foreign collaboration agreement between Anil Starch Products Ltd. and M/s. National Starch Products).

30. With regard to the remaining items disclosure whereof is prayed for, the applications are rejected.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //