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Registrar of Restrictive Trade Vs. Baroda Rayon Corporation Ltd. and - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
AppellantRegistrar of Restrictive Trade
RespondentBaroda Rayon Corporation Ltd. and
Excerpt:
.....application of the registrar alleging that the respondents were indulging in certain restrictive trade practices is based on an agreement dated the 16th february, 1972, that the said agreement has expired by efflux of time on 31st december, 1973, and, therefore, the inquiry does not survive. to be able to appreciate the contentions of the respondents the facts leading to this application may be briefly stated : 2. the applicant is the registrar of restrictive trade agreements. the respondents are producers of man-made fibre. they have formed an association which has its office in bombay. they have become its members. on 16th february, 1972, this association entered into an agreement with certain people who are described in the agreement as representatives of " consumers' association "......
Judgment:
1. This is an application dated the 2nd January, 1974, filed by the respondents in which they have contended that the proceedings should be terminated because the main application of the Registrar alleging that the respondents were indulging in certain restrictive trade practices is based on an agreement dated the 16th February, 1972, that the said agreement has expired by efflux of time on 31st December, 1973, and, therefore, the inquiry does not survive. To be able to appreciate the contentions of the respondents the facts leading to this application may be briefly stated : 2. The applicant is the Registrar of Restrictive Trade Agreements. The respondents are producers of man-made fibre. They have formed an association which has its office in Bombay. They have become its members. On 16th February, 1972, this association entered into an agreement with certain people who are described in the agreement as representatives of " Consumers' Association ". This agreement was sent to the Registrar of Restrictive Trade Agreements for registration under the provisions of Section 35 of the Monopolies and Restrictive Trade Practices Act. Such a course has implicit in it the admission that the agreement contains some restrictive clauses. It is, however, contended by Mr. Ashok H. Desai appearing for the respondents that the agreement was sent for registration to the Registrar of Restrictive Trade Agreements ex majeure cautela to avoid prosecution for not registering the agreement. It is admitted that the agreement was not sent to the Registrar with such reservation. It was sent unconditionally. It may have been open to the respondents to ask the Registrar to decide first whether the agreement attracted the provisions of Section 35 and if the Registrar decided that it did, to proceed to register the agreement.

This was not done. It would, therefore, appear that there is an implicit admission that the agreement contains restrictive clauses. It is, however, not necessary to decide this point at this stage.

3. As the Registrar took the view that some of the clauses of the agreement were restrictive he filed the main application on 22nd September, 1972, alleging that the agreement contained certain clauses which were in the nature of restrictive trade practices. We have been taken through the various clauses of the agreement. We need not deal with all of them. But we find that about 60% of the production of the respondents of rayon yarn of particular deniers was to be distributed only among the members of what by mutual agreement they chose to describe as representatives of Consumers' Association. Such a provision would prima facie amount to a restrictive clause because the bulk of the production was being reserved by mutual arrangement for certain people to the exclusion of the rest of the consumers in the country.

The remaining about 40 per cent. were stated to be for free sale.

Another clause fixed the selling prices and yet another clause provided for restrictions on the quantity of production of rayon yarn of particular deniers. Such a restriction would prima facie reduce the quantity of yarn available in the market in the country and would also prima facie be restrictive and manipulative. We can, therefore, safely express a prima facie view that the agreement contained restrictive clauses. The only question that remained to be determined was whether the practices started by the clauses were prejudicial to the public interest.

4. The Registrar has stated in his application that the agreement had, inter alia, the object of arriving at a mutually acceptable price and distribution pattern of viscose filament yarn, that the pattern of production was so devised from time to time by each spinner so as to allow him to maximise his profits by increasing the production of 40 denier yarn and reducing the production of coarser deniers like 120, 150, etc., and that the articles of the said agreement " prevent any new entry by a viscose weaver from getting his quota of yarn at the prices fixed under the agreement for the reason that distribution of viscose filament yarn was based on region-wise sale of spinners". The applicant prays that "the Commission may be pleased to inquire into the restrictive trade practices noted above under Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969, and pass such orders as it may deem fit under the said section." 5. We might mention that the application of the respondents with which we are dealing today merely states that the agreement referred to by the Registrar in his main application ended on 31st December, 1973, by efflux of time and that the agreement, therefore, does not survive. The application does not contain any statement to the effect that the practice started by the agreement had ceased.

6. Section 37 of the Monopolies and Restrictive Trade Practices Act under which the present inquiry is started provides that the Commission may inquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been registered under Section 35 or not, which would come before it for inquiry and, if, after such inquiry it is of opinion, that the practice is prejudicial to the public interest, the Commission may, by order direct that either the practice shall be discontinued or that it shall not be repeated. There is also another alternative that the agreement may be declared to be void. But with this we are not concerned in this matter. It would appear to us that what the Commission is required to find is whether the practice exists and not whether the agreement exists. A practice may be started by an agreement. The agreement may expire but the practice may continue. This has to be found by the Commission as a question of fact. The Commission has also to find whether the practice is prejudicial to the public interest. If these two findings are in the affirmative, what the Commission must do is to order that the practice shall be discontinued and, if it finds that the practice has since been discontinued, it may still order that it shall not be repeated. In our opinion, therefore, the expiry of the agreement by efflux of time does not put an end to these proceedings.

7. Putting a construction on Section 37 as suggested by the respondents would lead to absurd results. It is not difficult for a person to find out how long it takes the Commission to complete its inquiry and to enter into an agreement for a short term at a time. This would result in the termination of each inquiry because the inquiry would commence only after the expiry of the agreement by efflux of time. It may also be open to a person charged with the allegation of indulging in restrictive trade practices to terminate an agreement even though it has not expired by efflux of time under a clause which enables him to do so or by mutual consent in order to defeat provisions of the Monopolies and Restrictive Trade Practices Act. The Commission would certainly not put a construction that would lead to such absurd results more so in case of legislation which is beneficent to the public generally.

8. Mr. Ashok H. Desai has contended that this is a judicial inquiry and not a general inquisition and, therefore, the Commission would not inquire into the restrictive trade practices not alleged in the application of the Registrar. Mr. Sanghi, for the Registrar, met this argument by stating that what the Registrar wanted the Commission to inquire into was the existence of the practices alleged in his application which were started by the agreement. He does not intend the inquiry to be a general inquisition.

9. In view of what we have stated above if we continue the inquiry we will not be deciding any academic question as suggested by Mr. Desai.

The question would be a question of substance as to whether the practices started by the agreement continue or have been discontinued after the expiry of the agreement.

10. In the result the application dated the 2nd January, 1974, is dismissed with costs, quantified at Rs. 500 which the respondents will pay to the Registrar.


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