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Registrar of Restrictive Trade Vs. Gramophone Co. of India Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1975)45CompCas666NULL
AppellantRegistrar of Restrictive Trade
RespondentGramophone Co. of India Ltd.
Excerpt:
.....main application against the respondent under section 10(a)(iii) of the monopolies and restrictive trade practices act alleging that the respondent had entered into 5 agreements with gramophone record dealers, radio dealers, record-playing instrument dealers, film producers and artistes and that several clauses in the said agreements amounted to restrictive trade practices including maintenance of resale prices and that such practices were prejudicial to public interest. the applicant also alleged that the respondent is a monopolistic undertaking. the applicant prayed that the commission should inquire into the restrictive trade practices under section 37 of the monopolies and restrictive trade practices act and pass such orders as it may deem fit. on the said application the commission.....
Judgment:
1. These two applications dated the 15th April, 1974, and 26th April, 1974, have been filed by the respondent praying that the Commission should direct its Deputy Secretary to withdraw and/or cancel his letter to the respondent dated the 28th February, 1974, and also direct the Director (Research) to cancel and/or withdraw his letter dated the 11th April, 1974, calling for some information and that the inquiry under Section 37(1) be confined to the allegations contained in the main application filed by the Registrar of Restrictive Trade Agreements on 21st April, 1972. The respondent has also prayed for certain incidental reliefs.

2. The facts leading to the present application are briefly as follows : On 21st April, 1972, the applicant filed the main application against the respondent under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act alleging that the respondent had entered into 5 agreements with gramophone record dealers, radio dealers, record-playing instrument dealers, film producers and artistes and that several clauses in the said agreements amounted to restrictive trade practices including maintenance of resale prices and that such practices were prejudicial to public interest. The applicant also alleged that the respondent is a monopolistic undertaking. The applicant prayed that the Commission should inquire into the restrictive trade practices under Section 37 of the Monopolies and Restrictive Trade Practices Act and pass such orders as it may deem fit. On the said application the Commission ordered an inquiry. A notice of inquiry under Regulation 7 of the Restrictive Trade Practices (Enquiry) Regulations, 1970, was issued to and served on the respondent. The respondent entered appearance and filed a statement of the case on 16th August, 1972, raising various contentions. On 2nd March, 1973, the applicant tiled an answer to the respondent's statement of the case.

3. The respondent filed an application under Section 37(2) on 6th November, 1973, to which the applicant filed a reply. By its order dated the 13th December, 1973, the Commission, by consent of parties directed that the application under Section 37(2) should stand over to the hearing of the main application. In the course of the proceedings several orders were made in furtherance of the proceedings including one for discovery and inspection.

4. On 28th February, 1974, under the orders of the Commission its Deputy Secretary issued a notice to the respondent intimating to it that the Commission proposed to take action under Section 37(4).

Thereafter, on 11th April, 1974, the Director (Research), attached to the Commission, wrote to the respondent to furnish information in terms of a questionnaire enclosed with his letter. On 15th April, 1974, the respondent filed an application praying, inter alia, that the notice dated the 28th February, 1974, be cancelled and the inquiry confined to the main application. On 26th April, 1974, the respondent filed another application in continuation of the application dated the 15th April, 1974, praying, inter alia, that the said letter of 11th April, 1974, should also be withdrawn or cancelled. These are the two impugned letters in respect of which these two applications have been filed.

5. The first contention taken by the respondent is that, under the provisions of Section 37(4) there has to be a finding that the respondent is a monopolistic undertaking and is indulging in restrictive trade practices, that such finding should be arrived at during the course of an inquiry under Section 37(1) and that, in such a case, after passing the necessary orders under Sub-sections (1) and (2) of Section 37 the Commission may submit a case along with its findings to the Government. It is contended that the exercise of power under Section 37(4) postulates an inquiry completed under Section 37(1) and a finding with regard to the restrictive trade practices in such an inquiry. The suggestion of the respondent appears to be that as the Commission has not yet come to a finding that the respondent is a monopolistic undertaking or that it is indulging in restrictive trade practices, the exercise of power under Section 37(4) is, therefore, premature.

6. The contention of the respondent that there has to be a finding that it is a monopolistic undertaking and that it is indulging in restrictive trade practices before action under Section 37(4) is taken, is based on an interpretation of the word "find " in Section 37(4) as being equivalent to and coextensive with " giving a finding ". Mr.

Ashok H. Desai, on behalf of the respondent, argued that this was the correct interpretation and it harmonised with the word " findings" 'subsequently used in Section 37(4). Based on this interpretation Mr.

Desai further contended that according to him the true interpretation of Section 37(4) was that the Commission must proceed with the existing inquiry under Section 37(1) on the main application of the Registrar as it stood, and after giving findings to the effect that the respondent was a monopolistic undertaking and that it was indulging in restrictive trade practices, if the Commission incidentally finds that some of the restrictive trade practices proved against the respondent were also monopolistic trade practices it should send its findings to the Central Government with regard to the monopolistic trade practices which were also restrictive trade practices for such action as that Government may take under Section 31. Mr. Desai argued that such action under Section 31 can only be the making of a reference by the Government under Section 31(1) to the Commission with regard to the monopolistic trade practices which would result in a second inquiry by the Commission against the respondent.

7. Mr. Desai also argued that in Section 31(1) the word " appears" has been used thus : " Where it appears to the Central Government that one or more monopolistic undertakings are indulging in any monopolistic trade practice, or that, monopolistic trade practices prevail in respect of any goods or services, that Government may refer the matter to the Commission for an inquiry and the Commission shall, after such hearing as it thinks fit, report to the Central Government its findings thereon." 8. He contended that if in Section 37(4) the intention of the legislature had been that the word " finds " was not to be equated with " findings ", it could have used the word " appears " used in another part of the Act. In our opinion no inference can be drawn from the fact that a different word had been used to convey a similar idea. We must interpret the word " finds " in its own context and so interpreted it cannot be equated with " finding " because it is only after the inquiry that the Commission can come to the conclusion that the respondent is a monopolistic undertaking and in order to hold an inquiry it must give notice to the respondent of such an inquiry. The finding that the respondent is a monopolistic undertaking may not fall to be determined in every proceeding with regard to restrictive trade practices because restrictive trade practices may be indulged in by undertakings which are not monopolistic undertakings. The dictionary meaning of the word " find " is " to come upon ", "meet with ", " to discover ", " arrive at ", " to come to perceive " or " to determine after judicial enquiry ".

It does not appear to us that the word " find " was used in Section 37(4) as involving a judicial determination. In our opinion it would mean "to come upon or meet with or to come to perceive". Such "coming upon or meeting with" or "coming to perceive " would only be a tentative inference and not a judicial finding. The purpose of enacting Section 37(4) appears to be that if during the course of an inquiry under Section 37(1), i.e., after issuing a notice of inquiry, it appears to the Commission that the respondent may be monopolistic undertaking which is alleged to be indulging in restrictive trade practices the Commission may simultaneously inquire into any monopolistic trade practice which the respondent may be indulging in and submit the case along with its findings thereon for action by the Government under Section 31(2) and (3), and not the action for referring back the matter to the Monopolies Commission for inquiry under Section 31(1). The idea is to avoid multiplicity of proceedings.

What is contemplated is that in addition to forming an opinion as to restrictive trade practices prejudicial to public interest, the Commission must give findings on at least two further points, viz., (i) that the respondent is a monopolistic undertaking, and (ii) whether the respondent is indulging in any monopolistic trade practices. The findings on these points are in our opinion intended to be the result of a simultaneous inquiry as a result of which with regard to restrictive trade practices the Commission may pass orders under Sub-sections (1) and (2) of Section 37, and with regard to monopolistic trade practices the Commission may " submit the case along with its findings to the Central Government with regard to any monopolistic trade practices for such action as that Government may take under Section 31 ". The word " findings " in Section 37(4) appears to relate to findings with regard to monopolistic trade practices and not with regard to restrictive trade practices. Section 37(1) talks of the Commission coming to an " opinion " with regard to restrictive trade practices. In any case, the word " findings " in Section 37(4) in its context appears to relate to findings with regard to monopolistic trade practices, with regard to which the case is to be submitted to the Central Government for action under Section 31. So construed, Section 37(4) requires the Commission, if it deems fit, to send its findings with regard to the monopolistic trade practices to the Central Government after making an order under Section 37(1) with regard to restrictive trade practices. The Commission will not be in a position to send its findings with regard to monopolistic trade practices after making order under Section 37(1) with regard to restrictive trade practices if it does not hold inquiry with regard to monopolistic trade practices simultaneously. What is required to be done after making an order under Section 37(1) with regard to restrictive trade practices, is the sending of findings with regard to the monopolistic trade practices to the Central Government, and not the holding of an enquiry with regard to monopolistic trade practices. It is implicit in Section 37(4) that the Commission may, if it so considers necessary, hold simultaneous enquiry with regard to monopolistic trade practices. The only conditions precedent for the exercise of power under Section 37(4) being, (i) that the Commission should find during the course of enquiry under Section 37(1), that there is a monopolistic undertaking, and that it is indulging in restrictive trade practices, and (ii) that it should make such order with regard to restrictive trade practices under Section 37(1) or (2) as it may consider necessary. Once these two conditions are satisfied the Commission gets the jurisdiction to submit its findings with regard to monopolistic trade practices ; and no such findings can be arrived at by the Commission without holding an inquiry with regard to monopolistic trade practices and giving the undertaking concerned a reasonable opportunity to show cause and represent its case.

9. The simultaneous inquiry under Section 37(4) may relate to any monopolistic trade practices whether they appear from the record of the proceedings under Section 37(1) and/or from any other information or material that may have come to the notice of the Commission from any other source including the one collected or obtained by any of the officers of the Commission. Though it is not directly relevant to the interpretation of Section 37(4), it may be pointed out that the Commission has jurisdiction under Section 10(b) to inquire into any monopolistic trade practice on its own knowledge or information and this power of the Commission is not limited to any time or any stage of any proceeding before the Commission. If the Commission is to launch on this simultaneous inquiry it must, in order to observe the rules of natural justice, give notice to the respondent of the simultaneous inquiry. The letter of 28th February, 1974, was addressed by the Deputy Secretary to the respondent in order to give the respondent notice of this simultaneous inquiry. The letter of the Director (Research), dated the 11th April, 1974, was in pursuance of the decision of the Commission to launch upon this simultaneous inquiry and called for information in that connection, 10. The contention that a completed inquiry under Section 37(1) and findings on restrictive trade practices in such inquiry are conditions precedent to the exercise of power under Section 37(4) does not appear to us to be correct.

11. The interpretation suggested on behalf of the respondent would necessitate cither a subsequent inquiry by the Commission itself with regard to the status of the respondent as a monopolistic undertaking and with regard to existence of monopolistic trade practices on its own or a subsequent inquiry as a result of a reference made by the Central Government under Section 31(1). The interpretation which would result in such multiplicity of proceedings must be avoided. It must also be avoided for a further reason that in the Act there is no provision for interim injunctions restraining restrictive or monopolistic trade practices during the pendency of proceedings and multiplicity of proceedings would only delight those who indulge in them. The underlying object of Section 37(4) appears to be to avoid multiplicity of inquiries and to give appropriate relief in public interest as speedily as possible consistent with the principles of natural justice.

12. Mr. Desai next contended that the question of the status of the respondent as a monopolistic undertaking would be in issue in an inquiry under Section 37(1) and the monopolistic trade practices contemplated by Section 37(4) were those which were also restrictive trade practices under Section 37(1). He, therefore, contended that what Section 37(4) contemplated was only a narrow inquiry under Section 37(1) as a result of which the Commission could make a report to the Central Government under Section 37(4). In our opinion this contention is not correct. Firstly, because a restrictive trade practice may be indulged in by any producer, distributor and dealer irrespective of his being a monopolistic undertaking. The status of the respondent would be irrelevant, unless it is relevant for the collateral purpose of showing the magnitude of the restrictive trade practice. Secondly, because a monopolistic trade practice may not necessarily also be a restrictive trade practice, and there is nothing in Section 37(4) to limit the meaning of monopolistic trade practices to be reported to the Central Government to those which also fall within the definition of restrictive trade practices. The word "any " used with regard to monopolistic trade practice in Section 37(4) would suggest that the monopolistic trade practice need not be such as is also a restrictive trade practice. In our opinion, if a case is to be submitted to the Central Government, an inquiry whether simultaneous or subsequent is unavoidable.

13. We might mention that the main application does make an allegation that the respondent is a monopolistic undertaking. The contention of the respondent is that in any case an issue would be joined on this allegation in any inquiry under Section 37(1). It appears to us that this may not necessarily be so. An undertaking which is not a monopolistic undertaking may indulge in restrictive trade practices.

Although there may be an averment that the respondent is a monopolistic undertaking and there might be a denial of this averment this would not necessarily result in an issue being joined unless the allegation is relevant to the inquiry.

14. Mr. Desai, on behalf of the respondent, further contended that if a parallel inquiry is held in respect of restrictive trade practices under Section 37(1) and monopolistic trade practices under Section 37(4) it would result in embarrassment to the respondent. He contended that an inquiry under Section 37(1) is a judicial inquiry governed by provisions akin to the provisions under the Civil Procedure Code, whereas an inquiry under Section 37(4) is similar to an inquiry under Chapters III and IV of the Act and that these inquiries are more informal inquiries, 15. It appears to us that if a simultaneous inquiry is held it has to be by a procedure more beneficial to the respondent, namely, the procedure of inquiries under Section 37(1) which is akin to the procedure prescribed by the Civil Procedure Code. It would, therefore, benefit the respondent if the inquiry is simultaneous, instead of embarrassing him.

16. The next contention--and it appears to us to be a more substantial contention--of the respondent is that if the letter of 28th February, 1974, is intended to be a notice of inquiry into monopolistic trade practices, in order to satisfy the rules of natural justice, it must contain particulars of the monopolistic trade practices alleged to be indulged in by the respondent. The respondent contended that without such particulars the inquiry will be at large and will amount to a fishing inquiry to find out whether the respondent was indulging in any monopolistic trade practices. The letter of 28th February, 1974, neither calls upon the respondent to show cause why it should not be held to be a monopolistic undertaking nor does it set out the monopolistic trade practices to be inquired into under Section 37(4).

The letter of 11th April, 1974, addressed by the Director (Research) to the respondent asking for information would, therefore, not be justified inasmuch as the respondent has not been told what is being inquired into. On this ground alone we are inclined to set aside these two letters and accordingly we hereby set aside and cancel the letters dated the 28th February, 1974, and 11th April, 1974. We direct the Secretary or the Deputy Secretary to issue a fresh notice to the respondent under Section 37(4) calling upon the respondent to show cause why it should not be held to be a monopolistic undertaking and setting out the monopolistic trade practices to be inquired into. The Director (Research) will thereafter take action for getting information from the respondent which may be relevant to the nature of the inquiry.

17. The respondents have also attacked the language used by the Deputy Secretary and the Director (Research) in their letters. In view of the fact that these notices have been set aside on a more substantial ground, it is not necessary to deal with the text of these letters.

18. In view of what has been stated hereinabove the prayer that the inquiry under Section 37(1) be confined to the allegations contained in the application of 21st April, 1972, is rejected.


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