1. Mr. Sen on behalf of the respondents applies that the application dated 11th March, 1974, be disposed of before the preliminary issues are determined. The application dated 11th March, 1974, contains a prayer that directions be given for implementation of the proposed modifications sought to be made in the agreement dated 1st April, 1971.
2. According to Mr. Sen, the application dated 11th March, 1974, falls under Sub-section (2) of Section 37. We are afraid the proper stage for considering the application of the respondents has not yet come.
Subsection (1) of Section 37 provides that the Commission may inquire into any restrictive trade practice and if after such inquiry it is of the opinion that the practice is prejudicial to the public interest the Commission may make an order contemplated by Clauses (a) and (b) of the said subsection. Sub-section (2) provides that the Commission may instead of making any order under Sub-section (1) permit a party to the restrictive trade practice to take such steps as may be necessary to ensure that the trade practice is no longer prejudicial to the public interest. In our opinion, this would suggest that the stage for considering an application under Section 37(2) arises only after an inquiry into the existence of a restrictive trade practice has been made and the restrictive trade practice has been established and is considered prejudicial to the public interest.
3. It is at that stage that instead of making an order contemplated by clauses (a) and (b) of Sub-section (1) of Section 37 the Commission may act under Sub-section (2) of that section.
4. Mr. Sen on behalf of the respondents contended that the expression "instead of making any order under this section" in Sub-section (2) is not limited to an order under clauses (a) and (b) of Sub-section (1), but it may be an order to hold an inquiry or to continue an inquiry. We are afraid we do not find any substance in this contention. An order to hold an inquiry has already been made before the respondent comes on the scene and does not remain to be made. Once such an order is made no further order is required to continue an inquiry. Therefore, the order contemplated by Sub-section (2) can only mean an order under clauses (a) and (b) of Sub-section (1) of Section 37.
5. There is another reason why Sub-section (2) must come into play only if, as a result of an inquiry or as a result of an admission of an existing trade practice on the part of the person charged with it, the Commission finds that there is in existence a restrictive trade practice and that such practice is prejudicial to the public interest.
Sub-section (2) speaks of continuance of the restrictive trade practice. It is only when the existence of a restrictive trade practice is established that an opportunity can be given to a person charged with a restrictive trade practice to remedy matters in such a manner that the practice which has been established may continue but it may cease to be harmful or prejudicial to the public interest by virtue of the remedial measures taken. All this, in our opinion, implies a finding whether based on an inquiry or admission that there is in existence a restrictive trade practice which is prejudicial to the public interest.
6. We put it to Mr. Sen that in case his clients admitted that the restrictive trade practice alleged in the complaint under Section 10(a)(iii) existed, its being prejudicial to public interest could be presumed under Section 38, and in that case we might even at this stage bring into play the provisions of Sub-section (2) and hear his application. There is, however, no such admission.
7. Mr. Sen invited our attention to a decision dated September 5, 1972, of this Commission in the matter of Registrar of Restrictive Trade Agreements v. Cadbury Fry (India] Ltd., Bombay, where Sub-section (2) of Section 37 was used to make an inquiry unnecessary. We are afraid in that matter the contentions now taken by the Registrar that this is not the proper stage for an application under Section 37(2) were not taken, argued or decided. In this matter such contentions have been taken and argued and as a result of the arguments we have come to the conclusion that the application is premature.
8. In the result, the hearing of the application dated 11th March, 1974, is adjourned to the hearing of the complaint.
9. The application dated 4th July, 1974, does not survive and is dismissed. Mr. Sen states that the allegations in the rejoinder dated 17th July, 1974, of the Registrar of Restrictive Trade Agreements to the respondents' application dated 4th July, 1974, are not admitted.
10. Mr. Sen for the respondents applies for an adjournment to enable the respondents to test the correctness of the above decision in a court of competent jurisdiction. This application is rejected. Mr. Sen states that he will argue the preliminary issues without prejudice to the respondents' right to challenge the above order in a court of competent jurisdiction.