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In Re: Raymond Woollen Mills Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1976)46CompCas395NULL
AppellantIn Re: Raymond Woollen Mills Ltd.
Excerpt:
.....a notice of a suo motu inquiry under sections 10(a)(iv) and 37 of the monopolies and restrictive trade practices act, 1969 (hereinafter for the sake of brevity referred to as "the act"), and regulation 58 of the monopolies and restrictive trade practices commission regulations, 1974 (hereinafter for the sake of brevity referred to as "the regulations"). the notice states that the commission had information that the respondent was indulging in restrictive trade practices of the following nature : (i) abnormally increasing the prices of the said steel files by manipulating prices and frequently revising the price lists in a manner unrelated to the increase, if any, in the cost of production, etc., with a view, inter alia, to benefit the distributors and thereby to impose unjustified.....
Judgment:
1. This is an application by the respondent praying (a) that the notice of inquiry dated the 5th December, 1974, be discharged, (b) in the alternative the Commission should furnish to the respondent the information referred to in the notice, copy of complaint, if any, pursuant to which the preliminary investigation, if any, was made and the report of the Director of Investigation, if any, of such preliminary investigation, (c) that the Commission should direct further and better particulars to be furnished to the respondent of the matters set out in the application, and (d) the Commission should extend time for filing the respondent's reply.

2. On 6th December, 1974, the Commission issued to the respondent who is a manufacturer of steel files a notice of a suo motu inquiry under Sections 10(a)(iv) and 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter for the sake of brevity referred to as "the Act"), and Regulation 58 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter for the sake of brevity referred to as "the Regulations"). The notice states that the Commission had information that the respondent was indulging in restrictive trade practices of the following nature : (i) Abnormally increasing the prices of the said steel files by manipulating prices and frequently revising the price lists in a manner unrelated to the increase, if any, in the cost of production, etc., with a view, inter alia, to benefit the distributors and thereby to impose unjustified costs or restrictions on the consumers ; (ii) Practising discrimination in the matter of supplying, charging prices, giving discounts, giving turnover bonus and issuing credit notes between distributors and/or between distributors of various areas/ territories ; (iii) Refusing to deal with and make supplies to certain distributors ; (iv) Favouring certain distributors by giving unjustifiably more supplies to them on the eve of price revision so as to enable them to earn more profit by selling subsequently such stocks at (revised) higher prices; and (v) Giving discounts and bonus calculated on the basis of turnover and issuing credit notes or giving other concessions or benefits in connection with, or by reason of, dealings.

3. The notice further states that it appears to the Commission that an inquiry under Sections 10(a)(iv) and 37 of the Act should be held into the above restrictive trade practices alleged to be indulged in by the respondent. The notice further states that an inquiry was also to be held into the status of the respondent as a monopolistic undertaking in respect of production, sale and supply of steel files. The notice calls upon the respondent to comply with certain Regulations if it wished to be heard in the proceedings before the Commission.

4. For the first prayer in the application that the notice dated 5th December, 1974, be discharged, no ground other than those in support of the remaining prayers was stated before as on behalf of the respondent and we reject the prayer and need not deal with the matter any further.

5. The second prayer in the application asks for three things; (i) information referred to in the notice of inquiry, (ii) copy of complaint, if any, received from any party, and (iii) report of preliminary investigation by the Director of Investigation, if any.

6. A brief reference to some of the provisions of law may be made.

Section 10 of the Act provides how inquiries into monopolistic or restrictive trade practices may be initiated. Clause (a)(ii) provides for inquiries pursuant to references made by the Central or State Governments. Clause (a)(iii) provides for inquiries upon application made by the Registrar of Restrictive Trade Agreements, and Clause (a)(iv) provides for suo motu inquiries by the Commission upon its own knowledge or information. In respect of inquiries pursuant to complaints by consumers or consumers' associations under Clause (a)(i), Section 11 of the Act provides that the Commission shall refer the complaint to the Director of Investigation for preliminary investigation for the purpose of satisfying itself that the complaint requires to be inquired into. In respect of the remaining clauses of Section 10(a) there is no mandatory requirement of a preliminary investigation. However, the Commission has made Regulation 19 authorising it whenever necessary to order preliminary investigation even into references by the Central or State Governments, applications of the Registrar and where the Commission desires to inquire into any restrictive trade practice suo motu. This preliminary investigation is only for the purpose of satisfying the Commission that the matter requires to be inquired into. Regulation 21 makes the reports of the Director of Investigation confidential and provides that only when the reports or parts thereof are either brought on record for the purpose of the inquiry or put into evidence in which case the reports or parts of the reports which are brought on record or put into evidence are furnished to the parties. Regulation 25 gives right to the Director of Investigation to appear, inter alia, in suo motu inquiries. Chapter IX prescribes the procedure for proceedings under Section 37 of the Act in respect of matters initiated under Section 10. Clause (a)(i) provides for inquiries on the complaint of consumers or consumers' associations.

Regulation 53 prescribes that complaint by consumers or consumers' associations shall contain "the facts complained of which constitute a restrictive trade practice". Regulation 54 makes a similar provision in respect of references from the Central or State Governments. Regulation 55 makes a similar provision in respect of applications from the Registrar. Regulation 58 provides that all proceedings under Section 37 shall be initiated by a notice to the person or persons against whom allegations of restrictive trade practices are made. Although in respect of suo motu inquiries there is no express provision that the notice shall contain " the facts complained of which constitute a restrictive trade practice", the Commission has made it a practice to state such facts in the notice. This has been done in the present case as will appear from the particulars of restrictive trade practices alleged in the notice set out hereinabove. After the notice is issued the Regulations provide for a reply by the respondent and a rejoinder in case of suo motu inquiries by the Director of Investigation.

Regulation 74 provides that after the pleadings are closed the Director of Investigation in respect of suo motu inquiries is to make an application for directions and such directions include directions as to delivery of further and better particulars of the pleadings and discovery and inspection of documents. A similar provision has been made in Regulation 75 enabling any party to the proceedings to apply for directions.

7. The stage provided for further and better particulars of pleadings and discovery and inspection has not yet arisen in this case because the respondent has not filed the reply and the Director of Investigation has consequently not filed a rejoinder. In this case the application at least in respect of particulars, copy of complaint, if any, and for information, if any, is premature. All that the provisions of the Act and the Regulations require is that the respondent should at any rate at this stage be informed of the "facts which constitute a restrictive trade practice". Section 10(a)(iv) provides for inquiries upon the Commission's "own knowledge or information". The information may undoubtedly come from another source which may in some cases wish to remain anonymous. In respect of such information there may be a claim of privilege. All these things have to be determined under the application for directions as they relate to discovery and inspection.

There is no provision in the Act and the Regulations under which the respondents are entitled to the information referred to in the notice of inquiry upon which the Commission has thought it fit to institute the inquiry. The claim for information must, therefore, be rejected.

This applies equally to a copy of the complaint, if any, demanded by the respondent. There is no reference to any such complaint in the notice of inquiry. There is also no reference in the notice of inquiry to any report of the Director of Investigation.

8. With regard to the report of the Director of Investigation, if any, we have mentioned hereinabove that Regulation 21 makes such reports confidential and provides for copies of the same or parts of the same to be furnished to the parties only if the report or part of it is either brought on record for the purpose of inquiry or admitted into evidence. That stage has also not yet arisen. Even in respect of an inquiry upon the complaint of a consumers' association under Section 10(a)(i) where Section 11 of the Act makes a preliminary investigation mandatory, we have rejected the demand of the respondents for a copy of the Director of Investigation's report in our judgment dated 10th February, 1975, in Restrictive Trade Practices Enquiry No. 26 of 1974, in the case of All India Motor Transport Congress v, Goodyear India Ltd., [1976] 46 Com Cas 315 (MRTPC) The reasons for rejecting the demand are stated in the said judgment and we need not repeat them here. In the present case, a reference to the Director of Investigation is not made mandatory by the statute. It is a reference under the Regulations for the purpose of the Commission satisfying itself that an inquiry is necessary. We are afraid the respondent is not entitled to a copy of the said report at this stage. This demand must also be rejected.

9. Prayer (c) of the application is for further and better particulars of the notice of enquiry. As we have stated hereinabove Regulation 74 provides for a stage of further and better particulars of pleadings after the pleadings are closed and on the hearing of an application for directions. At this stage the respondent is only entitled to know the facts constituting the restrictive trade practices. We have examined the demands made by the respondent in the application and find that the demand is either for instances of restrictive trade practices or for evidence of such instances. We have discussed this question in cur judgment dated the 10th February, 1975, in R. T. P. Enquiry No. 31 of 1974 in the case of Singer--TVS Ltd., In re., [1976] 46 Comp Cas 183 (MRTPC); That was also the case of a suo motu inquiry. This case is covered by that judgment and for the reasons set out in that judgment and hereinabove we reject the claim for particulars at this stage.

10. Further, it appears to us that the application for particulars is based on a misconception of the nature of the proceedings before us.

Sections 10 and 37 of the Act refer to an "inquiry" into restrictive trade practices. The marginal note to Section 37 is "investigation into restrictive trade practices by Commission". The manner in which Mr.

A.H. Desai argued in support of the demand for particulars at the hearing suggested as if he was asking for particulars in respect of pleadings in a suit where there has to be a "trial" and not an "inquiry". Section 12 of the Act merely confers on the Commission "for the purposes of the inquiry" certain powers as are vested in a civil court under the Code of Civil Procedure while trying a suit in respect of summoning of witnesses, discovery and inspection, etc. Section 12 does not make an inquiry before the Commission under Sections 10 and 37 a "trial" as in a suit. There is a material difference between an inquiry and a trial. Even the literal meaning of the word "inquiry" is "investigation". In the marginal note to Section 37 the word " investigation " has been used and in our opinion very rightly although we do not base our conclusion that Sections 10 and 37 provide for an inquiry on the marginal note to Section 37, but on the fact that the sections themselves provide for an inquiry. As against that the literal meaning of the word "trial" is "judicial examination and determination of issues between parties by a judge". In case of a trial the facts on which the parties pleading rely for the claim or defence, as the case may be, are known to them. One party asserts such facts and the other party denies them. This raises issues between parties for determination and the judge judicially examines and determines the issues between the parties. An inquiry in the restrictive trade practice and more particularly a suo motu inquiry is not an adversary proceeding. There can, therefore, be no statement of facts on which the party pleading relies for his claim. In fact, in the inquiry the facts have to be found as a result of the inquiry. It follows that at that stage no further particulars, instances or evidence can be given. It is for this very reason that in respect of pleadings Order 6, Rule 2 of the Code of Civil Procedure provides that the pleadings shall contain a statement of facts on which the party pleading relies for its claim or defence, as the case may be, whereas the regulations provide only for "facts which constitute a restrictive trade practice". The provision is only for the constituent facts or ingredients of a restrictive trade practice alleged against the respondent.

11. In Section 4(1)(k) of the Code of Criminal Procedure the word "inquiry" has been defined. In the case of Savaranna v. State, AIR 1957 AP 472 the Andhra Pradesh High Court held that an inquiry is something different from a trial and that "inquiry" stops where "trial" begins.

The distinction between an inquiry and a trial in a similar context was also discussed and similarly laid down by the Allahabad High Court in the case of R.P. Kapoor v. Pratap Singh Kairon, AIR 1966 All 66. We agree with Mrs. Pappu appearing for the Director of Investigation that the purpose of asking for illustrations and evidence of restrictive trade practices is to put fetters and limitations on the scope of the inquiry.

12. In support of his demand for a copy of the report of the Director of Investigation and particulars Mr. Desai argued that allegations of restrictive trade practices are per se allegations of misconduct and involve serious consequences for the respondent and it is, therefore, absolutely necessary and in accordance with fair play and principles of natural justice that his client should be furnished a copy of the report as well as the particulars asked for.

13. Here again it would appear that Mr. Desai is importing into this inquiry the notions of a trial under the Code of Civil Procedure. Under the provisions of Order 6, Rule 4 of the Code of Civil Procedure, courts in India as well as in England have in cases of dismissal of a servant or an agent held that where a party justifies a dismissal on the ground of misconduct he must give particulars of misconduct. We have already shown herein-above that the notions of particulars of misconduct in a trial under the Code of Civil Procedure cannot be imported into inquiries under the Act. Apart from this, in our opinion, allegations of restrictive trade practices are only allegations that the party is practising certain trade restrictions in its own interest.

There is no implication of moral turpitude in such practices. Prior to the passing of the Act there would have been nothing illegal about such practices unless they were prohibited by some other law. Even when the trade restriction is established under Section 37(1) it is open to a person charged with it to show under Section 38 that the restriction is not against public interest or that the restriction is not unreasonable having regard to the balance between circumstances set out in Section 38 and detriment to the public. If the restriction passes through the gateways mentioned in Section 38, the restriction may be justified. If it does not so pass, the Commission can under Section 37(1) prohibit the restriction in the interest of social justice. If so prohibited it becomes mala quia prohibita. It is not mala in se. Only when the prohibition is violated can it be punished. Then it becomes a criminal misconduct. We do not agree with Mr. Desai that in all cases allegations of practising trade restrictions are per se allegations of misconduct involving serious consequences to the respondent. The only consequences of the allegations is a judicial inquiry and the only consequence of a successful judicial inquiry is the prohibition of the trade restriction.

14. We have already dealt with the demand for a copy of the report of the Director of Investigation based on the ground of principles of natural justice in R. T. P. Enquiry No. 26 of 1974--All India Motor Transport Congress v. Goodyear India Ltd. referred to hereinabove which completely answers the argument of Mr. Desai based on principles of natural justice. We have also dealt hereinabove with the demand for particulars and instances of restrictive trade practices and evidence thereof and we are of the view that at any rate at this stage the respondent is not entitled to anything more than the facts constituting the restrictive trade practices which are already contained in the notice of enquiry.

15. Mr. Desai also argued that there was vagueness about some words used in the notice. He objected to the use of the words "abnormally", etc., "inter alia" and "unjustified" in restrictive trade practice (i).

We think there is no vagueness about these words. It is made amply clear that increase in the price of files by manipulating and frequently revising them in a manner unrelated to the increase, if any, in the cost of production is an abnormal increase. The word "etc." suggests that the price rise is unrelated not only to the cost of production but to it may perhaps be added costs of management and other charges. Similarly, the word "inter alia" has been used to show that there may be other motives in increasing the prices than merely to benefit the distributors. But the allegation in the notice is confined to benefiting distributors. Read in this context, the word "unjustified" is also clear. Similarly, in charges Nos. (iii) and (iv), Mr. Desai wanted to know the instances of distributors to whom the word "certain " pertained. Here again the intention is to put fetters and limitations on the scope of the inquiry. Mr. Desai has taken us through the language of the entire notice and we find that there is no vagueness about anything and the facts constituting the restrictive trade practices are sufficiently given to bring home to the respondent what the allegations against it are.

16. The application appears to us to be entirely unjustified and has resulted in the respondent gaining more time for filing a reply and in delaying the inquiry into the allegation of restrictive trade practices alleged against it. We, therefore, dismiss the application except that we extend the time for filing the reply of the respondent by 3 weeks from today. The respondent will pay to the Director of Investigation costs fixed at Rs. 250.


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