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In Re: Hindustan Lever Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
AppellantIn Re: Hindustan Lever Ltd.
Excerpt:
1. this is an 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"). the respondents, hindustan lever ltd., are engaged in the production and sale of dehydrogenated oil (hereinafter called " vanaspati "), toilet preparations including soap, baby milk powder and animal feeds. it is not in dispute that in the production of soap in the organised sector it is a dominant undertaking.2. the inquiry was started as a result of a complaint lodged with the commission by the partners including one mr. bhogilal manilal shah of shah manilal motichand & sons of poona (hereinafter referred to as the "informants"). the informants had been the redistribution stockists of the respondents and.....
Judgment:
1. This is an 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"). The respondents, Hindustan Lever Ltd., are engaged in the production and sale of dehydrogenated oil (hereinafter called " Vanaspati "), toilet preparations including soap, baby milk powder and animal feeds. It is not in dispute that in the production of soap in the organised sector it is a dominant undertaking.

2. The inquiry was started as a result of a complaint lodged with the Commission by the partners including one Mr. Bhogilal Manilal Shah of Shah Manilal Motichand & Sons of Poona (hereinafter referred to as the "informants"). The informants had been the redistribution stockists of the respondents and due to causes which are in controversy, the agreement with them was terminated by the respondents by a letter dated 31st May, 1974, with effect from 4th July, 1974. The informants lodged this complaint with the Commission on 4th July, 1974, the day on which the termination of their agreement was to take effect. With their complaint, the informants annexed a copy of the agreement between themselves and the respondents which, according to the informants, was in the " standard form " and was entered into with all other redistribution stockists. The informants complained that the Clauses 5, 6, 9, 11, 18 and 19 of the said agreement contained restrictive trade practices under several clauses of Section 33(1) and the definition of restrictive trade practice in Section 2(o) of the Act. They also complained that the reference to " maximum resale price" in Clause 5 was merely a camouflage and under-cutting of the price was not tolerated by the respondents and that, pursuant to Clause 5, instructions were issued from time to time regarding maintenance of minimum resale prices and breach of those instructions was treated as breach of the conditions of the agreement entailing its termination.

The informants alleged that in the city of Poona they had another redistribution stockist by name Khemchand Dayalji & Sons and the Poona city was divided between this firm and the informants.

3. The complaint refers to an incident in December, 1973. It is alleged that the informants had received two consignments of vanaspati from the respondents, which they had been instructed to sell at Rs. 129.05 per tin and that due to public discontent for not getting vanaspati and Shiv Sena agitation, the informants had sold the said stocks at Rs. 127 per tin. It is alleged that it was on this account that the respondents had terminated the agreement of the informants. The informants alleged that the respondents were guilty of restrictive trade practices and inquiry may be held against them. On the same day the informants applied for an interim order, inter alia, for an injunction restraining the respondents from terminating their agreement pending the hearing and final disposal of their complaint.

4. The Commission ordered a suo motu inquiry under Section 10(a)(iv) on the said complaint and also issued an interim injunction with liberty to the respondents to bring up the application for hearing earlier on three days' notice on the informants' advocate on record. On 5th July, 1974, a notice of inquiry was issued to the respondents. The respondents had the application for interim injunction brought up for hearing earlier on notice to the respondents and on 22nd July, 1974, the interim injunction was dissolved and the application for interim injunction was dismissed with costs.

5. On 19th August, 1974, the respondents filed their statement of case in which they, inter alia, alleged that the informants had not made out any prima facie case and that no Clause of the standard agreement related to restrictive trade practices. The respondents also alleged that the agreement of the informants had been terminated as they had sold in black market 11,020 tins of 16.5 Kg. each of Lotus Bakery Brand Vanaspati supplied by the respondent in December. The respondents alleged that the informants had suppressed from the Commission their own letter of 12th October, 1972, addressed to the respondents in which the respondents had clarified that the redistribution stockists were at liberty to charge prices lower than the maximum resale price. The respondents denied that they were dominant or monopolist in any field.They also contended that the agreement with the redistribution stockists had been revised so as to eliminate several clauses which were alleged to be restrictive. We shall refer to the remaining contentions in the statement of the case when we deal with the said contentions.

6. On 22nd July, 1974, at the hearing of th" application for interim relief, Mr. G. A. Shah appearing for the informants applied for adjournment but when the same was not granted, he had sought and obtained leave to withdraw his appearance and had withdrawn from the proceedings These proceedings were carried on by the Director of Investigation. He made an application for directions on October 21, 1974. On October 31, 1974, the informants also made an application for directions. We made an order on these applications on 8th November, 1974, in which we, inter alia, stated that under regulation 73(5) of the Monopolies and Restrictive Trade Practices Regulations, 1974 (hereinafter for the sake of brevity referred to as the " 1974 Regulations "), the informants were to be deemed to be party to the proceedings. We, therefore, adjourned the director's application to 25th November, 1974, and ordered that the informant be informed accordingly and that in case he wishes to appear and take part in the proceedings, he should have a fresh appearance entered by an advocate on record in Delhi. The application dated 20th October, 1974, of the informants was also adjourned to 25th November, 1974. The order provides that if any party wished to apply for directions, it may in the meanwhile do so. Ultimately, we gave the necessary directions by an order dated December 20, 1974.

7. On 4th April, 1975, on the pleadings, we framed the following issues : (1) Whether the inquiry under Section 10(a)(iv) can be proceeded with on the basis of the complaint (paras. 3 to 6 of the respondents' reply).

(2) Whether M/s. Shah Manilal Motichand & Sons have any locus standi to participate in the proceedings (para. 11 of the respondents' reply).

(3) Whether M/s. Shah Manilal Motichand & Sons have suppressed and misrepresented facts as contended by the respondents, and if so, whether the complaint was not bona fide and was, therefore, vitiated If so, should the notice be discharged and the order instituting the inquiry revoked (paras. 4, 8 and 11 of the respondents' reply).

(4) Whether the inquiry cannot be proceeded with in view of the proceedings before the Registrar with regard to the agreement dated the 10th November, 1966, and the clarification issued by the respondents regarding Clause 5 as required by the Registrar and the fact that the Registrar has chosen not to file an application under Section 10(a)(iii) (para. 3 of the respondents' reply).

(5)(a) Whether Clause 5 of the agreement in question requires the redistribution stockists to purchase goods offered by the company at prices fixed by the. company and to sell the goods to the wholesalers or dealers at the prices fixed by the company If so, does it constitute a restrictive trade practice (b) Whether it is a fact that instructions are issued from time to time by the company regarding the maintenance of re-sale price and whether breach of any of these instructions is treated as a breach of the conditions of the agreement entailing termination If so, do these instructions constitute a restrictive trade practice (c) Whether Clause 9 of the agreement set out in the complaint constitutes a restrictive trade practice (d) If the answer to issues (a), (b) and (c) or any of them is in the affirmative, is the company indulging in the alleged restrictive trade practices (6) If the company has indulged in any restrictive trade practice as alleged, whether the same is not prejudicial to the public interest in view of the instances set out in Clauses (b), (g) or (h) of Sub-section (1) of Section 38 of the Act and the said practice is not unreasonable having regard to the balance between the said practices and the detriment to the public, if any After the statement of the case was filed by the respondents they made an application dated December 12, 1974, in which they, inter alia, prayed that for reasons stated in the said application, the issues therein set out as Nos. 1 to 11 be determined as preliminary issues and the Commission may fix a date for determining the said issues as preliminary issues. These issues did not necessarily arise from the respondents' statement of the case which was its pleading. This application came up for hearing on December 20, 1974, when it was ordered to be adjourned by consent to 31st January, 1975, and later to 14th February, 1975. Thereafter, no order appears to have been made on the respondents' application. It appears that the said application was not pressed. On April 4, 1975, the issues were framed. At that time also no application was made on behalf of the respondents that issues Nos. 1 to 4 or any of them be tried as preliminary issues. The hearing of the entire matter and determination of all the issues were adjourned to 7th July, 1975.

8. The hearing of the case actually started on October 20, 1975. The Director of Investigation examined three witnesses, Kundan Lal, Amrit Lal and Deen Dayal Gupta. The informants examined their partner, Bhogilal Manilal Shah. The respondents examined Mr. P. C. Sen, Assistant Registrar of Restrictive Trade Agreements, who only produced certain correspondence (exhibit 6 collectively). The respondents also examined Mr. J.C. Chopra, their marketing director, as a witness.

9. We shall now deal with issues Nos. 1 to 4. These issues do not depend on evidence.

Whether the inquiry under Section 10(a)(iv) can be proceeded with on the basis of the complaint (paras. 3 to 6 of the respondents' reply).

10. In paragraphs 3 to 6 of their statement of case, the respondents have contended that no prima facie case had been made out, that the redistribution stockists' agreement contained no clauses relating to restrictive trade practices which were prejudicial to public interest nor was any prima facie case made out for a suo motu inquiry by the Commission. They contended that the complaint of the informants was not properly verified and that the informants had suppressed the letter of October 12, 1972, addressed to the informants in which the respondents had made clear that the redistribution stockists were free to charge prices lower than the maximum prices. It was alleged that the informants had concealed a letter written by them on 20th May, 1974, to the chairman of the respondents in which the respondents had admitted that the officers of the respondents had drawn an inference that the informants had sold Lotus Brand Bakery Vanaspati at the rates higher than those fixed and that this inference was erroneous and unfounded that it followed that the case for termination of the informants' agreement was not non-maintenance of resale prices. The respondents contended that the conditions for exercise of power under Section 10(a)(iv) did not exist and, therefore, the proceedings may be terminated.

11. We are afraid that the entire case has at this stage to be decided on merits. Evidence has been led and the matter can be determined on merits rather than on preliminary points like the one takon in paras. 3 to 6 of the statement of case. The Commission issued the notice of inquiry only after it was satisfied that the complaint of the informants disclosed a prima facie case and that the allegations needed to be inquired into. It is not open to the respondents at this stage to contend that the complaint did not disclose a prima facie case and the proceedings ought, therefore, to be terminated. The proceedings can now come to an end only by a judgment on merits.

12. It is true that the Registrar has not filed any application under Section 10(a)(iii) in respect of the redistribution stockists' agreement filed by the respondents with him ; but that does not mean that he was satisfied that the agreement did not relate to any restrictive trade practices. But even if we were to assume in favour of the respondents without so holding that the Registrar was satisfied that the agreement did not relate to any restrictive trade practice, the satisfaction of the Registrar would be no bar to an inquiry under Section 37. Under that section the Commission can inquire into any restrictive trade practice even if the agreement has been registered under Section 35 with the Registrar and the Registrar has not chosen to take any steps in respect of it. In respect of applications filed under Section 10(a)(iii), the Registrar is a party-applicant but it is the Commission which has to determine whether any agreement relates or does not relate to any restrictive trade practice. Even if the Registrar does not make such an application, it is open to the Commission to start suo motu inquiry in respect of the agreement or to start a proceeding under any of the clauses of Section 10(a), viz., on a complaint from a consumers' association, individual consumers, reference from the Central or State Government or suo motu. The application of the Registrar is only one of the modes in which the matter might come to be inquired into by the Commission. No inference can be drawn from the absence of such an application and the satisfaction or otherwise of the Registrar would be totally irrelevant.

13. The complaint has since been verified by the informants. But, in view of the fact that the inquiry has been started suo motu by the Commission, non-verification of the complaint would be a matter of no consequence.

14. With regard to the contentions of the respondents that at the time of the complaint, the informants had failed to disclose letter of October 12, 1972, and the informants' letter of May 26, 1974, to the chairman of the respondents, we can only say that these defences are on merits and not preliminary points We shall deal with these two letters in our discussion on subsequent issues. At this stage we might say that the informants have denied the receipt of the respondents' letter of October 12, 1972, and nondisclosure of their letter of May 26, 1974, to the respondents' chairman would not result in the termination of the suo motu inquiry.

15. Our answer to issue No. 1 is that there is no bar to proceeding with the present inquiry for reasons set out in paras. 3 to 6 of the respondents' statement of the case.

Whether M/s. Shah Manilal Motichand & Sons have any locus standi to participate in the proceedings (para 11 of respondents' reply).

16. In para. 11 of the statement of the case, the respondents have submitted that the clauses of the redistribution stockists' agreements do not relate to any restrictive trade practices and that in any case they do not cause any detriment to the public interest.

17. In our opinion, these matters fall to be decided under issues Nos.

5 and 6 and we shall deal with them under those issues in the light of the clauses of the agreement as well as the evidence.

18. It is nowhere contended in the respondents' reply or statement of the case that M/s. Shah Manilal Motichand & Sons have no locus standi to participate in the proceedings. This was, however, argued by Dr.

Singhvi on behalf of the respondents on the assumption that this contention was taken in the respondents' statement of the case. In view of the fact that no such contention had been taken, this issue need not be decided.

19. However, in all fairness we shall set out the argument advanced by Dr. Singhvi on this point. At the time of the institution of these proceedings, Restrictive Trade Practices (Inquiry) Regulations, 1970 (hereinafter for the sake of brevity referred to as the "1970 Regulations"), were in force. These Regulations did not contain any provision for suo motu inquiries. They did not provide that the informant on whose initiative a suo motu inquiry was started, shall be deemed to be a party to the proceedings. The 1970 Regulations were repealed by 1974 Regulations which came into force on 13th July, 1974, when they were published in the Gazette of India. A Division Bench of the Delhi High Court held in a judgment delivered on 28th February, 1975, in the case of Premier Tyres v. Monopolies and Restrictive Trade Practices Commission [1976] 46 Comp Cas 297 (Delhi) that the effect of the repeal of 1970 Regulations and the passing of 1974 Regulations was that the old Regulations applied to the old proceedings. It was this judgment that appears to have given an idea to the respondents to take this contention which was not taken in the statement of the case filed by it on 19th August, 1974. Mr. G.C. Sharma, on behalf of the Director of Investigation and Mr. G.A. Shah, on behalf of the informants, contended that the Delhi High Court case was not correctly decided. We need not go into this question because if this matter goes in appeal to the Supreme Court, the point can be taken by the Director of Investigation and informants there if it is allowed to be taken on behalf of the respondents notwithstanding the fact that it has not been taken in the statement of the case of the respondents.

20. Assuming that this contention can be taken without its having been taken in the statement of the case, the simple answer to that is that the 1970 Regulations contained regulation 47 which provides that " subject to the provisions of the Act and these Regulations, the Commission shall have power to regulate its own procedure ". In the absence of a provision in the 1970 Regulations for suo motu inquiries and the position of the informants therein, the Commission was free under the said regulation and also under the provision' of the Act. to regulate its own procedure. The 1974 Regulations expressly provided in regulation 73(5) that " an informant shall, if he is not a party to the proceedings, be deemed to be a party and shall be entitled to be heard in the proceedings". In fact by our order dated November 8, 1974, we expressly provided that the informants should be deemed to be a party and they were entitled to be heard in the proceedings. It is true that we referred this to regulation 73(5) of the 1974 Regulations but an order made under a wrong provision can always be related to the correct provision: Lekhraj Sathramdas Lalvani v. N.M. Shah, Deputy Custodian (AIR 1966 SC 334). Under Section 18(1)(a) of the Act, the Commission has the power to regulate the procedure and conduct of its business.

This power has been expressly preserved by regulation 47 of the 1970 Regulations and it was open to the Commission to join the informants as party to the proceedings and also to allow then to participate in the proceedings. In fact the Calcutta High Court in the case of ITC Ltd. v.MRTP Commission [1976] 46 Comp Cas 619 (Cal) decided that regulation 47 of the 1970 Regulations cured one or all procedural defects. Apart from this even under the Code of Civil Procedure, misjoinder of a party has never been treated as a defect vitiating proceedings.

21. Dr. Singhvi on behalf of the respondents contended that on this ground the evidence of Bhogilal Manilal Shah, the partner of the informants should be excluded. In our opinion, the contention is not correct. Apart from the reasons set out hereinabove for permitting the informants to participate in the proceedings it has been held by the Supreme Court in Pooran Mal's case [1974] 93 ITR 505 (SC) that even if a document which has been illegally secured, had been admitted in evidence, the evidence cannot be excluded from the proceedings. This also, in our opinion, applies to oral evidence. Apart from this if we had not treated the informants as a party and Bhogilal Manilal Shah had not been examined by them, he could have been examined by the Director of Investigation. The inquiry was initiated on his information and he would have obviously been a witness whose evidence was essential in the inquiry.

22. Regulation 23 of the 1970 Regulations also provided that the Commission may at any time order that any person not a party be added as a respondent to the proceedings and the provisions of Order 1, Civil Procedure Code, shall be applied to these proceedings. There was, therefore, ample power in the Commission to join the informants and had the respondents applied that issue No. 2 be tried as a preliminary issue, the Commission might in exercise of its power under Section 18 and the old 1970 regulations 23 and 47, have joined the informants as party to the proceedings.

23. Taking advantage of the Delhi High Court's decision, although such contention has not been taken in the respondents' statement of the case. Dr. Singhvi also contended that it was possible for the respondents to contend that the Director of Investigation had no locus standi to carry these proceedings. He pointed out that under regulation 14 of 1971 Regulations, the Registrar had been constituted the custodian of public interest and was to carry proceedings and not the Director of Investigation. He pointed out that it was only under regulation 25 of 1974 Regulations that the Director pf Investigation has been given power to appear in certain proceedings. He, however, stated that he was not taking this contention because the respondents had no interest in whether one public officer or another carries the proceedings as long as he carried the proceedings fairly. He conceded that the Director of Investigation had carried the proceedings fairly and his appearance had not caused any prejudice to the respondents. He, therefore, did not take the contention before us but reserved the right to take it in appeal if necessary before the Supreme Court. In view of the fact that this contention has not been taken either in the pleadings or in the issues and in view of the statement made by Dr.

Singhvi, we do not propose to deal with this contention.

24. The answer to issue No. 2 is in the affirmative, viz., that M/s.

Shah Manilal Motichand & Sons have locus standi to participate in the proceedings.

Whether M/s. Shah Manilal Motichand & Sons have suppressed and misrepresented facts as contended by the respondents, and if so, whether the complaint was not bona fide and was, therefore, vitiated If so, should the notice be discharged and the order instituting the enquiry revoked (Paras. 4, 8 and 11 of the respondents' reply).

25. In paragraphs 4, 8 and 11 of their statement of the case the respondents have again alleged that the informants suppressed the respondents' letter of 12th October, 1972, and a letter dated 26th May, 1974, written by Bhogilal Manilal Shah to the chairman of the respondents and that the respondents' agreement with redistribution stockists does not relate to restrictive trade practices. Whether any of the clauses relate to restrictive trade practices or not has been discussed under subsequent issues. With regard to suppression of the two letters, we have dealt with the question under issue No. 1 and stated that the sending of the letter of 12th October, 1972, by the respondents to the informants is a fact in controversy and the receipt of the said letter was denied by the informants. This issue really does not arise. It must have been intended to be a preliminary issue to be taken by the respondents before evidence was led. Now, that evidence has been led, the matter will be decided on merits under subsequent issues. The question of bona fides will also arise on merits and will be discussed later. Our answer to this issue is in the negative. The inquiry is suo motu and the notice of enquiry is not liable to be discharged in limine.

Whether the inquiry cannot be proceeded with in view of the proceedings before the Registrar with regard to ihe Agreement dated 10th November, 1966, and the clarification issued by the respondents regarding Clause 5 as required by the Registrar and the fact that the Registrar has chosen not to file an application under Section 10(a)(iii) (Para. 3 of respondents' reply).

26. These matters have also been discussed under issue No. 1. The clarification issued by the respondents is itself in dispute and will be discussed later. Any proceedings before or any view taken by the Registrar do not bar an inquiry under Section 37. The answer to this issue is also in the negative.

27. Having dealt with issues the decision on which did not depend on evidence, we now come to issues which have to be decided on evidence.

But, before that it will be convenient to discuss the evidence of Bhogilal Manilal Shah, the partner of the informants.

28. Mr. Bhogilal Manilal Shah is the partner of the firm, M/s. Shah Manilal Motichand & Sons, on whose information the present inquiry was started. His evidence should, therefore, be material but it appears from the examples hereinafter given that no reliance can be placed on the evidence of this witness except when it is corroborated either by reliable independent oral evidence or by reliable documentary evidence.

If this witness had contented himself with stating true facts objectively, his evidence would have been a great help. The firm of M/s. Shah Manilal Motichand & Sons was the redistribution stockist of the respondent for over 40 years. In 1974 their agreement was terminated by the respondents according to Bhogilal Manilal Shah on account of non-maintenance of resale prices and, according to the respondents, on account of black-marketing. In the evidence of Bhogilal Manilal Shah the subjective element has resulted in his distorting facts. On several materials and sensitive points Bhogilal Manilal Shah has either contradicted himself after cross-examination or he has been reluctant to speak the truth and has fenced until the truth has come out as a result of cross-examination. On some points Mr. Bhogilal Manilal Shah has given evidence in a cavalier fashion without being mindful as to the truth. The following examples will illustrate this opinion : (1) In his examination-in-chief on October 21, 1975, Mr. Bhogilal Manilal Shah sought to produce a certified copy of the agreement of his firm with the respondents. The certified copy was taken from the Court of Civil Judge, Sr. Division, Poona. Bhogilal Manilal Shah stated that his firm had filed a suit against the respondents there and the agreement had been filed in the proceedings. He stated that the suit was disposed of in September, 1975, having been withdrawn by the plaintiffs.

Normally, documents have to be proved by production of documents themselves under Section 62 of the Evidence Act. Section 65 permits secondary evidence to be given when the party offering evidence cannot, for reasons not arising from his own default or neglect, produce such documents in reasonable time. It appears that, in order to make out a case under Section 65, Bhogilal Manilal Shah stated that the original agreement had been produced in the Court of Civil Judge, Sr, Division, Poona. The suit had been disposed of in September, 1975, and he could not produce the original on October 21, 1975. The respondents objected to the production of the certified copy on the ground that the suit had been disposed of on July 14, 1975, having been unconditionally withdrawn by Bhogilal Manilal Shah and not in September, 1975, and the original could have been produced and the certified copy was, therefore, not admissible.

The respondents produced a certified copy of the order of withdrawal (exhibit 2, collectively) to show the correct date of withdrawal.

We, however, admitted the certified copy in evidence (exhibit F) on the ground that the original of the agreement was in the possession of the respondents and they could produce it.

In his cross-examination, Bhogilal Manilal Shah had to admit that his statement that the suit had been withdrawn in Sepetember, 1975, was "not correct". He, however, explained that he had instructed his advocate in July, 1975, to withdraw the suit and that the advocate met him in September/October and told him that he had withdrawn the suit. The witness admitted that after filing the suit in the beginning of July, he had met the advocate, Mr. Deshak, twice or thrice and he had also met him twice or thrice before instructing him to withdraw the suit but he stated that he had not met him after instructions to withdraw and the end of September, 1975. It would appear from this that his evidence was either intentionally not true or at least given in a cavalier fashion.

(2) In examination-in-chief, Bhogilal Manilal Shah stated that Clause 1 of the agreement (exhibit F) mentioned the area in which his firm was to operate and that after 1966 the area was reduced three or four times. He produced the last letter dated 30th March, 1970 (exhibit G), whereby his firm had agreed to the reduction of his area. In his cross-examination on October 21, 1975, he stated that the area in which his firm was to operate was fixed but that was not mentioned in the agreement and it was fixed according to the division of the territory between his firm and the firm of Khemchand Dayalji by distribution of cards of retailers. Again, in his cross-examination on October 25, 1975, he stated that the area in which his firm could sell was set out in the agreement (exhibit F).

His attention was drawn to his statement in which he had stated that the area was not fixed by the agreement. He stated that the area was fixed in the agreement and what he had stated in his cross-examination earlier was not true.

When he was asked as to why he made an untrue statement, he had to fall back on another device and stated that when he produced exhibit G, he had said that the area was fixed according to that letter. At that time he did not have the agreement in mind. In the agreement the figure, "Poona-2", appears against "Poona" in several places.

This obviously refers to the postal division of Poona-2 in which the place of business of Bhogilal Manilal Shah was situated. But Bhogilal Manilal Shah turned round and said that " Poona-2 " occurring in the place where the address is mentioned in the agreement, refers to the postal division but in other places the word and the figure, " Poona-2 ", refers to the division of the city of Poona between his firm and the firm of Khemchand Dayalji into two zones, viz., Poona-1 and Poona-2, and that in the remaining places the word and figure, " Poona-2 ", did not represent the postal division but division of territory between his firm and the firm of Khemchand Dayalji. There was considerable cross-examination of Bhogilal Manilal Shah on the question as to whether the word and figure " Poona-2 " in other places did not represent the postal division but a division of territory between him and the firm of Khemchand Dayalji. In the result we are of the view that the word and figure "Poona-2" in the agreement (exhibit F) represents the postal division throughout and in no place represents any division of territory between Khemchand Dayalji and the firm of Bhogilal Manilal Shah. This device was obviously adopted to support the initial statement in examination-in-chief that the territory was divided by the agreement itself.

It is also the case of Bhogilal Manilal Shah that in para. 9 of the agreement (exhibit F) there is a restriction on redistribution stockists on rebooking the goods supplied by the respondent " outside the aforesaid town ". The statement that the division of area was contained in the agreement and that Poona-1 and Poona-2 indicated this division and that for the purpose of the agreement Poona-1 and Poona-2 were treated as two separate towns was intended to show that there was restriction on the movement of goods within the town itself. This has been found by us not to be correct as will be discussed later. But it appears that Bhogilal's statement that the word and figure, "Poona-2", occurring in the agreement (exhibit F) in places other than where the address of his firm is given, represented a separate township within the city of Poona, is not true.

(3) There is a controversy about the reasons for which the agreement of Bhogilal Manilal Shah's firm was terminated by the respondents.

According to Bhogilal Manilal Shah it was terminated because his firm sold goods at prices lower than those prescribed by the respondents and did not maintain resale prices. According to the respondents, the agreement was terminated because Bhogilal Manilal Shah's firm had black-marketed in two consignments of vanaspati which had been despatched to it in December, 1973. It is an admitted fact that the respondents had asked Bhogilal Manilal Shah's firm to sell these two consignments of vanspati to bakeries, sweetmeat sellers and restaurant keepers who were bulk consumers. But instead Bhogilal Manilal Shah's firm had sold these goods to five or six wholesalers. Bhogilal Manilal Shah's firm sought protection under a circular issued by the rationing authorities in Poona (exhibit K) in which they said that distributors were to sell these goods to "B" licence holders. Bhogilal Manilal Shah stated that the parties to whom the goods were actually sold were "B" licence holders. When cross-examined as to whether the persons to whom the goods were sold were actually " B " licence holders or not, to his own knowledge Bhogilal Manilal Shah put the onus on his employee, Tarachand, and stated that he bad not personally checked up whether these persons were " B " licence holders. He had asked Tarachand to sell the goods to "B" licence holders. He had asked Tarachand to find out the "B" licence holders in his area. He had not asked Tarachand to get a list from any authority. He thought that Tarachand knew about all " B " licence holders. Mr. Bhogilal Manilal Shah stated that up to the date of giving evidence he had not tried to check up whether the persons to whom goods were sold were at all licence holders and the nature of their licence. He also admitted that he told the representatives of the respondents who had made inquiries from him that his firm had sold these goods to " B " licence holders and that he had given this information without verifying it. He stated that he had to rely for this informatian on Tarachand and besides the alleged word of Tarachand he had no basis for coming to the conclusion that the purchasers were " B " licence holders.

Later again Bhogilal Manilal Shah stated that he knew from business experience as to who the ' B' licence holders were. When his attention was drawn to the fact that he had stated that he did not know who the ' B ' licence holders were and he was relying on Tarachand for this information and he was asked as to how he reconciled these two statements, he again stated that he was relying upon the information of Tarachand and that he had no personal knowledge and when he referred to his own business experience he was referring to the business experience of Tarachand and that the entire information as to who were 'B ' licence holders, was derived from Tarachand.

Tarachand was never examined by the informants as a witness.

Bhogilal Manilal Shah stated that Tarachand was still in the employment of his firm. This evidence could have been produced but has not been produced. We are entitled to assume under illustration (g) of Section 114 of the Evidence Act, that if this evidence had been produced, it would have been unfavourable to the informants. On the other hand, the respondents could have examined Gopalkrishnan who had inquired into this matter to show that the persons to whom these consignments were sold were not ' B ' licence holders. In fact the respondents had taken an adjournment for calling him in evidence. He was, however, never examined. In these circumstances we cannot come to any conclusion as to whether these persons were or were not 'B' licence holders.

(4) In his examination-in-chief Bhogilal Manilal Shah produced a Circular dated December 22, 1973, in Marathi from the foodgrains distribution authority (exhibit K) (official translation is exhibit K-2). His case was that, according to this circular, his firm was required to sell vanaspati to wholesalers who had ' B ' licence. He stated that his firm had a ' A' licence. The wholesalers had ' B ' licence and the retailers had ' C ' licence and, according to the circular, the sale was to be at prices mentioned in the circular to ' B ' licence holders. In his cross-examination on October 24, 1975, Bhogilal Manilal Shah stated that his firm had a 'B ' licence for the sale of vanaspati. He had to admit that his firm had no ' A' licence and never had a ' A' licence. When his attention was drawn to his previous statement in examination-in-chief that his firm had a 'A' licence, he stated that that was a mistake.

Earlier, Bhogilal Manilal Shah had tried to justify the sale of vanaspati sent to his firm by the respondents in December, 1973, to a few wholesalers instead of actual consumers on the grounds of circular (exhibit K). When he admitted that his firm had itself a ' B' licence and that under the circular itself the sale could have been made not only to ' B ' licence holders but also to hoteliers, restaurant keepers and sweetmeat makers, he changed the stand and stated that his firm could have sold to hoteliers, etc., if they had been regular customers and that for some time the hoteliers, etc., had not been regular customers of his firm. There has been considerable cross-examination on that point also but we do not propose to deal with it here. What we wish to point out is that even about his own licence Bhogilal Manilal Shah did not know whether his firm held a ' A' or ' B ' licence and changed his stand as a result of cross-examination. Once again the original licence itself could have been produced but was not produced.

(5) In his examination-in-chief Bhogilal Manilal Shah stated with regard to the two consignments of vanaspati sent to his firm by the respondents in December, 1973, that " the sale was to be at prices mentioned in the circulars which was Rs. 127.40 per tin ". The circular (exhibit K) does not mention any price for resale by distributors to ' B ' licence holders. It is the case of Bhogilal Manilal Shah that his firm were distributors and in fact they were and that these consignments were sold by his firm to 'B' licence holders by reason of the circular (exhibit K). The statement that the prices were fixed by the circular (exhibit K) for sale by distributors to ' B' licence holders is demonstrably not correct.

(6) In his examination-in-chief Bhogilal Manilal Shah stated that with regard to the two consignments of vanaspati sent by the respondents to the informants' firm in December, 1973, " I had told Swami on the telephone that if we had to pay the freight, it would not be possible to sell at Rs. 127.40 to wholesalers, which was the controlled price." He said this in reference to the circular (exhibit K) which is dated December 22, 1973, and, according to Bhogilal Manilal Shah, the circular was received by his firm after that date. The telephonic conversation with Swami was, according to Bhogilal Manilal Shah, on December 19, 1973. It is obvious that on December 19, 1973, Rs. 127.40 was not the controlled price according to the circular letter (exhibit K) because this circular was not in existence at that time.

(7) An allegation of the respondents against the informants was that they had sold two consignments of vanaspati despatched by the respondents to the informants in December, 1973, in black market because there was shortage of vanaspati at that time and black market was rampant. The shortage, therefore, became a sensitive point. Mr. Bhogilal Manilal Shah was not prepared to admit this sensitive and material point of shortage of vanaspati because that might lead to the conclusion that in fact these consignments had been sold in black market.

" I do not remember whether in 1973 there was a shortage of vanaspati. I do not remember whether there was a shortage in 1970 and 1971. I do not know whether there was a shortage of vanaspati in 1974. By shortage I mean that the demand was larger than the supply.

I do not know if there was any shortage of vanaspati between 1966 and 1970. I cannot say definitely that there was no shortage between 1966 and 1974. I cannot say whether, generally speaking, there was any shortage during that period. We do find out when there is shortage, but I do not remember the period between 1966 and 1974 when there was a shortage. There was a shortage at a time during this period but I do not remember when. I cannot say either with regard to the year or with regard to any part of a year. It is not true that I know that there was a shortage in 1973. I do not remember whether there was any shortage in 1973." " I remember from the mention of Shiv Sena agitation that there had been shortage towards the end of 1973. The agitation was also about hoarding and black marketing. So it was about shortages, black marketing, hoarding and high prices." " It is true that in 1973 there was shortage of vanaspati whether in large or small packs... ...I have stated that there was shortage of vanaspati towards the end of 1973 and that is true. It was in that connection also that there was Shiv Sena agitation......In Poona market towards the end of 1973 there was black market even in vanaspati. I do not know what was the amount of over-charge in respect of vanaspati in Poona at that time. I again say that there was no black market or premium in respect of smaller packs towards the end of 1973 because there was no shortage. I have said previously that towards the end of 1973 there was shortage and premium in respect of vanaspati of all packs. End of 1973 would cover the month of December, 1973." The above statements being mutually contradictory, Dr. Paranjape, a Member of the Commission, asked Bhogilal Manilal Shah to reconcile these statements and he replied I " On being asked to clearly state on full consideration of the different statements that I have made today, I say that in December, 1973, there was shortage of 16'5 kg. packs and not of the smaller packs." " Newspapers giving prices of vanaspati used to mention prices higher than the controlled prices. The papers, Vyapar in Gujarati, Free Press Journal in English and Daily Sakal in Marathi give prices of commodities including vanaspati. They mention prices higher than the controlled prices. The prices that they mentioned were the open market or current prices which were several times higher than the controlled prices. I therefore say that there must have been black market. I used to read these papers daily including the end of 1973.

In the end of 1973, these papers mentioned the current prices of vanaspati, which were higher than the controlled price and, therefore, I say that there was a black market. I used to read in the newspapers about prices of vanaspati......Although I was selling vanaspati, I had no interest in the current price of vanaspati because I was selling at the controlled rate. I was reading the news about these prices with total disinterest or detachment. It is not correct that I was not reading about prices of vanaspati with detachment or I have no interest in the prices. It is not true that I am saying this in order to avoid a charge of black-marketing in vanaspati." It is obvious from the above examples that on the sensitive question of shortage in the end of 1973, which supported the respondent's case of black-marketing against the informants, Mr. Bhogilal Manilal Shah fenced a good deal and ultimately was compelled to admit shortages and prevalent black-marketing in December, 1973.

(8) According to the circular (exhibit K) there would have been no objection to the informants selling the two consignments of vanaspati received by them from the respondents in December, 1973, to hoteliers and other bulk consumers if they were their regular customers. The respondents' contention was that these were sold to a few chosen wholesalers at black-market prices. When cross-examined on the question as to why they did not sell to hoteliers, etc., Bhogilal Manilal Shah stated that " from 1966 to 1970 there used to be cards issued by the respondents to hoteliers and other bulk consumers. We did not look at those cards before selling the consignments received in December, 1973. The sale to permit-holders was prior to 1973. After receipt of the two consignments in December, 1973, and before selling goods covered by them I did remember that we had sold some goods to permit-holders of rationing authorities, but I did not remember the period during which these goods had been sold. Again I say that at that time I did not remember that we had sold some goods to permit-holders in the class of hoteliers and other bulk consumers in the preceding years. I read the circular (exhibit K) before the goods covered by these consignments were sold and at that time I remembered that we had sold some goods to permit-holders in the class of hoteliers and others." From the above three statements of Bhogilal Manilal Shah in which twice he did remember and once he did not remember that previously vanaspati had been supplied to hoteliers, on a material and sensitive point, we can only come to the conclusion that his evidence could not be relied upon.

(9) According to the respondents, the two consignments of vanaspati sent by them to the informants in December, 1973, had been sold to a few persons at black-market rates. The case of the informants was that under circular (exhibit K) they were compelled to sell vanaspati to " B " licence holders and not to hoteliers and bulk consumers. It is an admitted fact that the respondents had made enquiries into this matter. The case of the respondents is that they had asked the informants to furnish proof that the goods had actually been sold to " B " licence holders. On that question Bhogilal Manilal Shah made several statements to the following effect: " When the representatives of the respondents made inquiries from me, I told them verbally that we had sold the goods to ' B ' licence holders. I did not give this information to the respondents after verifying it. It is not true that the respective representatives of the respondents had told me that these people were not licence holders at all. It is not true that they had asked me to furnish proof of these persons being ' B' licence holders. I did not voluntarily give them any proof. We sold these goods to these three persons without my personally satisfying myself that they were 'B' licence holders. I had to rely on the information given by my representative, Tarachand. Besides Tarachand, I have no basis for coming to the conclusion that these three firms were ' B ' licence holders. None of my partners tried to check up Tarachand's information." "I know Mr. Gopalakrishnan of the respondents......He also asked me as to why I had sold these goods on only three different days. He also asked me for proof about all the Purchasers holding ' B' licence. He also told me that because we had sold to 5/6 parties, it appeared to him that we had sold these goods in black-market." " The witness volunteers that I had told him that within my area of supply there were only six to seven 'B' licence holders. He did not ask me to show him the list of 'B' licence holders in Poona. He did not ask me for proof about the persons to whom we had sold goods holding 'B' licence. To reconcile my two statements made today that Mr. Gopalakrishnan asked for proof about the six purchasers holding 'B' licence and that he did not ask for such a proof. I say that he did not ask as such and he himself went and made enquiries in the market." (10) On the question of price on which the informants had sold these two consignments in December, 1973, also, Bhogilal Manilal Shah went on shifting his grounds and contradicting himself. At one place he stated " It is not true that Mr. Gopalakrishnan told me that we had sold these goods at a price higher than Rs. 129.05 and not at Rs. 729.05 per tin. At that time Rs. 129.05 was the scheduled price for sale to retailers and consumers including direct consumers. " Again at another place the witness states : " Shri Gopalakrishnan had not told me that we had sold these two consignments received in December, 1973, at prices higher than those that we ought to have charged. The witness volunteers that Mr. Gopalakrishnan told me that we had been asked to sell goods at Rs. 129.05 per pack and why we had sold them for Rs. 127.00 per pack." Earlier the witness had stated that Mr.

Gopalakrishnan told him that it appeared that he had sold the goods at prices above the list prices and that he had sold them only to five or six dealers and that instead of following the instructions to sell goods to direct consumers, he had sold them to wholesalers.

At another place earlier, Bhogilal Manilal Shah stated that : " They got irritated and told me that I had acted contrary to the instructions of the respondents and that I had sold the goods at higher prices in the market and, therefore, I should resign my distributorship." In a letter (exhibit M) written by Bhogilal Manilal Shah to the chairman of the respondents on May 26, 1974, Bhogilal Manilal Shah stated that: " The issue in brief pertains to the sale of Lotus by us during the month of December, 1973. Your officers have drawn an inference that we sold the Lotus at a higher rate than fixed, which we assure you is erroneous and unfounded." " In my examination-in-chief, I had stated that when I met Mr.

Talwar, Mr. Gopalkrishnan and Mr. Venkateswaran, Mr. Gopalkrishnan had told me that it appeared to him that we had sold these goods at prices above the list prices. I had also stated that these three gentlemen got irritated with me and told me that I have not sold the goods according to the instructions of the respondents and that I had sold the goods at higher prices in the market and, therefore, I should resign from distributorship. They said that I had shown the sale at Rs. 127.00 per tin and had actually charged Rs. 129.05 and, therefore, I had black-marketed at Rs. 2.05 per tin. If a person sells at Rs. 129.05 per tin but shows at Rs. 127.00 per tin in the cash memo, according to me, it would be a malpractice." "The witness volunteers that I had sold the goods according to circular (exhibit K). Mr. Talwar told me that we had not sold these goods according to the instructions of the company and sold them at prices above the controlled prices and, therefore, we would have to give up the distributorship of the respondents." The witness has obviously been changing and chopping his position with regard to the officers of the respondents as to whether they did or did not tell him that he had sold these consignments at prices higher than the controlled prices.

(11) One of the sensitive points in the case was why informants had not sold the two consignments of vanaspati received by them from the respondents in December, 1973, to hoteliers, bakeries, confectioneries and restauranteers, etc. The explanation of the informants was that thev did not contact such persons In the past such persons had bought across the counter and the informants had no records of their purchases; but this was later shown not to be correct. At one place Bhogilal Manilal Shah stated : " The distinction between the consumer and direct consumer exists only for vanaspati. The term 'consumer' is applied to households which use vanaspati whereas hotels, bakeries, confectioneries, who use vanaspati for manufacturing foodstuffs for sale, are termed as 'direct consumers'...... Consumers and direct consumers used to buy only at the shop. " " For direct consumers our representatives used to go and canvass orders and then we used to go at their place for delivery. The respondents' salesmen used to furnish us the names of direct consumers. It was the respondents' salesmen who used to go and canvass orders. We used to supply. The direct consumers could have come to the shop and bought goods but they did not do so. Our salesmen used to go to the direct consumers along with the company's salesmen to canvass orders. Our salesmen used to accompany company's representatives only occasionally." (Emphasis ours). By the former statement Mr. Bhogilal Manilal Shah intended to say that because the direct consumers bought only across the counter, there were no records of their purchases. By his latter statement it came out that these people never bought at the shop but they always placed orders and, therefore, there would be records of their purchases. Again, in the third place, Bhogilal Manilal Shah states : " When these two consignments came in December, 1973, I did not look at the previous record of supplies to hoteliers, etc., because there was no such record with us. For the years 1972 and 1973 there were no cards issued by the company in respect of hoteliers and other bulky consumers. " It would be difficult to reconcile the above statements because in one place Bhogilal Manilal Shah stated that there were no records because the sales were across the counter; in the second place, he stated that these orders were not across the counter. This would lead to an inference that there were records and at a third place again he says that there were no records. One would be at a loss to know what the truth is.

(12) Bhogilal stated that his firm used to give certain discounts for bulk purchases. He has also mentioned the rates of discount. He has stated that only verbal instructions were given by the salesmen of the respondents for giving these discounts. He has further stated that: " We have said in our complaint to the Monopolies Commission that we were compelled to give quantity discounts to buyers." We have scanned through the complaint andithere is no mention therein of quantity discount.

Similarly with regard to quantity discounts he has stated at one place that: " We derived no particular benefit from giving these quantity discounts." In another place Bhogilal Manilal Shah states.

" The respondents did not get anything directly from quantity discounts given by us but it helped its sales. By increase in sales the respondents as well as we are benefited." Having dealt with the evidence of Bhogilal Manilal Shah we come to the issue which has to be decided on evidence.

Whether Clause 5 of the agreement in question requires the redistribution stockists to purchase goods offered by the company at prices fixed by the company and to sell the goods to the wholesalers or dealers at the prices fixed by the company If so, does it constitute a restrictive trade practice " 5. The redistribution stockist shall use his best endeavours to maintain and increase the trade of the products in the said town and for this purpose he shall at all times keep and maintain adequate stocks of the products in all its packings and he shall carry out all instructions and directions including those as to the maximum resale prices which may from time to time be given by the company or by the company's accredited representatives in respect of the sale or resale or disposal by the redistribution stockists of stocks of the products supplied to him in pursuance of this agreement. The redistribution stockist shall purchase and accept from the company such stocks as the company shall at its discretion send to the redistribution stockist for fulfilling his obligations under this agreement." In our opinion this Clause relates to two restrictive trade practices.

The first practice is of resale price maintenance which flows from the words " he shall carry out all instructions and directions including those as to the maximum resale prices which may from time to time be given by the company or by the company's accredited representatives in respect of the sale or resale or disposal by the redistribution stockists of stocks of products supplied to him in pursuance of this agreement ". This practice would fall under Sections 33(1)(1) and 2(o) of the Act. The second practice that would flow from Clause 5 of the agreement is of full-line forcing arising from the words " The redistribution stockist shall purchase and accept from the company such stocks as the company shall at its discretion send to the redistribution stockist for fulfilling his obligations under this agreement." This would fall under Sections 33(1)(b) and 2(o) of the Act.

29. Dr. Singhvi contended that the issue as framed relates only to a single restrictive trade practice and not to a multiple of restrictive trade practices. He contended that full-line forcing had not been alleged in the complaint and, therefore, the issue obviously related to resale price maintenance. In our opinion the use of the Article " a " and use of the word "practice" in singular cannot restrict the meaning to one practice because what is challenged is Clause 5 of the agreement. Notice of enquiry was issued in respect of the complaint. In paragraph 9 of the complaint Section 33(1)(b) is expressly mentioned.

Full-line forcing will squarely fall within Section 33(1)(b). In paragraph 11 of the complaint it is alleged that restrictive trade practices are being indulged in by the respondents by virtue of the provisions contained in the redistribution stockist agreement. In our opinion both the above trade practices are covered by the issue and we propose to deal with both of them.

30. Dr. Singhvi contended that on true interpretation of Section 33(1)(f) it is not necessary to state that prices lower than those stipulated may be charged on resale unless the prices to be charged on resale by the purchaser are " stipulated " by the seller. He contended that in Clause 5 of the agreement (exhibit F) as it stood prior to 1972 there is reference only to maximum prices and maximum prices are not stipulated prices. His contention was that stipulated prices could only be the fixed or standard prices dictated by the seller and neither maximum nor minimum prices which would permit variations in prices would be " stipulated " prices. The word " stipulate " means to mention or insist upon as essential part of the agreement. It cannot be denied that maximum price is mentioned and insisted upon by the respondents in the agreement as an essential part of the agreement. In our opinion, a maximum price is, therefore, a stipulated price. Therefore, under Section 33(1)(f) where such a price is mentioned the agreement must clearly state that prices lower than these prices may be charged. The respondents have always understood the fixation of maximum resale prices as a "stipulation ". They have used this word in that sense in their own circular (exhibit 3) and part of exhibit 6 and in revised agreement (exhibit 8) in which they have stated " that prices lower than the maximum resale prices stipulated by the company may be charged".

31. The respondents have not put in their own counterpart or copy of the agreement (exhibit F). It is not in dispute that agreements in the same form as in exhibit F was entered into with redistribution stockists up to 1972. The respondents have put in exhibit 8 as a specimen of the revised agreement which they have entered into with a small number of redistribution stockists--according to them about 700 out of 4,500 redistribution stockists--after 1972. The respondents appear to be conscious of the fact that Clause 5 as it stood in exhibit F may relate to resale price maintenance In Clause 5 of exhibit 8 they have, therefore, added the sentence. " The redistribution stockist is prohibited from charging in excess of the maximum resale prices stipulated by the company but he may at his discretion charge prices lower than the said maximum resale prices." But it must be remembered that exhibit 8 has not been entered into with all the redistribution stockists of the respondents but only with a few of them which according to the respondents are about 700 but there is no evidence about this figure although this figure was mentioned in arguments by Dr. Singhvi. It is sufficient to say that if at all this agreement has been entered into, it has been entered into with a small number of redistribution stockists.

32. The respondents have stated that on 12th October, 1972, they sent a circular (exhibit 3) a copy of which they sent to the Registrar of Restrictive Trade Agreements on 12th October, 1972, stating that this circular had been sent to all redistribution stockists " as suggested by the Registrar ". In this circular purporting to have been addressed to redistribution stockists they have stated that Clause 5 was always understood and interpreted both by the redistribution stockists and the respondents to mean that the redistribution stockists were prohibited from charging in excess of the maximum resale prices stipulated by the company. " You were always at liberty to charge prices lower than the said maximum resale prices " and that in order to avoid any ambiguity what was implied in the said Clause was now expressly stated, namely, that prices lower than the maximum resale prices stipulated by the company may be charged. It must also be stated that a circular of the nature of exhibit 3 cannot by itself modify an agreement which is a bilateral document.

33. In our opinion there is no evidence before us to show that the circular, exhibit 3, was in fact despatched to all its redistribution stockists. Mr. Chopra, marketing director of the respondents, has stated in his evidence that he gave instructions to his office to issue the said circular and later he received a copy of the said circular and from this he was entitled to assume that the circular had been despatched to all the redistribution stockists. We are afraid this is not sufficient evidence of despatch of the circular to 4,500 redistribution stockists. There is no evidence of any despatch register, of any postage spent on the despatch or the oral evidence of an officer who had despatched this circular. Dr. Singhvi contended that under illustration (f) to Section 114 of the Evidence Act we must presume that the common course of business has been followed in particular cases. In this case there is no evidence and in any case not sufficient evidence of what was the common course of business in the office of the respondents. What Mr. Chopra may be entitled to assume in his office does not make it obligatory for us to presume under Section 114. In our opinion we do not have sufficient material for raising any such presumption.

34. The informant was cross-examined on the question of receiving a copy of exhibit 3. He flatly denied that he had received any copy of the said circular. On this point he has not contradicted himself.

However, leaving aside the evidence of Bhogilal Manilal Shah on this point we are not left with sufficient evidence of the despatch of this circular. The Director of Investigation examined 3 of the redistribution stockists of the respondents --Kundan Lal, Amrit Lal and Deen Dayal Gupta. The respondents did not ask these witnesses in cross-examination whether they had received the copy of the circular.

If this question had been put to them and it had been shown that they had received a copy of the circular, there might have been some evidence of the despatch of the circular.

35. In view of the fact that the agreement (exihibit F) continues to be in force with a large number of redistribution stockists and the same relates to the restrictive trade practice of resale price maintenance, we think that there is reason to pass an order under Section 37(1)(a) and (b) in respect of the restrictive trade practice of resale price maintenance.

36. Before us some price circulars issued by the respondents have been produced. These are exhibits "A", "B", "C" and "R". These circulars relate to vanaspati and intimate to the redistribution stockists the price increases by the Government of India under the statutory control.

These circulars do not even indicate that the revised prices are maximum prices, although we have been shown Gazette notification issued by the Government of India which shows that from time to time the Government had fixed only the maximum prices. These circulars also enjoined on the redistribution stockists that "please note that these prices are to be strictly followed." This would on the contrary indicate that the prices indicated in the circular which were in fact the maximum prices, although not so stated, were to be strictly followed. This would also be some evidence of resale price maintenance.

The respondents have not produced before us any price circulars with regard to any commodity which would show that the prices shown therein were'maximum prices or that the redistribution stockists or retailers were stated therein to be free to charge prices lower than those. Mr.

Chopra was specifically asked whether there was any such circular in existence and he had stated that the respondents would produce such circulars if they found them. None was produced. Obviously none has been found.

37. We must, however, in all fairness to the respondents say that the informant as well as the three redistribution stockists examined by the Director of Investigation have admitted that they understood the expression "maximum price" used in the agreement (exhibit F) only indicated the ceiling prices and that they could charge prices lower than those. This may, however, well be the construction of the agreement of some of the redistribution stockists. We have no evidence to show that all redistribution stockists have put the same construction on Clause 5. But apart from this, Section 33(1)(f) enjoins that it must be made expressly clear in the agreement that prices lower than the maximum prices could be charged.

38. After the close of the evidence, by consent of parties a bunch of cash memos which Mr. Chopra had promised to produce, were produced by the respondents and were put in and marked exhibit XII collectively and exhibit XIII collectively. These were put in because the respondents wanted to show that in point of fact prices lower than the maximum prices have been charged by some of the redistribution stockists. In the course of arguments it was argued on behalf of the Director of Investigation and the informants that these cash memos also showed a pattern of discounts which was dictated by the respondents themselves and would therefore amount to resale price maintenance because the stockists were not free to charge prices lower than the pattern dictated by the respondents. On examination of these cash memos which have been selected by the respondents from various regions in India it appears that we cannot come to the conclusion that prices lower than the maximum prices were charged. These cash memos show sales aft the maximum prices and certain discounts allowed to the customers. Some of the discounts are of large percentage of the price, in some cases exceeding 50% allowed to some customers. There has been no cross-examination of any witnesses produced by the respondents on the question of these cash memos because they were produced after the close of evidence and put in by consent. These discounts could relate to other transactions and adjustments not known to us. A discount of more than half the price cannot be with the intention of charging a lower price. We have also been unable to find any pattern of discounts from these cash memos. In our opinion, no reliance one way or another can be placed on these cash memos.

39. A plain reading of the last portion of Clause 5 of the agreement (exhibit F) shows that the respondents could send at their own discretion any stocks to the redistribution stockist and the latter would be bound to accept and pay for the same. These may be goods of a kind not required by the redistribution stockist or an assortment not desired by but forced on the redistribution stockist. This would, in our opinion, squarely fall under Sections 33(1)(b) and 2(o) of the Act and be therefore a restrictive trade practice.

40. Dr. Singhvi, on behalf of the respondents, contended that the opening words of Clause 5 provided " that the redistribution stockist shall use his best endeavours to maintain and increase the trade of the products in the said town and for that purpose he shall at all times keep and maintain adequate stocks of the products in all its packings", and the closing words that the obligatory purchase of whatever the respondents sent was for fulfilling this obligation under the agreement would govern this Clause and if any stocks were forced on the redistribution stockist which did not fulfil this purpose, the re-distribution stockist could reject them and if the company terminated his agreement, under Clause 19, the redistribution stockist could go to a court. We are afraid this argument does not appeal to us.

Under Clause 20 the company has the power to terminate any agreement on 30 days' notice without cause. It is in evidence that redistribution stockistship of the respondents is both profitable and prestigious and no redistribution stockist would like to lose it. His bargaining power would, therefore, be very little. We, therefore, think that this is a rernicious practice and ought to be struck down. This practice pan also cause distortion of competition because it would enable the respondents to dump goods in one area and cause shortage in another. It is in evidence that the respondents are a dominant producer at least in soaps in the organised industry. It is also a major producer in respect of many other commodities. It has large organisation of redistribution stockists which covers the whole country. The fact that unsold stocks are taken back by the respondents does not help because initially the redistribution stockist is compelled to buy goods which he does not want. This will impair the competitive efficiency of the redistribution stockists in regard to the products of the respondents themselves and also in regard to the products of other manufacturers competing with the products of the respondents. We may illustrate this. The respondents make several kinds of toilet soaps some of which are popular and some are more expensive. If the more expensive variety of toilet soaps manufactured by the respondents is not in demand whereas the popular variety is in demand, the competitive ability of the redistribution stockist will be adversely affected if his supplies of popular soaps are reduced and those of more expensive varieties are increased. Similarly, if one brand of soap is demanded by consumers, the redistribution stockist would be handicaped if adequate supplies of that variety are not forthcoming from the respondents; more so if he is burdened with supplies of unwanted products. The practice of the respondents to take back unsold goods does not help in this matter because initially the redistribution stockist has to buy and stock them and this practice is not a part of the agreement but is a concession which could be withdrawn at any time.

41. The answer to issue No. 5(a), therefore, is that Clause 5 of the agreement relates to restrictive trade practices of resale price maintenance falling under Sections 33(1)(f) and 2(o) and full-line forcing falling under Sections 33(1)(b) and 2(o) of the Act. Issue No.5(b): Whether it is a fact that instructions are issued from time to time by the company regarding the maintenance of resale price and whether breach of any of these instructions is treated as breach of the conditions of the agreement entailing termination If so, do these instructions constitute a restrictive trade Practice The issue as it is framed does not pertain to the termination of the agreement of the informants. The issue is general and suggests a practice of issuing instructions from time to time by the respondents to several of its redistribution stockists and of the respondents terminating the agreements of the several redistribution stockists for failure to maintain resale price and as to whether this practice constitutes a restrictive trade practice. There is no evidence before us of redistribution stockists other than the informants that such instructions were issued from time to lime by the respondents regarding resale price maintenance or that there was any breach of such instructions or that any agreements were terminated on this ground.

There is, however, some evidence to the contrary. The three redistribution stockists examined by the Director of Investigation have denied such instructions for resale price maintenance. They have stated that they always understood Clause 5 to mean that prices lower than the maximum could be charged and that in fact they had done so. The agreement of none of them had been terminated to indicate a practice of such terminations. Leaving aside the instance of the informants there is no other evidence to show this practice.

42. The informants have also been unable to show as to which restrictive trade practice this would amount to even if such prevailing practice had been shown. For the above reasons alone, we could answer this issue in the negative.

43. However, there is some evidence of and relating only to termination of the agreement of the informant and for that purpose we propose to discuss this matter further.

44. It is true that Clause 5 of the agreement contemplates oral instructions with regard to maximum prices and these oral instructions have to be apparently accepted by the redistribution stockists, even if given by the representatives of the respondents. According to the respondents these oral instructions were confined to matters of sales organisation and had nothing to do with resale price maintenance. This contention of the respondents is supported by the evidence of the three redistribution stockists examined by the Director of Investigation.

They had been summoned to produce cash memos. They, however, could not produce any cash memos which could show that they had actually charged prices lower than the maximum stipulated prices. It has been argued on behalf of the respondents and with some justification that these were periods of shortage and the goods were in short supply and the redistribution stockists had no motive in reducing the price.

Competition can thrive only in periods of plenty. In addition, in vanaspati, the sales were large and margin allowed to the redistribution stockist low. There was neither incentive nor scope for price reduction.

45. The evidence of Bhogilal Manilal Shah is, as we have stated, unreliable, He has also not been able to establish that the reason for the termination of the agreement by the respondents was charging prices lower than the maximum. On this sensitive point he has contradicted himself a number of times. He has ultimately admitted that the officers of the respondents had charged him with selling at prices higher than the maximum. He was charged in addition with selling goods only to a few persons of his own choice, who, according to him, were " B " licence holders and fell within the circular (exhibit K collectively).

He never succeeded in establishing that these were actually " B " licence holders. Bhogilal Manilal Shah has tried to make out that he had a dispute with the respondents with regard to freight charges in respect of two consignments of vanaspati received by him in December, 1973, But the evidence of Bhogilal Manilal Shah itself shows that freight charges had been discussed on telephone and he had ultimately agreed to them.

46. We are not inclined to believe the evidence of Bhogilal Manilal Shah that it was because of the circular (exhibit K collectively) and the Shiv Sena agitation about non-availability of stocks and black-marketing that he had supplied the goods in a hurry to a few choice wholesalers at prices lower than those he could have charged.

Undoubtedly, those were periods of acute shortage which resulted in political agitation. Bhogilal Manilal Shah admitted that there was prevalent black-market in vanaspati at that time and he was aware of the black-market rates. One may believe that in an atmosphere of political agitation he sold the goods at the maximum permissible prices. But it is difficult to believe that he sold them at distress prices.

47. At the same time we cannot say that there was a clear case of black-marketing made out against the informants. The only witness that has been examined by the respondents was Chopra. He was not a person who had investigated into the charge of black-marketing against the informants. It is admitted that the person who had done so was Gopalakrishnan. Gopalakrishnan was not examined as a witness by the respondents although thay had taken an adjournment for producing him.

It was argued by Mr. Shah on behalf of the informants that this should raise a presumption under Section 114(g) of the Evidence Act that if Gopalakrishnan had been examined, his evidence would not have been favourable to the respondents. We do not agree with this contention. If the informants had succeeded in establishing that the reason for the termination of the agreement was non-maintenance of resale prices and that it was not black-marketing, such an inference would have been inevitable. However, in view of the fact that the informants had not succeeded in establishing this, the respondents had no case to meet and non-examination of Gopalakrishnan cannot result in any presumption as to the effect of absence of his evidence. The effect of all the evidence is that the informants had not succeeded in establishing that they had. sold the December, 1973, consignments of vanaspati at prices lower than those desired by the respondents and that at the same time the respondents had not succeeded in showing that the informants had black-marketed in those consignments. There is, however, sufficient evidence before us to show that the respondents believed that the informants had black-marketed in these two consignments. We cannot say whether the dispute about freight charges played any part in the termination of the agreement There is enough evidence to suggest that when the informants' agreement was terminated, the respondents genuinely believed that the informants had black-marketed. It is not proved that the termination had anything to do with resale price maintenance. It cannot be said that oral instructions had been issued for resale price maintenance.

48. The answer to issue No. 5(b) would, therefore, be in the negative.

Issue No. 5(c): Whether Clause 9 of the agreement set out in the complaint constitutes a restrictive trade practice " 9. In order to ensure equitable and reasonable distribution of stocks at fair prices, the redistribution stockist shall not rebook or in any way convey, transport or despatch parts of stocks of the products received by him outside the aforesaid town except when he is so expressly directed in writing by the company. He shall also, whenever so required by the company, make available from the stocks of company's merchandise so purchased by him such part as the company directs him to do for purposes of resale on his behalf by the company's employee." On the face of it there is a restriction on movement of stocks of the products manufactured by the respondents and received by the redistribution stockists outside the town except with the permission of the respondents. Normally, when the goods are sold and the property therein has passed to the buyer, there should be no restriction on their movement thereafter. Under the agreement (exhibit F) the redistribution stockists are outright buyers of goods and the property therein passes to them. It is, therefore, undesirable that the seller should exercise any control on their movement. This on the face of it amounts to allocation or limitation of the area or market within which the redistribution stockist is to dispose of goods. This restriction would fall under Section 33(1)(g) of the Act. But, apart from this, this restriction prevents the redistribution stockists from offering competition outside the town in which his business is situated. The restriction, therefore, also squarely falls under Section 2(o) of the Act.

49. Normally, we should have thought that on a plain reading of Clause 9 of the agreement (exhibit F) the restriction was an inter-town restriction and not an intra-town restriction. Mr. Bhogilal Manilal Shah has, however, attempted to make out a case of intra-town restriction on the ground that in his case the use of the figure ' 2 ' after Poona in some places in his agreement constituted an area allotted to him within the city of Poona and that this led to intra-town restriction. We shall deal with this latter aspect after we have dealt with the question of inter-town movement of goods.

50. There is no real dispute about the fact that there is an inter-town restriction. However, Dr. Singhvi on behalf of the respondents argued that there was an inbuilt gateway and justification under Section 38 of the Act for such practice. He argued that the opening words of the Clause " In order to ensure equitable and reasonable distribution of stocks at fair prices " gave the agreed justification for the practice.

We have held in our judgment delivered on 27th November, 1975, in the case of [Registrar of Restrictive Trade Agreements, New Delhi v. Usha Sales Private Ltd. [RTP Enquiry No. 8 of 1974 reported in [1977] 47 Comp Cas 472 (MRTPC)] that fixing of a selling point was not restrictive if there was no allocation of territory or area for the disposal of the goods. Dr. Singhvi contended that evidence showed that there was no restriction on counter-sales to any person coming from anywhere. This may be due to the fact that it is difficult to confine sales over the counter to persons coming from a particular area. The fact that there was an allocation of a particular area for the disposal of goods and written permission was required for moving the goods out of the area, in our opinion, clearly indicates an allocation of area.

The fact that "the parties have chosen to state that this restriction was to ensure equitable and reasonable distribution of stocks at fair prices is not binding on the Commission and the Commission is not prevented from going into this question because of the opening words in the clause. If a particular provision in an agreement is pernicious and, therefore, illegal, a statement of pious intention by the parties does not end the matter unless the pious intention is justified on evidence. In our opinion, therefore, there is an inter-town restriction which amounts to an area allocation under Section 33(1)(g) and it also falls under Section 2(o) of the Act. We shall consider the question of the practice not being against public interest and passing through a gateway under issue No. 6.

51. Bhogilal Manilal Shah has stated that the words " the aforesaid town" in Clause 9 refers to " Poona-2 " which was the town mentioned in the agreement with the informants in which he was to distribute goods.

We have already discussed this aspect of the matter in example No. 2 while evaluating the evidence of Bhogilal Manilal Shah. This allegation, therefore, cannot be sustained. The informant has admitted in his evidence that he thought of " Poona-2 " as defining his area only during his cross-examination. This statement appears to have been withdrawn by him later. In our opinion it is not correct to say that "Poona-2" indicated the area allotted to the informants. It appears that the informants were servicing the area in Deccan Gymkhana which came in the postal district of Poona-4 even in 1966. The respondent-company have also led evidence showing that when a number of redistribution stockists have been appointed in other cities in India, no postal district is mentioned in the agreement for the purpose of demarcating the area, to be serviced by them. It appears to us that area allotted for servicing purposes need not necessarily be most conveniently demarcated in terms of postal districts which are demarcated on quite a different footing. What is indicated in the original complaint is that areas even within a town are allocated and that this constitutes a restrictive trade practice.

52. Mr. Chopra, the marketing director of the respondents-company, has deposed that in the standard agreement a township is taken as defined in census reports. But whenever it was thought useful, other townships were added to the area allotted to a redistribution stockist. From the evidence of Mr. Chopra it. is apparent that outlets in jural areas were allotted to some redistribution stockists together with a town which was allocated to. them. It would appear to us on consideration of the evidence that the word " town " in Clause 9 of the agreement relates to the entire area allotted to a redistribution stockist and that in several towns where there are more than one redistribution stockist, they are free to sell within the whole town although particular areas may be allotted to them for servicing of wholesalers and retailers. On behalf of the informants, reference was made to exhibit "G". There was a reference therein to "localities and outlets covered by the informants". The respondents claimed that the word " covered " was meant only for servicing and not for sale. Mr. Chopra has pointed out that the respondents insisted that the redistribution stockists should serve the retailers in the area before they sold outside the area. It is also in evidence that when a redistribution stockist was accompanied on his journey cycle by the representative of the respondents, he went only to the outlets allotted to the redistribution stockists. There, however, appears to be no restriction on his covering other area when not so accompanied by the representative of the respondents. Nor was there any restriction on his offering credit or other facilities to retailers who were not in his journey cycle for servicing.

53. Mr. Chopra has also stated that supplies to a redistribution stockist by the respondents are related to the demand estimate made by the respondents' representatives regarding the area which is expected to be serviced by him.

54. On the whole, we are not satisfied on evidence that there is in fact any intra-town restriction.

If the answer to issues (a) and (b) and (c) or any of them is in the affirmative, is the company indulging in the alleged restrictive trade practices 55. It is not denied that the agreement is in force and its provisions are being acted upon. If the agreement relates to a restrictive trade practice, it can be indulged in at any time. We hold that the restrictive trade practices held to have been proved are in existence.

If the company has indulged in any restrictive trade practice as alleged, whether the same is not prejudicial to the public interest in view of the instances set out in Clauses (b), (f) or (h) of Sub-section (1) of Section 38 of the Act and the said practice is not unreasonable having regard to the balance between the said practice and the detriment to the public, if any 56. Regarding resale price maintenance under Clause 5 of the agreement (exhibit F), the respondent-company has not only not attempted to justify or to pass through any gateways but it has itself attempted to remove the possible restrictive trade practice by claiming to have issued a circular regarding the pre-1972 agreement and by revising the agreement in 1972. There can, therefore, be no question of justification of this practice or its passing through any gateway.

57. Regarding the restrictive trade practice arising from full-line forcing the respondents have not tried to justify it. They have denied the existence of restrictive trade practice. No question of gateway or justification is, therefore, involved.

58. Regarding Clause 9, we have already rejected the argument with regard to inbuilt justification.

59. In his evidence Mr. Chopra, marketing director of the respondents, has tried to justify the restrictive trade practice contained in Clause 9, i.e., area allocation by restricting inter-town movement of goods.

We shall deal with the main points in justification : (1) It is claimed that the company works out demand for each market in a careful manner and supplies are matched to this demand. Any unauthorised movement of stocks will, therefore, result in maldistribution. Unscrupulous traders will exploit differences in the market situations between different localities. Such unscrupulous traders will be concerned only with the profit or gain and would create a shortage in an area and exploit the situation. It is also claimed that the Government wants the respon-dants to take responsibility for fair distribution. If the respondents have no control over movement of goods between towns, the company would be unable to comply with the Government's directive of maintaining equitable supplies. It is claimed that the company has built up an elaborate distribution organisation for the purpose of ensuring equitable distribution and the whole scheme would collapse if the products are allowed to be transferred from one town to another. In such a case the company will not be in a position to give any guarantee for servicing various retail outlets and the whole sales force of the company may have to be withdrawn as they will have no active role to play. According to the respondents this Clause is necessary both in times of shortage and in times of abundance.

The whole approach of the respondents appears to be based on the notion that it is their task to look after fair distribution of commodities. However, no private distributor can undertake such responsibility. As against this, the Act assumes that competition should be helped to be maintained unless particular restrictions on competition are found to be useful. Regarding the useful effect of the distribution net-work set up by the respondents, we have no evidence except the statement of Mr. Chopra. No consumer-association or a public body or a Government department has been brought forward to suggest that in actual fact the distribution network organised by the company is such that without it the public interest will suffer.

Mr. Chopra was asked whether competition will not ensure the demand and supply to adjust themselves. His answer was that an unscrupulous trader was not concerned with the principles of economics and he was only concerned with his own gain and he would create shortage in order to exploit the situation. This appears to imply that the respondents will not use their power under Clause 9 to create an artificial shortage. Of course, we have no evidence for such an assumption. No oral or documentary evidence has been produced to show that the Government have instructed the respondents not to permit movement of goods from one town to another. It is possible that without Clause 9 the respondents' distribution network, as it is organised today, may have to be modified in some respects. But that would be the result of the Act. In the light of the Act many trade practices which had been prevalent in the past can no longer be permitted. This has been the effect of similar legislation in many countries and our country can be no exception to it.

(2) Another point made in favour of Clause 9 is that it ensures that the quality of stocks does not deteriorate. It was pointed out that many of the products of the respondents are subject to deterioration as a result of age. It was, therefore, necessary to maintain regular flow of supplies and prevent accumulation of stocks and if goods were transferred from one place to another without the authorisation by the respondents it would be difficult to accept responsibility for quality.

Mr. Chopra has stated in his evidence that the respondents had been putting the date of manufacture on all edible products even before the recent order regarding packaged commodities came into force. In our opinion the indication of the date of manufacture on edible products would put the consumer on guard and the stockists and retailers will themselves not allow old stocks to collect. Many drugs have date of manufacture and the date of expiry put on them and without any restriction on the movement of drugs from one town to another, no one buys outdated drugs.

(3) The respondents have claimed that they repurchase unsold stocks from redistribution stockists and also give rebate in case of price reduction. According to them this would be difficult to carry out if Clause 9 was removed.

The practice of giving rebate in cases of price reduction and taking back unsold stocks is not a part of the agreement. It is a concession being given by the respondents and could be withdrawn at any time. Such concession cannot justify a restrictive clause. It is also not quite clear why these facilities will be difficult to administer if Clause 9 was removed. It would be quite appropriate for the company to insist that it will repurchase only those stocks which have been bought from them direct. Probably, the retailers could take back unsold stocks to the redistribution stockists and the redistribution stockists would in turn take them to the respondents. Similarly, price reduction could be allowed on the basis of purchases from the respondents direct.

(4) The respondents have claimed that permission to move stocks from one town to another would lead to sales-tax and octroi evasion.

These taxes vary-from locality to locality and traders want to transfer stocks from low-taxed localities to high-taxed localities clandestinely without paying all taxes. It is claimed that the respondent's restriction under Clause 9 makes such tax evasion difficult.

We have already examined a similar agreement in the case of Registrar of Restrictive Trade Agreements v. Tata Engineering & Locomotive Co. Ltd. [RTP Enquiry No. 1 of 1974--reported in [1976] 46 Comp Cas 470 (MRTPC)]. We have held therein that it is no business of a manufacturing company to impose restrictions of its own accord in order to prevent the possibilities of tax evasion. If the taxation authorities themselves found that the co-operation of the manufacturing concern was necessary and certain restrictions should be enforced through the manufacturing concern for avoiding tax evasison that would be a different matter. There is no evidence before us to show that any tax authority has requested the help of the respondents for this purpose. Without such evidence there can be no justification for a restriction.

(5) Mr. Chopra stated that if competition among redistribution stockists was freely permitted, it was not inconceivable that some redistribution stockists could have a large turnover and get larger rebate and, therefore, be in a position to give large discount than redistribution stockists in other areas and this will lead to big fish eating up the small fish. He claimed that it was possible that after the big stockist drove the small one out of business, he would again charge higher prices.

In effect the argument is that only competition controlled by the respondents could be beneficial. No evidence has been provided to support this argument. This appears to us to be a fallacious argument. Competition among redistribution stockists can lead to price competition and gain to the consumers. One trader competing with another is the essence of competition. Besides this, the Commission has power to prevent unhealthy competition.

(6) One more argument put forward on behalf of the respondents was that even if competition amongst redistribution stockists was prevented under Clause 9, there was competition from producers and distributors of competing products. Apart from this, the margin given to a retailer being larger than the margin given to redistribution stockists, there was a possibility of competition even among retailers. This can, however, be no justification for any restriction. It is good to have competition among retailers but it is better to have competition among retailers as well as among redistribution stockists.

The respondents also argued that there was competition from competing products made by other manufacturers. This may be so. But the consumer can only benefit from competition in all respects and at all levels.

This is no argument for restricting competition in any manner and at any level.

60. Taking all the above-mentioned points into account, one must consider the gateways under Section 38(1)(b), (g) and (h). Except for the bald statement of Mr. Chopra, no evidence has been led by the respondents to show that the removal of the restriction in Clause 9 would deny the public any particular benefits or advantages derived by them. It also cannot be said that the restriction imposed under Clause 9 is reasonably required in connection with any restriction approved by the commission. In view of the important position held by the respondents in the production of some of its products and also the fact that it is a dominant undertaking in the production of soaps in the organised sector and also the leading position it has attained by virtue of its standing in the industry, it cannot be said that the restriction on competition imposed by it does not restrict or discourage competition in any material degree. In our opinion, no justification or gateway has been proved. In view of this, the restriction in Clause 9 will have to be struck down.

General including the nature of order and costs In view of the above discussion there will be the following order : (1) Clause 5 of the agreement (exhibit F) shall stand modified so that the following shall be substituted in place thereof : " 5. The redistribution stockist shall use his best endeavours to maintain and increase the trade of the products in the said town and for this purpose he shall at all times keep and maintain adequate stocks of the products in all its packings and he shall carry out the instructions and directions including those as to maximum resale price which may from time to time be given by the company or by the company's accredited representatives in respect of the sale or resale or disposal by the redistribution stockist of stocks of the products supplied to him in pursuance of this agreement. The redistribution stockist is prohibited from charging in excess of the maximum resale prices stipulated by the company but he may at his discretion charge prices lower than the said maximum resale prices." (2) The practices of resale price maintenance and full line forcing to which original Clause 5 of the agreement related, shall be discontinued and shall not be repeated.

(4) The practice of area allocalion, to which Clause 9 of the agreement (exhibit F) related, shall be discontinued and shall not be repeated.

(5) In all future price circulars or lists to be issued by the respondents, it shall be clearly stated that the prices therein mentioned are maximum prices and that prices lower than those prices may be charged.

(6) This order shall come into force with effect from 1st July, 1976. On or before the said date, the respondents shall intimate all redistribution stockists of the modifications in Clause 5 of the agreement (exhibit F) and the voidity of Clause 9 of the agreement (exhibit F).

(7) On or before 30th September, 1976, the respondents shall file an affidavit before the Commission setting out the manner in which this order has been carried out.

(8) In view of the circumstances of the case, there shall be no order as to costs and each party shall bear its own costs.


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