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Registrar of Restrictive Trade Vs. Mysore Kirloskar Ltd. and anr. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1978)48CompCas837NULL
AppellantRegistrar of Restrictive Trade
RespondentMysore Kirloskar Ltd. and anr.
Excerpt:
1. the registrar of restrictive trade agreements (hereinafter referred to as "registrar") applied on 9th december, 1975, for amendment of the order of the commission dated 4tb august, 1975, in r.t.p. enquiry no.14-a of 1974. this application was made under section 13 of the monopolies and restrictive trade practices act (hereinafter referred to as "the act"), read with regulation 85 of the monopolies and restrictive trade practices commission regulations, 1974 (hereinafter referred to as "the regulations").2. the order of the commission dated 4th august, 1975, related to an application by the registrar under section 10(a)(iii) of the act. there were two respondents in that enquiry. the respondent no. 1, viz., m/s.mysore kirloskar, is the manufacturer of certain machinery and respondent.....
Judgment:
1. The Registrar of Restrictive Trade Agreements (hereinafter referred to as "Registrar") applied on 9th December, 1975, for amendment of the order of the Commission dated 4tb August, 1975, in R.T.P. Enquiry No.14-A of 1974. This application was made under Section 13 of the Monopolies and Restrictive Trade Practices Act (hereinafter referred to as "the Act"), read with Regulation 85 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter referred to as "the Regulations").

2. The order of the Commission dated 4th August, 1975, related to an application by the Registrar under Section 10(a)(iii) of the Act. There were two respondents in that enquiry. The respondent No. 1, viz., M/s.

Mysore Kirloskar, is the manufacturer of certain machinery and respondent No. 2, viz., M/s. Mahindra and Mahindra Ltd., has been constituted as sole distributors for India of the said machinery manufactured by respondent No. 1. Both the respondents were absent at one stage or other of the proceedings and at the time of final hearing before the Commission and the Registrar had filed an affidavit dated August 22, 1975, in ex parte proof.

3. The complaint of the Registrar was that respondent No. 1 had entered into an agreement dated 24th April, 1967, with respondent No. 2 appointing the latter as its sole distributors for the sale of Monarch Lathes manufactured by respondent No. 1 and that by virtue of the said agreement as a whole and particularly clauses 4, 5(a), 5(b), 6 and 9 the respondents were indulging in the following restrictive trade practices : (i) Restricting the persons to Whom goods are sold or from whom goods are bought.

(ii) Restricting the purchaser from acquiring or otherwise dealing in any goods other than those of the seller/manufacturer.

(iii) Restricting the output and supply of goods which might compete with the products of the seller/manufacturer.

(iv) Stipulating that the prices to be charged on resale by the purchasers/dealers shall be the prices stipulated by the seller/manufacturer.

(v) Granting or allowing allowances, discounts, rebates, etc., in connection with or by reason of dealings.

He prayed that the Commission may be pleased to inquire into the restrictive trade practices indulged in by the respondents under Section 37 of the Act. The proceedings were accordingly initiated by the Commission and on account of the defaults of both the respondents Nos. 1 and 2 at different stages of the proceedings, the proceedings against both of them were made ex parte by order of the Commission dated 30th June, 1975.

4. Subsequently, after the Registrar had filed the affidavit in ex parte proof, the Commission passed order against the respondents ex parte on 4th August, 1975. This order, inter alia, contained the following findings : " In our opinion, this restriction falls under Section 33(1)(c) and (g) of the Act. We also find Clauses 5(a) and (b) of the agreement prohibit the respondent No. 1 from appointing any other person as the selling agent in the territory of India. Clauses 5(a) and (b) also restrict respondent No. 1 from selling goods to any other person throughout India during the subsistence of the agreement. In our opinion, this is a restrictive trade practice and falls under Section 33(1)(a) of the Act.........

In our opinion, these practices also fall within the definition of restric-'tive trade practice in Section 2(o) of the Act, as they may have the effect of preventing, distorting or restricting competition..........

In the result we direct that Clauses 4, 5(a) and (b) and 6 of the agreement, which is the subject-matter of the Registrar's application, shall be void in respect of the restrictive trade practices to which they relate. We further direct that these practices shall be discontinued and shall not be repeated." The Registrar thereupon filed the application dated December 9, 1975, pointing out that the Commission by its order dated 4th August, 1975, had held that Clauses 5(a) and (b) of the impugned agreement prohibiting respondent No. 1 from appointing any persons as the selling agent other than respondent No. 2 and appointing respondent No. 2 as sole selling agents amounted to restrictive trade practices falling under Section 33(1)(a) of the Act, that the order of the Commission declared the said Clauses 5(a) and (b) of the impugned agreement as void in respect of restrictive trade practice to which they relate and it also directed that the practice to which these clauses relate shall be discontinued and shall not be repeated. He pointed out that Clauses 1 and 2 of the impugned agreement referred to respondent No. 2 as the sole distributors, that these references were tantamount to the restrictive trade practice falling under Section 33(1)(a) read with Section 2(o) of the Act. He, accordingly prayed that the order dated 4th August, 1975, may be so amended as to declare Clauses 1 and 2 of the impugned agreement as also void.

5. It is necessary at this stage to refer to a subsequent development which, though not strictly relevant to the application, figured in the arguments by the parties. The Commission by its letter dated 27th October, 1975, decided to consider the question whether the order of the Commission had been complied with by the parties concerned and for that purpose a hearing was fixed on November 14, 1975. In response to this letter respondent No. 1 by its letter dated November 12, 1975, pointed out that the impugned agreement had come to an end by efflux of time on April 29, 1975, and that respondent No. 1 had entered into a fresh agreement with respondent No. 2 on or about 8th July, 1975, which is deemed to have commenced from 30th April, 1975. It was also pointed out that the agreement dated 8th July. 1975, was forwarded by respondent No. 1 to the Registrar for purposes of registration under Section 35 of the Act. It was claimed that the restrictive trade practices complained of by the Registrar in respect of the impugned agreement were discontinued by the respondents and were not repeated in their agreement dated 8th July, 1975, and that the agreement dated 8th July, 1975, met with the directions of the Commission given on 4th August, 1975. It was also submitted that should the Commission desire to modify the agreement dated 8th July, 1975, the respondents were agreeable to abide by the directions of the Commission. It may be.

pointed out that Clauses 1 and 2 of the agreement dated 8th July, 1975, referred to respondent No. 2 as sole distributors as in the impugned agreements.

6. In the meantime, respondent No. 2 submitted to the Commission a memorandum dated November 7, 1975, explaining the steps taken by them to comply with the order after receipt of a certified copy of the same.

The memorandum, inter alia, stated as under ; " The said order had further directed that the restrictive trade practices to which Clauses 4, 5(a) and (b) and 6 related, shall be discontinued and shall not be repeated by " MK " and our company. By virtue of this, some of the clauses of our current agreement with " MK " need to be amended as indicated below: (i) Since the MRTP Commission has struck down Clauses 5(a) and (b) of the previous agreement dated April 24, 1967, which prohibited " MK " from appointing another person as a selling agent in the territory of India, they cannot appoint our company as " sole distributors ". Therefore, the words "sole distributors" appearing in Clauses 1 and 2 of the current agreement dated July 8, 1975, need to be amended to read as simply "distributors".

(ii) Since the Commission has struck down Clause 6 of the agreement dated April 24, 1967, which provided that the goods shall be resold by the distributor at prices to be agreed upon between the parties to the agreement, and has directed " MK " to permit their distributors or dealers to charge prices lower than those mentioned in their price lists, Clause 4 of the current agreement shall have to be deleted..........

Upon receipt on August 22, 1975, of a certified copy of the said order dated August 4, 1975, sent by the Commission under cover of their letter No. 15(2)/A/RTP/74, dated August 20, 1975, we advised "MK" in our letter Ref. MTD/20782 dated August 26, 1975, to amend the current agreement dated July 8, 1975, as indicated above.

Reminders were issued to " MK " in this respect urging them to take steps to amend the said agreement with them, vide our letters Ref.

JSK : MPB : 10880 dated October 21, 1975, and Ref. JSK : MPB : 0054 dated November 5, 1975." The Registrar filed on 13th February, 1976, a letter in which he contended that retention of the words "sole distributors" in Clauses 1 and 2 of the agreement dated 8th July, 1975, was tantamount to restrictive trade practices falling under Section 33(1)(a) read with Section 2(o) of the Act, and, therefore, the respondent should be directed to modify the Clauses 1 and 2 of what the Registrar called the revised agreement so as to bring them in line with the Commission's order dated 4th August, 1975.

7. Respondent No. 1 by an affidavit dated 4th March, 1976, replied to the Registrar's application dated December 9, 1975. It was contended on behalf of respondent No. 1 that in view of the Registrar's letter dated February 13, 1976, he should be deemed to have abandoned his application dated 9th December, 1975. It was also contended that the Commission had no jurisdiction to enlarge the scope of the application by the Registrar which had been heard and disposed of, by addition thereto of matters not originally comprised therein or complained against, that the jurisdiction of the Commission to amend an order already passed was confined only to such matters as were necessary or desirable for proper execution of any specific direction therein given on a specific matter complained against or comprised therein, that the Commission could not add any matters brought in or sought to be introduced as part of the original application by way of an afterthought, and that the agreement between respondent No. 1 and respondent No. 2 having expired by efflux of time in April, 1975, the Registrar's application did not, in any event, lie. It was also contended that the Commission had no jurisdiction or power or authority under Section 13 or Regulation 85 to make any order or to give any direction as was sought by the Registrar by his application dated 9th December, 1975, or to permit the Registrar to amend his application under Section 10(a)(iii) after the Commission had already decided and disposed of that application by an effective order so as to put an end to the proceedings themselves, that the Registrar had made no complaint whatever in regard to Clauses 1 and 2 of the impugned agreement where the words "sole distributors" were used, that in the application the Registrar had only set out Clauses 4, 5(a), 5(b), 6 and 9, that the Commission by its order dated 4th August, 1975, had been pleased to direct that Clauses 4, 5(a), 5(b) and 6 shall be void and that these practices shall be discontinued and shall not be repeated. It was contended that in the Commission's order nothing had been said about Clauses 1 and 2 of the agreement. It was also contended that the said agreement had come to an end in April, 1975, by efflux of time before the Commission was pleased to make its order dated 4th August, 1975. It was pointed out that respondent No. 1 had entered into a new agreement effective from 30th April, 1975, and this, agreement was executed by respondents Nos. 1 and 2 prior to the making of the order by the Commission and the new agreement had received on July 22, 1975, the approval of the Central Government under Section 294AA of the Companies Act which came into force from 1st February, 1975. It was finally submitted that the Registrar's application dated 9th December, 1975, was misconceived and untenable in law.

8. The learned Registrar at the outset pointed out that there was no question of his abandoning his application dated 9th December, 1975, and that his letter dated 13th February, 1976, was in pursuance of the Commission's letter dated 27th October, 1975, for consideration of compliance with the Commission's order dated 4th August, 1975. He referred to Section 37 which, according to him, was for inquiring into restrictive trade practices whether emanating from agreement or not and he emphasised that his complaint to the Commission related to restrictive trade practices arising out of the clauses Of the agreement, some of which were specified. He contended that the Commission had issued a cease and desist order against restrictive trade practices and this would not be effective unless els. 1 and 2 which contained references to " sole distributors " are also declared void along with Clauses 5(a) and 5(b). He referred to Section 13(2) and Regulation 85 and pointed out that application under Section 13(2) for amendment or revocation of the Commission's order can be supported by evidence on affidavit not only regarding material change in the relevant circumstances, but also on any other facts or circumstances on which the applicant relies.

9. The learned counsel for the respondent No. 1, on the other hand, contended that the Commission's order dated 4th August, 1975, only prohibited restrictive trade practices contained by specific clauses impugned by the Registrar and declared void by the Commission, that the Commission had no power to amend its order so as to enlarge the scope of its efficacy, that the restrictive trade practices covered by the Commission's order were those envisaged by clauses themselves, that Clauses 1 and 2 have to be read in the light of the Commission's order as a whole, that the order of the Commission robbed the agreement of its effect in so far as sole distributorship was concerned. He then referred to Sections 37, 13(2) and Regulation 85 and contended that the words " any other fact or circumstances " in the first part of Regulation 85 took colour from the earlier clause, viz., the "material change in the relevant circumstances" and that even taking into account the latter portion of Regulation 85, there was no mistake or error on the face of the record in the Commission's order which called for amendment. He then pointed out that in any case the impugned agreement had expired by efflux of time even before the Commission passed the order, and, therefore, at any rate, the Commission had no power to amend its order in relation thereto. He relied in this connection on the decision of the Allahabad High Court (dated 16th April, 1976, in RTPE No. 6 of 1973) in the matter of Agreement Relating to Nylon Filament Yarn [1974] 47 Comp Cas 323. He contended that the provisions of UK law on the subject were quite different from provisions under the Indian law and that the Indian legislature must be deemed to have deliberately kept up the differences knowing fully well their implications.

10. I do not find any merit in any of the contentions put forward on behalf of respondent No. 1. There is no connection between the Registrar's application dated the 4th August, 1975, for amendment of the Commission's order and the Registrar's letter dated the 13th February, 1976, although the subject-matter of both the communications is in a sense identical. The letter dated the 13th February, 1976, will be the subject-matter of a separate hearing and it cannot prejudice the rights of either party in so far as they arise from the disposal of the application of the Registrar dated the 4th August, 1975.

11. There is some misapprehension in the mind of respondent No. 1 about the exact scope of the Registrar's application. The Registrar was not seeking to amend his own application which initiated the inquiry against respondents Nos. 1 and 2. He is merely seeking to get the order of the Commission in the inquiry amended. There is no question at this stage of embarking on a fresh inquiry or enlarging the scope of an inquiry which has already been concluded.

12. There is also misapprehension in the mind of the respondent about the powers of the Commission to amend its order. The power is not confined only to such matters as are necessary or desirable for proper execution of any specific direction therein given on a specific matter complained against or comprised therein. No doubt the Commission has these powers and these are contained in Section 13(1). But the Registrar was invoking not Section 13(1) but Section 13(2) and according to Section 13(2) any order made by the Commission may be amended or revoked at any time in the manner in which it was made. This has to be read with Regulation 85, which reads as under : " 85. An application under Sub-section (2) of Section 13 of the Act for amendment or revocation of any order made by the Commission in any proceedings shall be supported by evidence on affidavit of the material change in the relevant circumstances or any other fact or circumstances on which the applicant relies. Unless the Commission otherwise directs, notice of the application together with copies of the affidavits in support thereof, shall be served on every party who appeared at the hearing of the previous proceedings and every such party shall be entitled to be heard on the application and the provisions of Section 114 and Order XLVII of the Code of Civil Procedure, 1908 (5 of 1908), shall, as far as may be, apply to these proceedings. " It is clear that even as spelt out by Regulation 85, Section 13(2) permits amendment as a result of material change in the relevant situation or as a result of any fact or circumstance on which the applicant for amendment relies. Moreover, according to the latter portion of Regulation 85, provisions of Section 114 and Order XLVII of the Code of Civil Procedure shall, as far as may be, be applied to these proceedings. This, in its turn, would justify an amendment if there is discovery of new and important matter or evidence which, after the exercise of due diligence, was not within the applicant's knowledge or could not be produced by him at the time when the order was passed.

It can also be justified on account of some mistake or error apparent on the face of the record or for any substantial reason. Even the grounds spelt out by Regulation 85 were sufficiently wide to enable the Commission to amend the order in appropriate cases, let alone the somewhat wider ambit of Section 13(2). The learned Registrar referred to the first portion of Regulation 85 and emphasised that any other fact or circumstance on which the applicant may rely, other than material changes in the relevant situation, would justify an amendment of the Commission's orders. The learned counsel for the respondent contended that any other fact or circumstance must relate to material change in the relevant situation, or at least must be similar to that.

I do not consider it necessary to decide this issue because I am inclined to the view that the Commission has ample power to amend its order if there is an error or mistake apparent from the record or if there is any sufficient reason. It is true that the other sufficient reason meant a reason sufficient on grounds analogous to those specified immediately previously in Order XLVII, rule 1 (vide Chajju Ram v. Neki [1922] LR 49 IA 144; AIR 1922 PC 112). That is to say, the ground must be analogous to mistake or error apparent on the face of the record and the present case falls squarely within the requirements either of the error or mistake apparent from the face of the record or at least within sufficient reason analogous thereto.

13. The Commission clearly directed in its order that Clauses 5(a) and 5(b) of the impugned agreement shall be void in respect of the restrictive trade practices to which they relate. It further directed that the practices shall be discontinued and shall not be repeated. It is clear from the order that restrictive trade practice of which the Commission was seized is something quite distinct and separate from the clauses of the agreement which relate to it. It is also equally clear that the restrictive trade practice of which the Commission was seized is not coterminous with the clauses of the agreement which relate to it. Sometimes, the restrictive trade practice may overlap a part of the clause in the agreement; at other times, as in the present case, it may not only overlap some clauses but it may also appear in other clauses as well. The ambit of restrictive trade practice is often wider than the ambit covered by the specific clauses of the agreement. There is also the possibility of restrictive trade practices surviving the clauses of the agreement. It is for that purpose that the law contemplates not only the declaration of certain clauses of the agreement void in so far as they relate to restrictive trade practices, but it also contemplates discontinuance of the trade practice and forbids repetition of the same.

14. In these premises there is no warrant for the contention of the learned counsel for respondent No. I that the Commission's order dated the 4th August, 1975, was confined to restrictive trade practices contained in the specific clauses impugned by the Registrar. The thrust of the Commission's order was on the restrictive trade practices and no doubt these practices related, inter alia, to the impugned clauses. But that did not mean that they did not relate to other clauses as well, or that they exhausted their stamina only in the impugned clauses. Once the restrictive trade practice was located it had to be expunged from all the clauses, although it might have basically related or closely related to some clauses and remotely related to others. In the present case, the restrictive trade practice of appointing sole distributorship was borne out not only by Clauses 5(a) and 5(b) but also by reference in els. 1 and 2 to the sole distributorship. It was once again not correct on the learned counsel's part to say that the grievance of the Registrar in the application was confined only to Clauses 5(a) and 5(b) in so far as this restrictive trade practice was concerned. The Registrar had specifically referred to the agreement as a whole and he had also emphasised the restrictive trade practice flowing from the impugned Clauses 5(a) and 5(b). The fact, therefore, remained that while the Commission's order directed that the restrictive trade practice of sole distributor ship shall be discontinued and shall not be repeated it left Clauses 1 and 2 of the impugned agreement unscathed. The result was that in one part of the agreement the Commission had struck down the sole distributorship arrangement and in another it left the same intact by reason of its omission to give appropriate directions in respect of Clauses 1 and 2. This was a clear error or mistake apparent from the record. An error can be either of commission or omission and this was an error of omission. It was an error in view of the fact that because of it there was an inherent contradiction in the Commission's order. The Commission could not in one breath denounce sole distributorship and in another breath tacitly approve Clauses 1 and 2 of the impugned agreement. It is immaterial to contemplate the possible consequences of this omission. It may be as the learned counsel pointed out that, in view of the finding of the Commission, the references to sole distributorship in Clauses 1 and 2 had lost their sting. But the fact remained that the order of the Commission was incomplete and self-contradictory in view of its failure to issue any directions in relation to Clauses 1 and 2. This contradiction does not require any detailed debate or any lengthy arguments. It can, therefore, be taken as an error or mistake apparent from the record, or at any rate as sufficient reason analogous to the error or mistake apparent from the record which would justify the amendment of the order.

15. It is not without significance that respondent No. 2 in its memorandum dated November 7, 1975, very fairly accepted that continuance of references to "sole distributors " in Clauses 1 and 2 became anomalous in view of the decision of the Commission regarding the restrictive trade practice of sole distributorship. As a matter of fact, even respondent No. 1 in its letter dated November 12, 1975, had shown willingness to abide by the Commission's order should the Commission find that the clauses of the new agreement did not conform to the principles laid down by the Commission for the old agreement. It is difficult to reconcile this position with the affidavit on behalf of the respondent dated March 4, 1976.

16. There is also no merit in the contention of the learned counsel for respondent No. 1 that in view of the decision of the Allahabad High Court (dated the 16th April, 1976, in Restrictive Trade Practice Enquiry No. 6 of 1973) in the matter of Agreement Relating to Nylon Filament Yarn [1977] 47 Comp Cas 323, the Registrar's application did not He and the Commission had no power to amend its order since the impugned agreement had expired by efflux of time even before the Commission passed its order dated 4th August, 1975. The Allahabad High Court's decision related to the jurisdiction of the Commission to pass a substantive order in the inquiry or to carry on the inquiry till the passing of that order. In the present case, the question is quite different. The inquiry has already been concluded and the final and substantive order had already been passed by the Commission. All that I am concerned with is the necessity or otherwise of amending the order.

With respect, the ratio of the decision of the Allahabad High Court has no application to the question. As far as the jurisdiction is concerned, the question is closed. The die is cast and the bolt is shot. The narrow question before me is whether the order as it was passed should be allowed to remain or whether any error or mistake apparent therefrom should be removed. That question has to be decided according to law and considering relevant law, as discussed earlier, I see no other alternative but to accept the Registrar's application and direct that the order of the Commission be amended by introducing in para 7 in the first line numbers " 1 and 2 " before number " 4 ", so that the amended paragraph will read as under : " In the result, we direct that Clauses 1, 2, 4, 5(a) and 5(b) and 6 of the agreement which is the subject-matter of the Registrar's application shall be void in respect of the restrictive trade practices to which they relate. We further direct that these practices shall be discontinued and shall not be repeated."


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