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Sivakasi Chamber of Match Vs. Western India Match Co. Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
AppellantSivakasi Chamber of Match
RespondentWestern India Match Co. Ltd.
Excerpt:
1. messrs. sivakasi chamber of match industries, the complainant in the present enquiry, filed an application dated january 12, 1976, praying that the respondent be ordered to discontinue and not to repeat the restrictive trade practices of manipulating prices in a way that these are likely to have the effect of preventing, restricting or distorting competition, by underselling their matches in certain areas, so as to drive out competition, pending hearing and final disposal of the notice of enquiry in the restrictive trade practices enquiry no. 3 of 1973. it enclosed along with the application three photostat copies of three vouchers, viz., one cash memo issued by bandukwala trading company, sholapur, dated december 19, 1975, another cash memo issued by pahlomal bharumal, gondia, dated.....
Judgment:
1. Messrs. Sivakasi Chamber of Match Industries, the complainant in the present enquiry, filed an application dated January 12, 1976, praying that the respondent be ordered to discontinue and not to repeat the restrictive trade practices of manipulating prices in a way that these are likely to have the effect of preventing, restricting or distorting competition, by underselling their matches in certain areas, so as to drive out competition, pending hearing and final disposal of the notice of enquiry in the Restrictive Trade Practices Enquiry No. 3 of 1973. It enclosed along with the application three photostat copies of three vouchers, viz., one cash memo issued by Bandukwala Trading Company, Sholapur, dated December 19, 1975, another cash memo issued by Pahlomal Bharumal, Gondia, dated December 31, 1975, and a sale memo issued by Pahlomal Bharumal, Gondia, dated December 20, 1975.

2. It is alleged in the application that the members of the Sivakasi Chamber of Match Industries have been suffering on account of the continuous practices of the respondent of underselling their products in selected areas so as to drive competitors out of business wherever the respondent believed they were becoming strong. The following table giving the particulars from the vouchers enclosed is given in the application in support of the allegation : 3. It is pointed out that while the official price of matches as sold by WIMCO to wholesalers is Rs. 70 per 5 gross the wholesalers were entitled to certain free gifts which in effect reduced the price to the wholesalers. It is further contended that in view of the fact that it had taken a long time for the processing of the complaints by the Sivakasi Chamber of Match Industries it was essential that an interim order for relief should be granted to them.

4. The respondent by its reply dated February 19, 1976, contended that the Commission did not have the jurisdiction to try or entertain the application or to grant interim injunction as prayed for or otherwise and that the application was outside the ambit of the enquiry and was not maintainable. It was also contended that the application should not be granted on account of laches and that it was in fact an abuse of the process of the Commission. It was pointed out that the notice of the enquiry was issued as early as October 1, 1973, that the reply was filed by the respondent on March 21, 1974, that the director had moved an application for further directions on September 16, 1974, that by an order dated October 28, 1974, the Commission was pleased to give the directions, and that the present application was Sled as late as January 12, 1976, i.e., more than two years from the date the respondent was served with a notice of enquiry and more than a year after the Commission had given certain directions. It was also contended that the complainant had no locus standi to make the application, that the application was in fact barred by the law of limitation, that the allegations made in the application were totally vague and without any material particulars and that the allegations were made without any affidavit in support, that the complainant had deliberately suppressed the facts about the various brands of match boxes manufactured by competitors of WIMCO sold in the very markets and that the very relief claimed by the complainant would distort competition in the market and will by itself be a restrictive trade practice. It was pointed out that the respondent was not underselling in any selected area or otherwise and that the members of the complainant-association had not been suffering and that the respondent was not trying to drive out competition as alleged. It was submitted that in fact the respondent's share had declined in the market year by year, that the number of competitors in the market had increased and the competitors had no disadvantages as alleged or otherwise, that there was expansion of competition in general, that there was increase in the number of members of the complainant-association in particular, that there were new entrants in the business and that the total sales of the respondent had declined both in aggregate and percentage. It was also pointed out that the table given in the application was misleading, that the annexures to the application were not bills of the respondent, and that the complainant should be put to strict proof of the vouchers. It was also pointed out that, in fact, the various competitors including the members of the complainant-association gave discounts either in the shape of coupons which are encashable or otherwise, that the said discounts were not uniform and varied from period to period, market to market and party to party even in the same market, and that, in fact, the selling rate of competitors would vary from Rs. 58 to Rs. 69 per 5 gross container after taking into account the various discounts given by the competitors. Reference was made to manufacturers of Chavi matches, Kuil brand matches and " No. 27 " brand matches and it was contended that they enclosed coupons in their 5 gross containers ranging up to 25 per container of 5 gross which sells between Rs. 58 to Rs. 69 per container.

5. By an order dated February 20, 1976, the Commission directed the complainant to file a proper affidavit in respect of his application for interim relief within seven days and to furnish a copy thereof to the other party. Accordingly, one Shri R. Venkataramau, Manager, Sivakasi Chamber of Match Industries, filed an affidavit dated February 23, 1976. In this affidavit Shri Venkataraman stated that facts contained in para. 2 of the application by the complainant were true to the information received by him from several members of the chamber, that the members were not agreeable to allow themselves to be identified as source of information due to the fear of losing their share in established markets on account of any retaliatory action the respondent might take. He also stated that the facts stated in para. 3 of the application, which also included the table reproduced earlier, were true to the information received by him from the Pioneer Match Sales Depot, Central Avenue, Nagpur, except regarding competitors' average rate. Regarding the competitors' average rate, according to him, the facts were true according to information received by him from members of the chamber who were not agreeable to allow themselves to be identified as source of information.

6. In reply to the affidavit of Shri Venkataraman, the respondent filed a reply in the form of an affidavit by Shri V.K. Bhalla, a principal officer of the respondent. This affidavit is dated April 9, 1976, and to this affidavit were enclosed two affidavits, one by Shri K.K.Deosthale, dated April 9, 1976, and another by Shri N.M. Puthran also dated April 9, 1976. Shri Bhalla's affidavit reiterated the main point set out in the earlier reply of the respondent dated February 19, 1976, In addition it was contended in the affidavit that the complainant had deliberately suppressed the facts and particulars about, the brands, manufacturers, selling prices, discounts, prize schemes, cash coupons, benefit schemes and real rates of the various branch of WIMCO's competitors' match boxes sold in the said markets. The affidavit included two statements giving comparative prices of matches for 5 gross containers at Sholapur and Gondia, and, according to these tables, the selling prices of Chavi, Kuil, No. 5, Ajantha, Lingam, Kalapai, Ram, Deer Head, were Rs. 62, Rs. 61, Rs. 59, Rs. 61, Rs. 56.50, Rs. 55, Rs. 60, and Rs. 58.50, respectively, at Sholapur, while in Gondia the selling price of Chavi, Gulab and Manohar were Rs. 64, Rs. 68.50 and Rs. 62.50 respectively. It was emphasised that in the two markets, Chavi brand which was common, did not have the same selling price. It was also contended that the. selling prices indicated in the affidavit of Shri Venkataraman were totally false and misleading. It was also contended that the affidavit of Shri Venkataraman had no value unless the sources of information were specified, and the allegation of any retaliation by the respondent was made only as a cloak to protect the false and misleading statements which had been made in the application.

7. In his affidavit Shri Deosthale stated that he was working as a salesman of WIMCO in Nagpur and looking after the sales of the company in and around Nagpur including at Gondia. He stated that the information in the complainant's application that WIMCO's rates were Rs. 64.15 and Rs. 65.32 per case compared with its competitors' average rate of Rs. 64.50 and Rs. 66 in the Gondia market, was wholly misleading and false. According to Shri Deosthale, the Chavi brand of matches was sold to the wholesalers at Rs. 64 per 5 gross container, that Pioneer Match Works of Sivakasi were the manufacturers of Chavi brand, that they floated several prize schemes, that one of the schemes involved distribution of cash coupons ranging from Rs. 0.50 to Rs. 5, that the other schemes entitled the wholesalers to gifts like steel almirah, hero cycles, fans, wall-clocks, stainless steel tiffin box, alarm clock, steel chairs, thermos flasks, steel plates, steel glasses, handbags, plastic bottles, etc., and that the price of Chavi matches per container of 5 gross would be much lower than what had been affirmed in the application. In regard to Gulab brand, he stated that the manufacturers gave 6 dozen boxes free for 5 gross container so that the price of Rs. 68.50 was actually reduced to Rs. 60.65. He also stated that Gulab brand manufacturers had given cash prizes of Rs. 2 in each container and the effective price of Gulab brand was Rs. 58.65. In regard to Manohar brand, the price per bundle was Rs. 62.50. In support of these averments Shri Deosthale enclosed photostat copies of certain bills.

8. Shri N.M. Puthran stated in his affidavit that he was working as a salesman in Sholapur and neighbouring areas. He has stated that information given by the complainant that as against the rates charged by WIMCO, viz., Rs. 66.50 per container of 5 gross, the competitors' average rate was Rs. 67 to Rs. 69 in the Sholapur market, was wholly misleading and false. According to Shri Puthran, the brands which were sold at Sholapur market were Chavi, Kuil, No. 5, Ajantha, Lingam, Kalapai, Ram and Deer Head. The Chavi brand was sold to the wholesaler at Rs. 62 per 5 gross container. In addition, the manufacturers of Chavi brand had floated various prize schemes. One of the schemes involved distribution of cash coupons which were inserted in every 5 gross packet, and the cash coupon distributed ranged up to the value of Rs. 3. The Kuil brand of matches was sold at the rate of Rs. 61 per container. In addition, Kuil had floated various gift schemes and taking into account the various discounts and prizes the net price of Kuil was much lower than even the price of Rs. 61 per bundle. In regard to No. 5, Shri Puthran stated that this brand was sold at the rate of Rs. 59 per case. Ajantha was sold at the rate of Rs. 61 per case, Lingam at the rate of Rs. 56.50 per bundle, Kalapai was sold at the rate oi Rs. 55 per bundle, Ram was sold at Rs. 60 per bundle and Deer Head was sold at Rs. 58.50 per bundle. Shri Puthran, therefore, emphasised that the prices oi the competitors of WIMCO was not between Rs. 67 to Rs. 69 as affirmed by the complainant but it was in fact much lower. According to him, WIMCO was not underselling their products continuously or otherwise in the Sholapur area and that it was the members of the Sivakasi Chamber who were selling their matches below the price of WIMCO matches.

9. The complainant filed a rejoinder dated 15th April, 1976, to the reply of the respondent. This rejoinder was supported by an affidavit by Shri R. Verikataraman. In the rejoinder the complainant stated that the application for interim injunction was not made earlier but was made at the time it was made because the complainant had received a large number of complaints from its members and because of the commercial attitude of the respondent of undercutting on a large scale at selected places. It was also pointed out that the respondent was indulging in the restrictive trade practice of undercutting the competitors, that WIMCO by various devices was underselling the small-scale manufacturers, that on account of the said devices small-scale manufacturers were driven to lower their prices and thus lowering their already slender margin of profit to the level of loss.

It was also pointed out that WIMCO still had at least 40% of the production of matches and the market, that the nearest competitor of WIMCO did not produce even 5% of the production, that other manufacturers were having even less share, that there are more than 1,500 small-scale manufacturers, that the average share of each of them would come to 0 04%. It was also pointed out that figures given by the complainant related to January, 1976, and the period prior thereto, while the figures given by the respondent related to March-April, 1976, that the members of the complainant-association were compelled to bring down their prices because of the practice employed by WIMCO. It was also pointed out that the delay in the proceedings before the Commission had occurred because of the peculiar nature of the procedure and also because of an application under Section 37(2) by the respondent. The affidavit of Shri Venkataraman was in support of the rejoinder and indicated the sources from which the contentions in their rejoinder were made. The rejoinder also had two enclosures, one was a photostat copy of a cash memo dated December 30, 1976, which showed that the price of Chavi was Rs. 69 per bundle. Another enclosure was a circular from Bombay Wirnco Matches Distributing Co., Clive Road, Bombay, giving details of schemes depending on different targets of quantities of sales.

10. At the hearing of the application the learned counsel for the complainant contended that the complainant was not at all responsible for the delay in the proceedings, that although the first complaint was made as early as in 1971 the complainant heard about the proceedings only in 1974 in connection with the application of the respondent under Section 37(2), that the matter was delayed because of consideration of the application of the respondent under Section 37(2) and that it, is because of the passage of time that the complainant was forced to file an, application for interim relief. He next contended that there was no doubt about the Commission's jurisdiction to give interim relief and relied greatly on the Supreme Court's decision in the case of ITO v.M.K. Mohammed Kunhi [1969] 71 1TR 815 (SC). The ratio of that decision, according to him, was that an express grant of statutory power carried with it by necessary implication the authority to use all reasonable means to make such grant effective. The case was concerned with the powexs of the Income-tax Appellate Tribunal and it was held that the powers which had been conferred by Section 254 of the I.T. Act on the Appellate Tribunal must carry with them by necessary implication powers and duties incidental and necessary to make the exercise of those powers fully effective, and that the statutory power carried with it the duty in proper cases to make such orders for staying proceedings as would prevent the appeal if successful from being rendered nugatory. He took the Commission through the whole judgment in the case and contended that on the same basis the Commission had the power to issue interim injunction or else the Commission's final order would be rendered nugatory. He also referred to Order 39, Rule 2, of the Code of Civil Procedure, and contended that even on the basis of that rule the Commission had the power to issue interim injunction. He also pointed out that regln. 15 in terms made provisions of the Code of Civil Procedure applicable in so far as they were not inconsistent with the provisions of the Act or the Regulations. He then emphasised that it was not his intention to lead any detailed evidence and all the evidence relied upon was contained in the papers enclosed to the application of the complainant dated January 12, 1976, and the rejoinder dated July 15, 1976. According to him, the evidence led to the inevitable conclusion that WIMCO was a dominant undertaking in the manufacture of matches and that by adopting a policy of undercutting the competitors at selected pockets it was distorting competition in art unmistakable manner.

11. The learned Director of Investigation contended that the complainant should not be taken to have locus standi in the proceedings automatically, that Section 18(2) gave discretion to the Commission to permit or refuse permission to any person who wanted to be a party to the proceedings and this discretion should be exercised with utmost caution and that often complainants had their own axe to grind and were really not interested in advancing the interests of the general public.

He also submitted that the Commission no doubt had jurisdiction to issue interim injunction especially in view of the decision of the Supreme Court relied upon by the learned counsel for the complainant.

He, however, drew the attention of the Commission to the observation of the Supreme Court in the very case that the power of stay should not be exercised in a routine way or as a matter of course and this should be granted only when a strong prima facie case was made out and it would be granted only in most deserving and appropriate cases where the Tribunal was satisfied that the entire purpose of the proceedings would be frustrated or rendered nugatory by allowing the practice complained against to continue during the pendency of the enquiry.

12. The learned counsel for the respondent contended that the application made by the complainant was mala fide and amounted to abuse of the process of the court. He referred to the notice of enquiry dated October 11, 1973, issued by the Commission and the two complaints dated 20th April, 1971, and 31st May, 1972, received from the complainant which were enclosed with the notice and pointed out that the injunction applied for bore no relation whatsoever to any item complained against.

According to him, the complaint was against the respondent purchasing matches from factories in the small-scale sector and selling them with its own trade marks. The allegation was against unlawfully avoiding payment of higher rate of excise duty and with that advantage underselling the matches to the detriment of other small factories. The injunction sought was in respect of a trade practice which is not referred to in the complaint. He also pointed out that there were considerable laches on the part of the complainant and injunction being an equitable remedy should not be extended to the complainant on account of the laches. He pointed out that the respondent had given a statement of their case as early as March 21, 1974, and, the Commission had issued directions on the application of the Director of Investigation as early as October 28, 1974. But for more than one year the complainant had not come to the Commission with any application for injunction. He pointed out that at least from February, 1975, the complainant was actively on the scene and yet till the date of the present application, i.e., January 12, 1976, had not bestirred itself to take any action. He referred to regln. 74(1) and contended that the application for interim injunction should have come seven days after the pleadings were closed. He stated that the respondent's application under Section 37(2) had no relevance to the complainant's duty to tile the application in good time. He also printed out that the very prayer in the application was anti-competitive in its consequences because it sought to bar the respondent from any healthy competition in the trade.

He also pointed out that there was no proper affidavit in support of the application, and that the affidavit when made was full of fundamental defects. He emphasised that the affidavit of Shri R.Venkataraman studiedly avoided indications of the sources of information and such an affidavit, according to him, had no value whatsoever in the light of Order 19, Rule 3. He also relied on the decisions in State of Bombay v. Purushottam Jog Naik, AIR 1952 SC 317 and 62 BLR 799, 65 BLR 584 (sic). He then took the Commission through the reply of the respondent dated April 9, 1976, and the affidavits of Shri Deosthale and Shri Puthran which are already referred to earlier.

He-contended that the complainant was guilty of bad faith because it had suppressed material facts in the affidavit which was filed on its behalf by Shri Venkataraman. He emphasised that averments made in the affidavits of Shri Deosthale and Shri Puthran on behalf of the respondents were not contradicted. He pointed out that the affidavit of Shri Venkataraman lacked particulars and the few particulars it contained were misleading. According to him, the reference to average price of the competitors was most misleading.

13. The learned counsel for the respondent next contended that the Commission had no jurisdiction to issue such interim injunction. He stated that there was clear distinction between inherent powers and implied powers and there was no provision in the Act from which the implied power to issue injunctions could be read. He pointed out that under the old U.K. Act, as it was enacted in 1956, the Restrictive Trade Practices Court could not issue interim injunctions and it was only after the amendment of the Act that a specific power to issue interim injunction had been given subject to very strict requirements.

He also made a distinction between stay and injunction and contended that injunction affected the relative rights of parties whereas stay did not do so. According to him, an injunction would disturb status quo ante whereas stay would just preserve it. He also referred to the decision of the Delhi High Court in Raman Hosiery Factory v. J.K.Synthetics Ltd. [1975] 45 Comp Cas 374 and the English cases referred to therein, viz., (1) Daily Mirror Newspapers Ltd. v. Gardner [1968] 2 QB 762 (CA), (2) Brekkes Ltd. v. Cattel [1972] Ch 105, and contended that if injunction could not be given by the High Court a fortiori the Commission could not give injunction in the circumstances of the case.

He next pointed out thai the powers of the Commission were very much circumscribed, it had only limited powers of a civil court, that these powers were defined in Section 12(1) of the Act and beyond these powers the Commission did not have any power of the court. He also pointed out that no doubt the Commission had powers to make certain orders under Section 37(1) but those orders could be passed only when the inquiry was completed. There was no express provision under Section 37(1) for granting an interim injunction and there was nothing to justify any such provision by necessary implication. He pointed out that under regln. 15 of the MRTPC Regulations, the provisions of the Code of Civil Procedure applied mutatis mutandis to the proceedings before the Commission in so far as such provisions were not inconsistent with any of the provisions of the Act, but regln. 15 could not confer powers which were not conferred by the Act and that the powers conferred by the Act were circumscribed by provisions of Sections 12(1) and 37(1).

He also pointed out that regln. 74 and particularly regln. 74(3) made no mention of an application for interim injunction.

14. He next contended that the decision of the Supreme Court, on which reliance was placed by the learned counsel for the complainant, was based on implied and not inherent powers and that very wide powers could not be implied through the interstices of a statute. He relied in this connection on the decisions in State of Orissa v. Member, Sales Tax Tribunal [1972] TLR 1735 ; [1971] 28 STC 652 (Orissa), Haji Mahabub Hossain v, Biswanath Nandy, AIR 1971 Cal 381, Patna Electric Supply Workers Union v. A. Hassan, AIR 1958 Pat 427, Rameshwar Dayal v.Sub-Divisional Officer, AIR 1963 All 518, and Mulimani Sanna Basavarajappa v. Basavannappa, AIR 1959 Mys 152. He contended that no Tribunal had inherent powers and that in the Supreme Court case relied upon by the learned counsel for the complainant, implied powers were spelt out from the express powers of the Tribunal and they were so spelt out in order to preserve the continuance of the status quo.

15. He next contended that the complainant had no locus standi in the present proceedings and that in any case he had no right to file an application for interim injunction. He referred to regln. 73(5) and emphasised that according to that regulation tbe complainant was only a party with limited rights and that his only right was that of being heard in the proceedings. He emphasised that the complainant had no right to file a rejoinder nor had he any right to file the pleadings, and this according to him was clear from reglns. 67 to 69 and 74(1). He then pointed out that Sections 10(a)(i) and 11 were concerned with the complainant as a source of enquiry and that Sections 17 and 18, particularly Sections 17(2)(b) and 18(2), made it clear that it was within the discretion of the Commission to allow any party to be present at the hearing or to determine the extent to which persons interested or claiming to be interested in the subject-matter of any proceeding before them were allowed to be present or heard.

16. The learned counsel for the complainant in his reply once again read the original notice and the complaints and contended that the terms of the complaints were quite broad and quite justifiably included the charge of underselling in respect of which the complainant wanted an injunction. According to him, the central charge was in respect of manipulation of prices and it was clear from paras. 13 and 14 of the respondent's reply dated the 9th April, 1976, to the complainant's application that the respondents had admitted that they were giving concessions by way of reduction in prices or gifts, etc. He also referred in this connection to the statement of the case by the respondents and the rejoinder of the Director of Investigation to show that manipulation of prices was a major charge. He again contended that the decision of the Supreme Court in the case of Mohammed Kunhi [1969] 71 ITR 815 clearly supported his claim, that the difference between inherent and implied powers was not relevant in the present controversy, that preservation of status quo was not the necessary condition for allowing an interim injunction, and that the ultimate determinant should be balance of convenience. He referred in this connection to Order 39, Rule 2, and to AIR 1963 Patna 263 (sic). He emphasised that WIMCO was a dominant undertaking in the manufacture of matches and they were giving discriminatory discounts or charging discriminatory prices and these two aspects according to him were enough to justify an interim injunction, as they would establish a restrictive trade practice. He emphasised that the complainant was the person directly affected by the restrictive trade practice, that the Director of Investigation came only for the purpose of Section 11 to ascertain whether the complaint deserved to be inquired into, that once the inquiry started, the complainant was a full-fledged party who had an effective right to be heard, that there was a basic difference in the nature of the inquiry before the Commission and a civil suit, that the impact of the inquiry before the Commission was quite wide and that even consumers not associated with the complainant should be in a position to participate in the proceedings before the Commission. He contended that even if regln. 73(5) were not there a complainant could still be a party to the proceedings and that in the present case the Commission had already given copies of pleadings to the complainant. He also pointed out that Section 18(2) did not refer to the party to the proceedings but to persons and that as far as parties were concerned they had a right to participate in the proceedings.

17. I do not consider it necessary in the circumstances of the present case to decide the larger issue whether the Commission has power to issue interim injunction in regard to restrictive trade practices alleged, because I am inclined to the view that even assuming that the Commission had powers to issue such an. injunction, the circumstances of the present case did not warrant such an injunction. Before examining the circumstances of the present case it would, however, be necessary to dispose of another contention, viz., whether the complainant in the present case had a locus standi to make an application for interim injunction that it had done. This question has to be decided in the light of the provisions in the Monopolies and Restrictive Trade Practices Act and the Monopolies and Restrictive Trade Practices Commission Regulations, 1974, Section 10(a)(i) of the Act empowers the Commission to inquire into any restrictive trade practice upon receiving a complaint of facts which constitute such practice from any trade or consumers' association having a membership of not less than 25 persons or 25 or more consumers. There can, therefore, be no doubt about the credentials of a trade or consumers' association as a source of inquiry into restrictive trade practices.

Section 11 enjoins on the Commission to call for the preliminary investigation to be made by the Director of Investigation in the case of a complaint under Section 10(a)(i) for the purpose of satisfying itself that the complaint requires to be inquired into. If the finding of the Director of Investigation was that the complaint did not require to be inquired into, the matter was closed. But if the finding of the Director was that the complaint required to be inquired into, the Commission had no other alternative but to inquire into it. In regard to the inquiry the Commission has powers to regulate the procedure and conduct of its business under Section 18(1)(a) subject to the provisions of the Act. Under Section 66(1) also the Commission had power to make regulations for the efficient performance of its functions under the Act. It is under these provisions that the Commission had framed the regulations which are called the Monopolies and Restrictive Trade Practices Commission Regulations, 1974. The two statutory provisions which were particularly referred to in the arguments were Sections 17(2) and 18(2). Section 17 was concerned with the question whether the hearing of the proceeding before the Commission should be in public or should be in camera. Section 17(2) provided that if it was desirable to do so because of the confidential nature of any evidence or matter or for any other reason the Commission may give directions as to the persons who may be present thereat. It is conceivable that for a certain part of the proceedings under Section 10(a)(i) the complainant may be barred from the proceedings, although the purpose of Section 17(2) seems to be to bar persons who have no interest in the outcome of the proceedings or to prevent publicity of the statements and allegations and counter-allegations made in the course of the proceedings. The newspaper representatives or business rivals of the respondents may be asked to clear out when the proceedings are on. Section 18(2) is more comprehensive. It gives the Commission entire discretion to determine the extent to which persons interested or claiming to be interested in the subject-matter of any proceeding before it are allowed to be present or to be heard either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceedings. It leaves the Commission free to decide on the circumstances of each case about the extent of participation of any persons interested or claiming to be interested in the subject-matter of any proceeding before it. It is well to remember that Sections 17 and 18 apply to all the proceedings before the Commission and are not confined to inquiry into restrictive trade practices. The ambit of the powers is, therefore, quite wide and it is within this ambit that the regulations have been framed, and unless the regulations overstep the bounds of the statute, they lay down the framework within which the Commission has decided to work. For the purpose of the present case, the regulations lay down the framework within which inquiry into restrictive trade practices is carried on.

These provisions are given in Chap. IX of the regulations.

18. The regulations contained in Chap. IX, viz., reglns. 53 to 84, relate to inquiry into restrictive trade practices. According to regln.

53(1), the complaint under Section 10(a)(i) shall contain the facts complained of which constitute the restrictive trade practice. This complaint has necessarily to be made by the complainant. Under regln.

58, proceedings under Section 37(1) are initiated by notice to person/persons against whom allegations of restrictive trade practice are made. Regulation 61 provided that the Commission shall cause a copy of the notice to be served on such parties as the Commission may decide, and such out of those parties, as the Commission may direct, shall be respondents to the proceedings. This leaves discretion to the Commission to serve the notice on the complainant. Be that as it may, every respondent, who has entered an appearance, has a right to reply to the notice and a copy of the reply to the notice is to be sent to the Registrar in cases initiated under Section 10(a)(iii) and in all other cases to the Director of Investigation. The complainant is not, as a matter of right, entitled to a copy of the reply. Similarly, under regln. 68, the respondent is to produce for the inspection of the Registrar or the director documents on which he relies. Here also, the complainant is out of the picture. Under regln. 69, it is the Registrar or the Director of Investigation who has a right or an obligation to file a rejoinder with the Secretary of the Commission but the complainant has no such right or obligation. Regln. 70 refers to the power of the Commission to require a pleading or a supplemental pleading from any of the parties, and this regulation is not specific about' the parties which can be called upon to file a pleading or a supplemental pleading. But documents given under regln. 70 are not among documents to which the complainant has access under the discretion of the Commission under regln. 73(5). It would, therefore, appear that the complainant is not a party for the purposes of regln.

70. If he cannot get copies of documents given under regln. 70 by others, it follows that he could not give such documents himself.

Similarly, regln. 71 empowers the Commission to strike out the whole or any part of a reply, rejoinder, pleading or supplemental pleading which appears to the Commission to be frivolous, vexatious or irrelevant on the application of any party. On the same considerations which are valid for regln. 70 the complainant cannot be said to be a party, which can, as of right, make such an application. Regln. 72 deals with amendments of notice of enquiry and pleading and regln. 72(4) provides that the copy of the amendment shall be furnished to all other parties to the proceedings. But regln. 73(5) makes it clear that the complainant cannot get them as of right.

19. It is regln. 73(5), which is, so to speak, the crux of the matter.

It provides that any complainant, applicant, informant or Government authority, who makes reference under Clause (a) of Section 10 shall, if he or it is not a party to the proceedings, be deemed to be a party and shall be entitled to be heard in the proceedings. It goes on to say that the Secretary may, and if so directed by the Commission, shall furnish to him or it, i.e., complainant, applicant, informant or Government authority, a copy of the documents filed with him under reglns. 53, 54, 55, 66, 67, 69 and 72. It is clear from this regulation that it presupposes the possibility of a complainant not being a party to the proceedings in certain circumstances, without the provision in regln. 73(5). It goes on to provide that it shall be deemed to be a party and shall be entitled to be heard in the proceedings. Entitlement to be heard is a limited right and will not advance the cause of the complainant to any noticeable degree, Section 18(2) clearly enumerates some of the rights of persons, participating in the proceedings, viz., the right to be present, the right to be heard, the right to cross-examine witnesses, the right to otherwise take part in the proceedings. The right to be heard is only one of the rights and has to be clearly distinguished from the right to otherwise take part in the proceedings. The right to be heard is, therefore, a limited right.

There is, however, nothing in the regulations to confine the right to the final hearing. The word used is " proceedings " and it would cover the proceedings from the filing of the complaint to the passing of final order under Section 37(1). The Regulation goes on to say that it would be within the Secretary's discretion to furnish or not to furnish a complainant with copies of documents filed with the Secretary under reglns. 53, 54, 55, 65, 67, 69 and 72. These documents include memoranda of appearance given by the respondents, reply given by the respondents, rejoinder given by the applicant and amendments ordered by the Commission. It is clear that the matter is entirely within the discretion. of the Secretary of the Commission and the Commission, and that unless the Commission orders the Secretary to furnish copies of these documents to the complainant he is not entitled to the same. It clearly envisages the possibility of the Commission refraining to direct the Secretary to furnish copies of these documents. It is significant that while regln. 72(4) provides that the copies of the amendment shall be furnished to all other parties to the proceedings, regln. 73(5) leaves it to the discretion of the Secretary and the Commission whether the copies of the amendment shall be furnished to the complainant. This would suggest that parties referred to in regln.

72(4) were, so to speak, full-fledged parties, while parties referred to in regln. 73(5) were parties with limited rights.

20. Reglns. 74 and 75 have to be read in this context. Under regln.

74(1) only the Registrar or the director could apply for directions with regard to the preparations for the final hearing and these directions could include amendment of the notice of hearing, delivery of further and better particulars, delivery of interrogatories, discovery or further discovery of documents or inspection thereof, etc., etc. Only if the Registrar or the Central Government or the State Government or the Director of Investigation does not make an application for directions, regln. 74(6) provides that the respondent may apply for directions. It is regln. 75(1) which gives a right to any party on whom the notice of application for directions by the Registrar or the Director or the respondent is served, to apply for directions as to any matter capable of being dealt with on an interlocutory application in the proceedings. , Now, notice of application for directions has to be served by the Registrar, the State Government, the Central Government or the Director of Investigation, as the case may be, under regln. 74(2) on all parties to the proceedings who have entered appearance. In the context of the earlier regulations, this can only mean that the reglns. 74(2) and 75(1) refer to what, for the sake of convenience can be called full-fledged parties. If the Registrar had made the application under regln. 74(1), the respondent could apply under regln. 75(1) for directions in respect of matters capable of being dealt with in an interlocutory order. If the respondent had first applied under regln. 74(6), the Registrar could apply for directions under regln. 75(1). The complainant who cannot claim as of right to get even replies of the respondent or the rejoinder ot the applicant cannot reasonably be included in the category of parties referred to in that regulation.

21. There is no provision in the Regulations about the right of any party, whether full-fledged or limited or deemed, to apply for interim injunction. Even the question whether the Commission has power to grant such an injunction is a subject matter of controversy. If, however, it is assumed for the purposes of the present case, that the Commission has that power, it is clear that the Registrar or the Director has an implied right to apply for the same. Similar right must also be attributed to the complainant because if he has a right to be heard under regln. 73(5) he canalso be heard to say that unless an interim injunction is given, the purpose of the whole inquiry would be defeated. He may give reasons which may not impress the Registrar or the Director, but he may like to take a chance with the Commission, He would be within his rights in making this submission to the Commission as an exercise of his right to be heard. As stated earlier, the right to be heard is not confined to, the final hearing and at any stage of the proceedings, if from his point of view it is crucial, the complainant can make an application for being heard and according to the merits of his application the Commission may or may not allow his submis sions. The fate of his submissions will depend on the nature and relevance of the submissions, on his own credentials as complainant, the nature of the complaint, the nature of the restrictive trade practice alleged, the stage of inquiry at which the request is made, the ground given for the request, etc., etc. But his right to be heard undoubtedly includes the right to submit to the Commission that an interim injunction should be issued if the inquiry on which the Commission had embarked was not to be defeated, or if the damage likely to be caused by the perpetuation of the restrictive trade practice was to be effectively halted. While, therefore, the complainant was suffering from disabilities under the Regulations, as contrasted with the other full-fledged parties to the proceedings like the applicant or the respondent, there was no bar to his applying for interim injunction. The most appropriate stage for making that application would no doubt be the time of making the complaint, but since the right of being heard is avail able at any stage of the proceedings, the right to make this submission may be exercised at any time, subject of course to the consequences that would flow from delay or laches.

22. But even on the footing that the complainant had a right to make an application for interim injunction, I am not satisfied on the facts and in the circumstances of the present case that the injunction prayed for is warranted. In the first place, there is considerable merit in the contention put forward on behalf of the respondent that injunction is prayed for by reference to a trade practice which is not spelt out in any of the original complaints. In the complaint dated the 28th April, 1971, the following is the relevant portion referring to purchase by WIMCO of matches from the small-scale sector I " The mechanised sector has recently introduced a scheme to purchase matches with their trade marks from factories in small-scale sector and created a very serious situation. In other words the monopoly mechanised sector is lawfully avoiding payment of higher rate of excise duty by getting their product manufactured by factories in hand-made sector. With this advantage they are able to undersell such matches to the detriment of other small factories. Moreover by such action the monopoly mechanised sector 'Wimco' are able to get over the restriction imposed by the Monopolies and Restrictive Trade Practices Act, 1969, It may apparently look today as if the mechanised sector is helping small sector in marketing their product. But we are very much afraid that if the monopoly mechanised sector is allowed to continue this practice, it would in due course eliminate the very existence of small sector as independent units.

We would request the Commission to take suitable action to put an end to this malpractice by the monopoly mechanised sector and save the unpreviled (sic) handmade sector." 23. The complaint in this paragraph is regarding the purchase by WIMCO of part of its requirement of matches from the small-scale sector. The advantages claimed by this practice for WIMCO were savings of excise duty and circumventing of the provisions of the MRTP Act. With these advantages, it was implied that WIMCO was underselling the small-scale sector. There is no suggestion here of any selective underselling in pockets where competition with hand-made sector was keen and WIMCO was reducing its prices to destroy the units of the small-scale sector. The suggestion, as a matter of fact, was that, all over the country, wherever small-scale sector was operating, WIMCO had the same advantages as the small-scale sector in respect of excise duty and was pressing home its other advantages flowing from its dominant position.

24. In the complaint dated the 13th May, 1972, the following is the passage relevant to the trade practice alleged : " We are enclosing bills issued by Wimco Depot at Kanpur and Mathura for the sales of their own production, Tekka brand and sale of matches purchased by Wimco from hand-made sector with the registered trade mark of Wimco, namely. Three Monkeys and Lucky Seven. You will find that the basic price charged by Wimco for both these varieties of matches are the same, i.e., Rs. 8.97 per gross. But an additional incidence of D/D charge of Rs. 0.73 per gross is collected on the sale of their own production, Tekka brand, and they allow cash discount and price line discount of (sic)30 per gross on sale of matches purchased by them from handmade sector. So the real selling price of Wimco's own production is Rs. 9.70 per gross as against the price of matches purchased by them is Rs. 8.60 per gross. The price of established brands produced in handmade sector in these markets is ranging from Rs, 8.80 to Rs. 9.30 per gross.

Further, Wimco supply restricted quantity of their own production in the established markets and create artificial shortage. This artificial shortage of Wimco's own production is taken advantage by the trade to take undue profit. Wimco favourably utilize the position to compel the trade to buy matches purchased by them from hand-made sector along with their own production.

You will understand from this that basic price of both the varieties of matches are kept same to show that Wimco do not indulge in any restrictive trade practice. But by allowing cash discount and price line discount on sale of matches purchased by them from hand-made sector and charging D/D charges on sale of their own production, Wimco indulge in unhealthy restrictive trade practice. This is a clear case to prove that the real intention of Wimco to purchase matches from hand-made sector is not to help them, but to exploit them and indulge in restrictive trade practice, utilising their monopoly position to eliminate their competitors in hand-made sector (sic)." 25. Even here, the allegation is not of selective price cutting or price discrimination in pockets where competition with small-scale sector is keen. The allegation, as a matter of fact, is that, Wimco everywhere keeps the prices of the products of the mechanised sector high and the price of the matches purchased from the small-scale sector low so as to quote lower prices than those quoted by the small-scale sector. The allegation covers the whole territory of demand and is not confined to pockets where competition with small-scale sector is effective. In fact, the allegation further is that by reason of artificial increase in the demand for the mechanised sector products WIMCO is able to dispose of its cottage industry products with an advantage. In other words, it is alleged that WIMCO has a leverage in respect of its matches from the mechanised units and it uses that leverage to push forward sales of its purchase from the small-scale sector. The competition with the whole of the small-scale sector is, so to speak, distorted first by reduction of price and secondly by leverage of higher demand for products of the mechanised units.

26. On the other hand, the whole thrust of the application for interim injunction dated January 12, 1976, was in respect of selective price cutting. This will be clear from paragraphs 1 to 3 of the application which are reproduced below for facility of reference : " This is an application on behalf of the petitioner under regulation 15 of the MRTPC Regulations, 1974, read with Section 151, C.P.C. praying for, pending final disposal of the enquiring orders on respondents directing it to discontinue and not to repeat the restrictive trade practice of manipulating prices in a way that these are or likely to have the effect of preventing, restricting, or distorting competition, by underselling their matches in certain areas so as to drive out competitors (emphasis. mine).

2. The petitioner's members have been suffering on account of continuous practice of the respondents in underselling their product in selected areas so as to drive out competitors, wherever the respondent believes these are becoming strong. In the whole of India, the respondent has an edge over the competitors because of its name value and because of its size. If on top of these disadvantages, the competitors have to face the additional burden of underselling it is obvious that the competitors can never effectively compete with the respondents (emphasis. mine).

3. The petitioner has evidence of their underselling in the form of bills (annexed) made by wholesalers to their retailers which show that with specified quantity sold at official prices, certain quantities of matches are given free. The net effect is to reduce the price by a corresponding amount. The following table shows the relative rates of selling : 27. There is, therefore, a clear departure not only in the emphasis but also in the objective in the application for interim injunction as compared with the original complaints. Interim injunction can only be claimed in respect of restrictive trade practices alleged in the original complaint and in a case like the present one, where there is a departure not only by way of emphasis but by way of objective while asking for interim injunction, the prayer cannot be accepted.

28. Moreover, the prayer in the application for interim injunction is not supported by strong prima facie evidence, which would convince the Commission that the respondent was resorting to a restrictive trade practice which was doing continuing harm to the complainant and but for interim injunction the harm would be so irreparable that the whole purpose of the inquiry would be defeated. In the first place, the source of the material relied upon is not properly indicated. It is clear from the affidavit of Shri Venkataraman dated February 23, 1976, that the complainants are not in a position to specify the sources of their information. Besides, there is nothing to show that even assuming that the prices quoted were as given in the application they were so quoted because the competition between WIMCO and the small-scale sector was very intense in these particular sectors. This really is the crux of the matter. The complainant had not only to prove that there was a price cutting but that the price cutting was motivated not by considerations of healthy competition but by considerations of prepetuating a dominant position. Further, the respondent had alleged that even the members of the complainant-association were resorts ing to the very same competitive gimmicks and the question once again is whether if they were doing so, they were doing it as a strategy for survival or they were indulging in routine competitive manoeuvres. The learned counsel for the complainant has referred to the rejoinder by the complainant dated July 15, 1976, to the reply by the respondent to the application of the complainant. There is a reference in that rejoinder to a large number of complaints from the members regarding undercutting on a large scale at selected places. It was also suggested that the complainants had to indulge in the gimmicks of discounts, gifts, etc., to withstand the tactics of the respondent. The real question, as stated earlier, is to show whether there was an attempt at predatory pricing by the respondent at selected places and whether any of the complainants had to reduce the prices in order to counteract such a predatory pricing. The learned counsel for the complainant very fairly stated that he was relying only on materials set out in the application for temporary injunction and the rejoinder. On the basis of that material it was not possible to come to the conclusion either way on these crucial issues. The material was not only inconclusive but it was in essential respects of a tenuous nature. An interim injunction cannot possibly be granted on the basis of such evidence.

29. Moreover, the timing of the application for temporary injunction is also such that no urgency can be imported in remedying the damage indicated. Even assuming that the complainant was not kept in the picture without any fault on its part, there is no satisfactory explanation about its refraining from making the application from the middle of 1975 to the date of the application. If the grievance was really pressing it would have provoked the complainant to come to the Commission without any delay. Furthermore, the proceedings in the present case have far advanced and the final hearing is not very far.

No damage is likely to occur to the complainant in the ensuing few months if at least for a year after the middle of 1975 the complainant did not feel the pinch. Ordinarily, the application for interim injunction should have come along with the complaint, i.e., more than 6 years ago. If the prick of the trade practice was so injurious it would have prodded the complainant to come to the Commission notwithstanding the tactics or strategy of the respondents. All things considered, therefore, the context of the proceedings also does not support the application.

30. As the Supreme Court has pointed out in the very case relied upon by the learned counsel for complainant, this power cannot be exercised in a routine way or as a matter of course. It will be exercised only when a strong prima facie case is made out that the entire purpose of the proceedings will be frustrated or rendered nugatory unless the injunction was granted. The Supreme Court case was a case of tax recovery when the appeal was pending with the Tribunal. It was a question of maintaining the status quo till the rights of the parties were defined. In the case of a restrictive trade practice interim injunction would mean departure from the status quo. Moreover, the Indian scheme of legislation in respect of restrictive trade practices is that they become void only when the Commission passes an order to that effect and before the Commission passes an order to that effect the complainant has to establish that the trade practices alleged were restrictive. Even if the complainant establishes that any trade practice alleged was restrictive in character it was open to the respondent to show that it was not working against public interest. A case for interim injunction must raise a strong case against the respondent in respect of both the aspects. On the facts and in the circumstances of the present case, it was not possible to say that this has been done.

31. On these grounds, therefore, the complainant was not entitled to an order of interim injunction. The application dated January 12, 1976, is accordingly dismissed.


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