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In Re: Western India Plywoods Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
AppellantIn Re: Western India Plywoods Ltd.
Excerpt:
.....a notice dated october 16, 1976, notifying its intention to enquire into the alleged restrictive trade practice of giving graduated bonus to its agents on the basis of annual turnover according to the following schedule: 3. the respondent filed its memorandum of appearance and also filed its reply to the notice dated january 8, 1977. in this reply it was, inter alia, contended that the respondent in its price lists dated december 5, 1973, january 28, 1974, february 16, 1974, and march 5, 1974, was giving graduated bonus to its customers and not to its agents on the basis of the annual turnover for the year 1973 and 1974, and that the respondent has withdrawn the annual turnover bonus with effect from 1975 and that there was no warrant or justification for proceeding on the basis that.....
Judgment:
1. This is an application by the Director of Investigation seeking the following directions: " (a) That leave may kindly be granted to the applicant to deliver to the respondent interrogatories as set out in annexure ' A' hereto and time be fixed when the respondent shall answer those interrogatories.

(b) That the respondent be ordered to make discovery on oath of the documents in its power or possession with particular reference to annexure II. Further the respondent be ordered to give inspection of those documents.

(c) That the Hon'ble Commission may be pleased to issue such other direction or directions as may be considered proper and necessary in the matter.

2. The respondent is a limited company doing business in plywoods. On the basis of its own knowledge or information, the Commission issued to it a notice dated October 16, 1976, notifying its intention to enquire into the alleged restrictive trade practice of giving graduated bonus to its agents on the basis of annual turnover according to the following schedule: 3. The respondent filed its memorandum of appearance and also filed its reply to the notice dated January 8, 1977. In this reply it was, inter alia, contended that the respondent in its price lists dated December 5, 1973, January 28, 1974, February 16, 1974, and March 5, 1974, was giving graduated bonus to its customers and not to its agents on the basis of the annual turnover for the year 1973 and 1974, and that the respondent has withdrawn the annual turnover bonus with effect from 1975 and that there was no warrant or justification for proceeding on the basis that the grant of bonus based on an annual turnover up to 1974 would have the effect of preventing, distorting or restricting competition in future. The Director of Investigation filed his rejoinder dated March 7, 1977, wherein he submitted, inter alia, as under : " Assuming without admitting that the restrictive trade practices set out in the notice of enquiry were discontinued in 1975, none the less a cease and desist order is liable to be issued to the respondent for prevention or repetition of the said practice or practices of a similar nature.

The practice of giving graduated bonus on the basis of annual turnover to the customers is a restrictive trade practice within the meaning of Section 2(o) of the Act and the respondent is liable to be ordered to cease and desist from indulging in it. The averment of the respondent to the contrary is not admitted." 4. Subsequently the Director of Investigation filed an application dated March 11, 1977, to which the respondent has objected by its reply in which the following prayers were made : (i) no leave be granted to the petitioner to deliver to the respondent the interrogatories as set out in annex. I to the said application; (ii) no order be made for discovery or production of the documents mentioned in annex. II to the application filed by the petitioner under Regulation 74 and in any event only an order for discovery and inspection of documents should be made ; (iii) that the respondent may be granted time to file a detailed counter to the application filed by the petitioner under Regulation 74 if more particulars are required to be placed before this Hon'ble Commission; and (iv) pass such further or other order or orders as may be just and necessary under the circumstances of the case. " Both the parties were heard on the application by the Director of Investigation and the reply by the respondent. The learned counsel reiterated his stand that in view of the fact that the practice of granting turnover bonus was discontinued from 1974, the enquiry should be terminated and he relied on the decision of the Allahabad High Court in [1977] 47 Comp Cas 323 (J. K. Synthetics Ltd. v. R. D. Saxena, Director of Investigation). The Director of Investigation, on the other hand, contended that the Allahabad decision was not applicable to the facts of the present case, that the present case was not a case based on an agreement, that the enquiry in the present case was in respect of restrictive trade practice de hors any agreement and that the mere fact that the practice was discontinued for the time being did not justify the termination of the enquiry. In this connection he relied on the decision of the Commission in RTPE No. 17 of 1976 (Blaze Advertising) dated 30th September, 1976 [1977] TLR 1985.

5. The decision of the Allahabad High Court is clearly not applicable to the facts of the present case. It is made abundantly clear in the decision that the agreement was the foundation of the enquiry in that decision, that it was the operation, working and giving effect to the provisions of the agreement alone, which led to the restrictive trade practices set out in the notice of enquiry issued against the respondent in that case and that no restrictive trade practice apart from the agreement had been pleaded. In the present case, in the first place there is no agreement involved. In the second place the subject-matter of the enquiry is a restrictive trade practice. The question whether restrictive trade practice was given up was a matter to be decided on examination of evidence. Moreover, Section 37(1) clearly provides for an order by the Commission to the effect that restrictive trade practice should not be repeated. The underlying idea was clear that stoppage of restrictive trade practice should not stifle the enquiry but if it was found that the trade practice was really prejudicial to public interest an order for desisting from that practice could also be passed by the Commission. The fact that in the rejoinder the Director of Investigation has not challenged the claim of the respondent that the practice was discontinued did not accordingly derogate from the necessity of the enquiry or the competence of the Commission to continue it. No doubt, the continuance of the restrictive trade practice was a matter to be enquired into and if it was really discontinued the only order that could be passed would be regarding the repetition of the trade practice. But unlike in the Allahabad case the matter is not free from dispute. When the final hearing is made no doubt the question whether the practice is in existence or is discontinued will be resolved. If the practice is still continuing and if it is found to be against public interest an order to discontinue the same will be passed along with an order not to repeat the same. If, however, it is found that the practice is really discontinued, the only order that could be passed was that it should not be repeated. It would be open to the respondent to argue at that stage, if it is able to prove that the restrictive trade practice was discontinued, and that in view of the Allahabad decision, no order regarding desisting could be passed. The whole matter is in dispute and can only be decided upon after the final hearing. For the present, therefore, the following directions arc issued: (i) Leave is granted to the Director of Investigation to deliver to the respondent interrogatories in terms of annex. I to the application dated March 11, 1977.

(ii) The respondent will be at liberty to answer such interrogatories as it likes and to state its objections to the remaining interrogatories. The answers and objections to interrogatories will be on affidavit.

(iii) The respondent is directed to make and file an affidavit of documents in terms of Order XI, Rule 13, Code of Civil Procedure in Form No. 5 of appendix 'C ' to the First Schedule of the Code of Civil Procedure.

(iv) All affidavits and lists of documents under this order to be.

filed within four weeks from to-day. Inspection of documents disclosed to commence immediately after affidavits and lists of documents have been filed in the office of the Commission in New Delhi.


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