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In Re: Sterling Industries Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1979)49CompCas897NULL
AppellantIn Re: Sterling Industries Ltd.
Excerpt:
.....for amendment of the notice of enquiry dated the 17th december, 1974, issued by the monopolies and restrictive trade practices commission (hereinafter referred to as "the commission") suo motu under sections 10(a)(iv) and 37 of the monopolies and restrictive trade practices act, 1969 (hereinafter referred to as "the act"). the respondents are manufacturers, inter alia, of grinding wheels. in the original notice dated the 17th december, 1974, the commission had notified its intention to institute an inquiry into the following restrictive trade practice indulged in by the respondents : " charging prices on a 'slab basis' giving advantage or concessions in the matter of price to the buyers of larger quantities as compared to the buyers of smaller quantities of grinding wheels which leads to.....
Judgment:
1. This is an application dated the 5th September, 1977, by the Director of Investigation (hereinafter referred to as "the Director") for amendment of the notice of enquiry dated the 17th December, 1974, issued by the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as "the Commission") suo motu under Sections 10(a)(iv) and 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as "the Act"). The respondents are manufacturers, inter alia, of grinding wheels. In the original notice dated the 17th December, 1974, the Commission had notified its intention to institute an inquiry into the following restrictive trade practice indulged in by the respondents : " Charging prices on a 'slab basis' giving advantage or concessions in the matter of price to the buyers of larger quantities as compared to the buyers of smaller quantities of grinding wheels which leads to discrimination in charging prices for the sale and supply of grinding wheels and/or granting or allowing concessions or benefits in connection with, or by reason of, dealings in respect of the sale and supply of the grinding wheels." 2. In response to this notice, ultimately, respondents Nos. 1, 2, 3 and 4 filed their memoranda of appearance, although in the case of respondent No. 1 the advocate withdrew their representation subsequently. All the respondents filed their replies from time to time. The Director filed his rejoinders to the replies of all the respondents. Respondent No. 4, through its counsel, expressed its willingness to submit to an order by the Commission and this fact has been recorded by the Commission in its order dated the 27th November, 1975. By its order dated the 27th November, 1975, the Commission framed the following issues with regard to respondents Nos. 1 and 5.

" Whether the allegation set out in the notice under Section 10(a)(iv) of the Monopolies and Restrictive Trade Practices Act constitutes restrictive trade practices within the meaning of Section 2(o) of the Act 2. To what relief, if any, the Director of Investigation is entitled " " 1. Whether the allegations set out in the notice under section 10(a)(iv) of the Monopolies and Restrictive Trade Practices Act constitutes restrictive trade practices within the meaning of Section 2(o) of the Act? 2. If the answer to issue No. 1 above is in the affirmative, whether the respondent is entitled to the benefit of any of the Clauses (a) or (b) of Section 38(1) of the Act as well as the balancing clause contained in the latter part of Section 38(1) of the Act 3. To what relief, if any, the Director of Investigation is entitled " 3. By its order dated the 14th August, 1975, the Commission framed the following issues in respect of respondents Nos. 2 and 3 : " 1. Whether the application is not maintainable on any of the grounds set out in paras. 1 to 7 of the reply filed by respondent No. 3 2. Whether the allegation set out in the notice under Section 10(a)(iv) of the Monopolies and Restrictive Trade Practices Act constitutes restrictive trade practice within the meaning of section 2(o) of the Act 3. If the answer to issue No. 2 is in the affirmative, whether any or all of the respondents is or are entitled to the benefit of any of the Clauses (a), (b), (c), (f), (g) and (h) of Section 38(1) of the Act as well as the balancing clause contained in the latter part of section 38(1) of the Act? 4. By Its order dated the 19th May, 1977, the Commission ordered that the proceedings against respondent No. 1 will be ex parte and thereafter the advocate for respondent No. 1 withdrew from the proceedings. Even regarding respondent No. 5, the advocate on record withdrew, while respondent No. 4 did not want to contest the issues raised in the notice. It is thereafter that the Director filed his application for amendment of the notice which is the subject-matter of the present order, and at the suggestion of the Commission he also filed material in support of his application dated the 5th September, 1977, by his letter dated the 30th September, 1977.

5. Opposing this application the learned counsel for respondent No. 2 contended that there were no particulars to justify the allegation of concert, that this was necessary in view of the decision of the Supreme Court in Telco's case [1977] 47 Comp Cas 520 ; AIR 1977 SC 973, that the application for amendment should not be allowed, that the Director was setting up an entirely new and independent case, that the Director was not entitled to do so and he relied on the Supreme Court's decision in the case of A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation, AIR 1967 SC 96. He also contended that the application was mala fide in the sense that it was inordinately delayed and there was no justification for such a delay. He also referred to Commentary of Sarkar on Code of Civil Procedure at page 373, and also contended that there have been no facts about the alleged concert, viz., when it was resorted to, where it was resorted to, between whom it was resorted to and how it was resorted to.

6. The learned counsel for the respondent No. 3 contended that the charge was completely baseless, that even the particulars given by the Director in his letter dated the 30th September, 1977, gave particulars only in respect of some respondents and that on the other hand allegation of concert was made against all the respondents, that his clients were not aware of the particulars filed by other respondents, that the particulars now given by the Director contained particulars in respect of respondent No. 3 which were not borne out by the pleadings of respondent No. 3 that absolutely no constituent facts were given in respect of the alleged concert and that the product manufactured by the respondent, formed a small part of the price of the produce made by the purchasers. He then pointed to the delay, which according to him, extended over 4 years and that even if the reply given by respondent No. 3 was taken into account the delay was as long as two years. He also contended that the Director was precluded from raising this plea because respondent No. 3 had clearly raised the question of misjoinder of parties and in the rejoinder, far from raising the question of concert the Director had only harped on the theme of the common practice carried on by the respondents. He particularly pointed out that in the rejoinder to respondent No. 3 there was no suggestion of any common pricing. He pointed out that a slab system was absolutely necessary in order to ensure competition between the various manufacturers and that it was the multiplier which varied from respondent to respondent and ultimately made a difference in the prices charged by them for com-parable products. He endorsed the plea of the learned counsel for respondent No. 2 that the Director was making a new claim on a new basis which he was not entitled to do. He also pointed out that while the restrictive trade practice alleged in the original notice was regarding competition between the purchasers of grinding wheels, the restrictive trade practice now alleged was competition between manufacturers of grinding wheels. He then relied on the decisions of the Commission in RTPE No. 24-A/1974 (RRTA v. Atul Products Ltd.) [1978] 48 Comp Cas 852, RTPE No. 5/1975 (RRTA v. Tata Engineering & Locomotive Co. Ltd.) [1979] 49 Comp Cas 30 and RTPE No.15 of 1974 (RRTA v. Rallis India Ltd.) [1979] 49 Comp Cas 580.

7. The learned Director contended that delay could not be put up as a ground for opposing the application because the Commission was competent under Regulation 72 to amend the notice at any time. He also referred to the decision of the Commission in RTPE No. 24A of 1974 (RRTA v. Atul Products Ltd.) [1978] 48 Comp Cas 852 and contended that the Commission had not rejected any application for amendment on the ground of delay. He also pointed out that amendment contemplated under Regulation 72(1) could not only be made by the Commission suo motu but also at the request of the parties. He pointed out that he had given the particulars in his letter dated the 30th September, 1977, and that some of the particulars were given on the basis of papers which were on record and he had not referred to any paper earlier than that dated March 12, 1975. He contended that the amended application did not set out a new case and relied on the decision of the Commission in in the matter of Andhra Pradesh Paper Mills Ltd. (RTPE No. 5 of 1973) [1977] 47 Comp Cas 252. He pointed out that the charge now made was closely connected with the original charge and relied on paras. 27 to 35 of the decision of the Commission in Atul Products (RTPE No. 24A of 1974) [1978] 48 Comp Cas 852. He contended that amendment could be allowed even if the restrictive trade practice alleged in the amended application was not implicit in the original notice. He agreed that he had not, given particulars regarding some of the respondents but pointed out that as far as the replies were concerned he had given extracts from the replies of all the respondents. He also pointed out that one of the respondents, viz., the 5th respondent, was willing to submit, to the Commission's order. He emphasised that in the rejoinder to the replies given by the respondents he had not abandoned any pleas and that in any case the rejoinder could also be amended under Regulation 72(2). He also pointed out that respondent No. 3 had more or less admitted the slab system and that concert did not require necessarily an agreement but could be inferred from the conduct of the parties and he relied in this connection on the decisions of the European Court in the cases of Anilyne Dyes [1972] CMIRD 557 and Italian Sugar [1973] CMIRD 65.

8. The considerations which weighed with the Commission while deciding on the application for amendments have been detailed in the Commission's earlier orders in the cases of Atul Products Ltd. [1978] 48 Comp Cas 852, Rallis India Ltd. [1979] 49 Comp Cas 580 and Tata Engineering & Locomotive Co. Ltd. [1979] 49 Comp Cas 30. They do not require repetition here. Bearing in mind the principles laid down in those cases I am unable to accept the plea of the learned Director that the amendments proposed by him should be allowed. He has relied greatly on the Commission's decision in Andhra Pradesh Paper Mills Ltd., In re (RTPE No. 5 of 1973) [1977] 47 Comp Cas 252, but that case is clearly distinguishable. Except for the fact that in the notice in the present case as in the notice in the Andhra Pradesh Paper Mills' case [1977] 47 Comp Cas 252, the expression "or each one of them" was not used, there are fundamental differences in the basic facts between the case of Andhra Pradesh Paper Milk [1977] 47 Comp Cas 252, and the present case.

In Andhra Pradesh Paper Mills' case [1977] 47 Comp Cas 252 the allegation was set out as under : "(i) Changing the pattern of production of paper to adversely affect the flow of supplies in the market relating to ordinary white printing and writing paper, (ii) Earning higher net profit than what would have been the normal net profit worked out on the basis of yield of 8% on share capital plus 4% on reserves " and it was alleged that these practices prima facie resulted in preventing, distorting and restricting competition in the paper industry and imposed on the consumers unjustified costs. It is clear from the notice that the field of competition was clearly defined as competition between the manufacturers of paper and it was clear from the restrictive trade practices alleged that the idea of concert was implicit in them. In the present case, the position is quite different.

In the original notice, the allegation is as reproduced earlier. It is clear from the allegation that the field of competition alleged to have been affected was competition between the buyers of grinding wheels.

There was no suggestion of any competition between manufacturers of grinding wheels being affected. It, therefore, cannot be suggested that the amendments proposed by the Director were merely for determining the real issue between the parties. In effect it was to bring in a new issue which was altogether a different issue from the one contemplated by the original notice. It meant addition of an issue with an altogether different field of competition and a different set of competitors. It is also significant that respondent No. 3 raised the plea of misjoinder of parties. It could not, therefore, be suggested, as in the Andhra Pradesh Paper Mills' case [1977] 47 Comp Cas 252, that the parties had proceeded on the assumption that concert was implicit in the charge. If the Director really wanted to put forward the charge of concert that was the occasion on which it could have been made if that was really his intention even at the back of his mind. It is true that there is no limitation in regard to inquiries in restrictive trade practice matters. But this argument works both ways and it was open to the Director or the Commission to issue a fresh notice based on the relevant set of facts. The facts relevant to the field of competition between the purchasers of grinding wheels would be different from facts relevant to the field of competition between manufacturers and it cannot, therefore, be suggested that the restrictive trade practices now proposed arise from the same set of facts, which weighed with the Commission when the original notice was issued. In the present case the inquiry has advanced very greatly and in fact issues had already been framed and one of the parties had already agreed to submit to an order of the Commission. There were negotiations going on between another respondent and the Director. All things considered, therefore, I do not consider this a fit case where amendment should be allowed so as to introduce into the inquiry a fresh restrictive trade practice based on fresh set of facts. It will not be proper to go into the merits of the claim proposed to be introduced. It would also not be proper to examine whether particulars now sought to be given by the Director have been culled from the replies of the respondents or from unspecified sources.

The short question at this stage is whether amendment proposed should be allowed to be introduced and on a balance of consideration it seems to me that the amendment should not be allowed. The application is accordingly ordered.


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