Skip to content


Registrar of Restrictive Trade Vs. Shriram Pistons and Rings Ltd. - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported in(1979)49CompCas126NULL
AppellantRegistrar of Restrictive Trade
RespondentShriram Pistons and Rings Ltd.
Excerpt:
.....particulars. the averment that this clause would also affect competition between the distributors of respondent and distributors of competing products would, therefore, be ignored. in regard to the allegation itself, it would require the broad facts or features of the trade, as referred to earlier, before a prima facie allegation could be made about the restrictive nature of the trade practice. as regards clause 17, the registrar is directed to clarify how the clause in question was likely to give rise to the restrictive trade practice alleged. since the registrar has given an interpretation of the clause which is challenged by the respondent, the registrar is directed to give further and better particulars of the situation he has in view. the registrar's application for amendment.....
Judgment:
1. These matters were heard together. In support of his application dated the 22nd August, 1977, the Registrar contended that by the amendment proposed he was only trying to rectify an omission, that Clause 17 of the agreement Was already impugned in the original application, that the whole agreement including Clause 17 was made annexure to the application and that is why his attempt to incorporate Clause 17 in the application itself was only to make good an omission.

The learned counsel for the respondent, on the other, hand, contended that there, was no justification for the amendment application, that the amendment would be justified only if it related to a restrictive trade practice, that para. 6 of the original and amended applications of the Registrar referred only to Section 33(1)(e), that the amendment does not make the charge more intelligible, that Clause 17, as a matter of fact, was meant to eliminate all possible restrictive trade practices by ensuring uniform pricing and that the particulars given by the Registrar were based on a wrong reading of the clause. He contended that, as a matter of fact, even if the amendment is allowed, the Registrar would not be able to elucidate the charge and accordingly in the absence of the constituent facts the inquiry should not proceed in regard to Clause 17. He referred in this connection to the decision of the Commission in RTPE No. 5 of 1975 (RRTA v. Tata Engineering & Locomotive Co. Ltd.--since reported in [1979] 49 Comp Cas 30). He pointed out that Clause 17 applied both to new and old dealers and since the Clause was a part of the proforma agreement it ensured uniform pricing to all the dealers. He also contended that Clause 17 should be read with Clause 6 which was concerned with pricing. He referred in this connection to the judgment of the Commission in Atul Products Ltd.'s case (RTPE No. 24-A of 1974--since reported in [1978] 48 Comp Cas 852) and particularly to page 36 thereof. According to him, the real question was whether the facts given by the Registrar in his letter dated the 3rd October, 1977, were sufficient constituent facts so as to justify the further continuance of the inquiry, and, according to him, if it did not so justify, there was no point in allowing the amendment.

2. In regard to the particulars furnished by the Registrar, the learned counsel pointed out that in respect of Clause 3, in the absence of broad features of the trade, it was not possible to say that the consequences indicated by the Registrar were probable. In regard to Clauses 4 and 13 he pointed out that the field of competition was indicated but the manner in which the competition was affected in these fields was not indicated. He went on to contend that constituent facts in respect of each of the three fields of competition were necessary in order to make the charge intelligible. He contended that the arrangement between the respondent and the distributors was started with the giving of data about the market to the respondent and the respondent fixing the targets for the distributors and only in the light of these targets were the maximum stocks to be held by the distributors fixed by the respondent. He went on to contend that the effect of these limits would be determined only by the state of abundance or scarcity of the goods in question. He also contended that these clauses were far removed from the Clause impugned in the case of Hindustan Lever Ltd. [1977] 47 Comp Cas 581 (SC), which was struck down by the Supreme Court. In regard to Clause 11 also, the learned counsel contended that the factual exercise was necessary in regard to the basic features of trade because the competition between the distributors of the respondent and the distributors of other manufacturers would not be affected in times of shortage in any circumstance. He also expressed doubt as to how competition between respondent and other manufacturers would be affected by the working of Clause 11. In regard to Clause 15, he pointed out that the Registrar had suggested that the clause would affect competition between distributors of respondent and distributors of competitive products when, as a matter of fact, he had clarified before the Commission that the charge regarding competition between distributors of the respondent and other distributors was not justified. He contended that in the guise of further and better particulars the Registrar could not expand the scope of the inquiry. He also pointed out that the respondent was a new arrival in the trade in question.

3. The learned Registrar in his reply contended that he had accepted the clarification in regard to the dealers in the earlier hearing before the Commission but pointed out that he was now referring to the distributors. His main contention was that his responsibility at this stage was only to indicate a prima facie case to the respondent and that having done so he was not bound to give any broad features of the trade or background of facts.

4. I have examined the contentions of the parties with care. It is true that before the final hearing the Registrar is only bound to show a prima facie case about the restrictive nature of the trade practice alleged but it is also true that prima facie case does not merely mean the setting out of the impugned clauses or elucidating their meaning assuming that the meaning is absolutely clear. The Commission has pointed out in the case of Atul Products Ltd. (RTPE. No. 24-A of 1974) (since reported in [1978] 48 Comp Cas 852) that even in the kind of case referred to by the Supreme Court in its Hindustan Lever decision [1977] 47 Comp Cas 581, the Registrar has to spell out the implications of the impugned clauses and their probable effect on the relevant field of competition. Spelling out of the probable effect on the relevant field of competition and the manner in which the effect is brought about would in respect of some trade practices require the outline of the facts or features of the trade in respect of which the agreement operates. The agreement does not operate in vacuo or in the air. It is for this reason that broad features or facts of the trade were necessary to show a prima facie case about the restrictive nature of some practices. This does not mean that the Registrar has to undertake the factual exercise involved in the methodology laid down by the Supreme Court for establishing that the trade practice is restrictive.

That exercise will be undertaken at the time of the final hearing. But the application on which the notice is based and on the basis of which, the inquiry started must show a prima facie case and that prima facie case, as stated earlier, may require in certain cases in respect of certain allegations and in respect of certain trade practices broad features or facts of the trade against which the agreement is operating or expected to operate. It is from this point of view that it seems to me that it will help all concerned if the Registrar gives broad facts or features so as to eliminate avoidable loss of time. It is not possible to give an exhaustive list of these features nor can it be stated that all these will be relevant in all cases ; but as a matter of illustration it can be stated that it should not be difficult for the Registrar to indicate (i) whether in respect of the product in question the supply exceeds demand or vice versa ; (ii) whether in respect of the product in question the market is competitive or, oligopolistic or monopolistic; (iii) what is the relative position of the respondent in the market for the product and (iv) what is the basic nature of the product--whether it is consumer goods or an item of machinery or intermediate goods. It is in the light of these facts or features that the allegations made regarding the effect of some of the clauses impugned can be examined. Examining the further and better particulars given by the Registrar and taking them clause-wise the Registrar has now defined the field of competition and indicated the manner in which the competition will be interfered with by Clauses 3 and 11. In regard to these clauses no further and better particulars are necessary. But in regard to the others, the Registrar is directed to give further and better particulars on the lines indicated earlier.

In regard to Clauses 4 and 13, the Registrar is directed to clarify how competition between the distributors of respondent inter se would be affected by these clauses and also how the competition between the respondent and other manufacturers would be affected. In regard to Clause 15, the learned counsel for the respondent was right in contending that the Registrar could not expand the scope of the inquiry while giving further and better particulars. The averment that this Clause would also affect competition between the distributors of respondent and distributors of competing products would, therefore, be ignored. In regard to the allegation itself, it would require the broad facts or features of the trade, as referred to earlier, before a prima facie allegation could be made about the restrictive nature of the trade practice. As regards Clause 17, the Registrar is directed to clarify how the Clause in question was likely to give rise to the restrictive trade practice alleged. Since the Registrar has given an interpretation of the Clause which is challenged by the respondent, the Registrar is directed to give further and better particulars of the situation he has in view. The Registrar's application for amendment will be held over till further and better particulars are furnished by him and considered. Compliance by 6th February, 1978.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //