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Madura Coats Ltd. Vs. Hindustan Petroleum Corporation - Court Judgment

LegalCrystal Citation
CourtMonopolies and Restrictive Trade Practices Commission MRTPC
Decided On
Judge
Reported inI(2004)CPJ7MRTP
AppellantMadura Coats Ltd.
RespondentHindustan Petroleum Corporation
Excerpt:
.....order dated 27.2.1995, observed that the subject-matter was within the jurisdiction of the mrtp commission.subsequent to this order, the petitioner approached the" mrtp commission and claimed compensation amounting to rs. 2,49,285/- by way of loss suffered due to the change in the distribution of hsd oil from cochin to madurai. the petitioner further alleged that the said change in the distribution and marketing system amounted to restrictive trade practices as defined in the relevant provisions of mrtp act, 1969, and as a result of this restrictive trade practice, on the part of the respondent, the petitioner has suffered financial loss.2. in its reply, the respondent has denied the allegations of restrictive trade practices and has contended that section 3(1) of the essential.....
Judgment:
1. The petitioner is a company registered under the Companies Act, 1956. It has its registered office at Madurai and is engaged in the business of manufacture of textiles in its factory at Madurai, Ambasamudram and Tuticorn in the State of Tamil Nadu. The respondent is a Public Sector Enterprise engaged in the business of dealing in petroleum products including High Speed Diesel Oil (HSD oil). The petitioner is stated to have been purchasing HSD oil from the respondent regularly from its supply outlet at Cochin in the State of Kerala. This being an inter-State Sale, the petitioner has been paying Central Sales Tax @ 4% as required under the Central Sales Tax Act, 1956. It has been alleged that in August, 1989, the respondent discontinued the supplies from Cochin and called upon the petitioner to draw supplies from the respondent's storage outlet at Madurai in Tamil Nadu. As a consequence of this, the petitioner is stated to have been subjected to payment of local sales tax @ 18%, which was higher than the rate of Central Sales Tax @ 4% earlier payable by the petitioner.

Aggrieved by the change in the arrangements made for the supply of HSD oil, the petitioner approached the Hon'ble High Court of Madras under Article 226 of the Constitution of India. Having failed to get any relief, the petitioner approached the Division Bench of the said High Court, which, vide its order dated 14.8.1990, ordered status quo and vide its subsequent order dated 27.2.1995, observed that the subject-matter was within the jurisdiction of the MRTP Commission.

Subsequent to this order, the petitioner approached The" MRTP Commission and claimed compensation amounting to Rs. 2,49,285/- by way of loss suffered due to the change in the distribution of HSD oil from Cochin to Madurai. The petitioner further alleged that the said change in the distribution and marketing system amounted to restrictive trade practices as defined in the relevant provisions of MRTP Act, 1969, and as a result of this restrictive trade practice, on the part of the respondent, the petitioner has suffered financial loss.

2. In its reply, the respondent has denied the allegations of restrictive trade practices and has contended that Section 3(1) of the Essential Commodities Act, 1955, empowers the Central Government to maintain or increase supplies of any essential commodity for securing its equitable distribution. It has been further submitted that under Section 2(a)(viii) of aforesaid Act, petroleum and petroleum products are included within the definition of 'Essential Commodities' and in exercise of the powers thus vested with the Central Government, several Control Orders have been issued in respect of the Essential Commodities including the petroleum products.

(1) Whether the respondent has been indulging in unfair trade practices as alleged in the Compensation application (2) Whether the applicant has suffered any loss or damage as a consequence of the alleged unfair trade practices 4. By way of evidence, the applicant filed affidavit along with supporting documents, but did not lead any oral evidence. No affidavit of evidence was filed by the respondent on the ground that the matter can be disposed of on the basis of the documents already filed.

Arguments were finally heard on 10.11.2003.

5. Learned Counsel for the applicant argued that, in the case of Coats Viyella Ltd. v. State Level Co-ordinator, Tamil Nadu & Pondcherry, reported in (1997) 27 CLA 96 (MRTPC), the MRTP Commission had granted interim relief by ordering status quo in the supply of HSD Oil on inter-State basis. He further contended that the supply of HSD oil on inter-State basis was disrupted due to confusion created by the circular dated 1st June, 2000 issued by the Ministry of Petroleum and Natural Gas, as a result of which the applicant had to buy HSD oil on payment of local sales tax @ 18% as against the Central Sales Tax leviable @ 4%, during the period from 21.6.2000 to 26.6.2000. He contended that by forcing the applicant to buy HSD Oil, during the aforesaid period, on payment of local sales tax @ 18%, the respondent imposed unjustified costs and it caused financial loss to the applicant amounting to Rs. 2,49,285/-. The said trade practice adopted by the respondent, he contended, was a restrictive trade practice within the meaning of Section 2(o)(ii) of the MRTP Act. Learned Counsel for the applicant also referred to the Commission's order dated 18th October, 2000, in the case of Director General (I&R) v. Negi & Co. Pvt. Ltd., reported in (1998) 80 Comp. 449 (MRTPC) by virtue of which the supply of petroleum products on inter-State basis was ordered to be resumed.

He also referred to the Commission's order in Ballarpur Industries Limited v. Sinarmas, Indonesia, reported in (1996) 22 CLA 16 (MRTPC) to establish its locus standi for filing the present petition.

6. Learned Counsel for the respondent contended that under Section 3(1) and Section 2(a)(viii) of the Essential Commodities Act, 1955, the Central Government was fully empowered to issue the impugned circular and the respondent being under the administrative control and supervision of the Ministry of Petroleum and Natural Gas, was bound to comply with the decision contained in the said circular. While explaining the background under which the impugned circular was issued, learned Counsel for the respondent submitted that the Ministry of Petroleum and Natural Gas had received a number of complaints regarding the diversion of HSD oil by the non-genuine direct customers for the purpose of adulteration and black-marketing due to substantial difference in the rates of Central Sales Tax and Local Sales Tax. It is against this background that the impugned circular dated 1.6.2000 was issued by the Central Government. This decision, he emphasized, was taken in public interest which would clearly justify the restriction thereby imposed under the provisions of Section 31(3) of the MRTP Act.

Learned Counsel for the respondent further submitted that more than 110 applications under Sections 12-A and 13-B of the MRTP Act, in the cases registered as RTPE 97/95 and RTPE No. 94/2000 were filed on the same subject-matter. But the MRTP Commission had dismissed them vide its orders dated 15.9.2000 and 18.10.2000. He further submitted that various contempt petitions as well as 12-A applications were also dismissed as the Commission came to the conclusion that there was no restrictive trade practice on the part of the respondent. He also referred to the order of the Hon'ble Commission dated 21.12.2001 in the Compensation Application No. 345/2000 in Madura Coats Ltd. v. Bharat Petroleum Corporation Limited and submitted that after considering all the aspects of the case, the MRTP Commission while dismissing the Compensation Application the following observations : "Since no case of restrictive trade practice is made out against the respondent' the question of the applicant having suffered any loss on account of such restrictive trade practices and hence claiming compensation for the same does not arise" 7. Learned Counsel for the respondent contended that the present case is squarely covered by the aforesaid judgment of the MRTP Commission because the subject-matter of the case, the cause of action and the relief claimed, are exactly identical except that the name of the respondent is different. Learned Counsel for the respondent also referred to the observations made by the MRTP Commission in the aforesaid judgment which are reproduced below : "The rationale behind the impugned change in the distribution arrangement of HSD oil and other petroleum products is abundantly clear from the above circulars. The motivating factor behind the change in the distribution arrangement appears to be nothing but public interest. Further, it has the approval of the Ministry of Petroleum, Government of India. This being so, the respondent cannot be faulted and held guilty of restrictive trade practices in view of the provisions contained in Section 38(1)(i) of the MRTP Act which deals with presumption as to the public interest." "In the instant case, the impugned restriction to draw supplies from the State in which the buyer is located has the approval of the Ministry of Petroleum, Government of India, and, therefore, it cannot be said to be violative of the provision contained in Section 33(1) read with Section 37 of the MRTP Act in view of the gateway available under Section 38(1)(i). Nor is it a restrictive trade practice within the meaning of Section 2(o). Since the impugned policy decision is uniformly applicable to all the dealers/buyers and has the approval of the Ministry of Petroleum, Government of India, it cannot be said to have the effect of preventing, distorting or restricting competition. Nor does it impose any unjustified costs or restriction on the consumer. Whatever the rates of taxation, it is established law that inter-State sales attract Central Sales Tax and the sales within the State attract local taxes. Just because the rate of Central Sales Tax is lower than the rate of local sales tax, the applicant cannot be allowed to circumvent the law of its own advantage on the unsustainable ground that the change in the policy subjects the applicant to higher rate of taxation and as such it amounts to imposing unjustified costs as contemplated in Section 2(o) of the MRTP Act. The clause relating to unjustified costs cannot be read in isolation." 8. In view of the facts and circumstances discussed above, we have no hesitation in accepting the plea of the respondent that the present case being identical, is squarely covered by the Commission's order dated 21st December, 2001 in CA 345/2000. In view of this, the Compensation Application No. 331/2000 is dismissed with no order as to costs.


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