JUDGMENT
S. Muralidhar, J.
1. These three writ petitions are directed against the common order dated 2.1.2004 passed by the Monopolies and Restrictive Trade Practices Commission, New Delhi (‘MRTP Commission’) in CA. Nos. 226/98 (Popular Jewellery House), CA. No. 224/98 [Girdhari Lal Jewellers (P) Ltd.] and CA. No. 225/98 (Paras Jewellers). By the said order, the MRTP Commission has allowed the applications and has directed the petitioner herein to pay compensation of Rs. 75,887/-, Rs. 1,50,000/- and Rs. 83,000/- respectively to each of the aforementioned claimants together with interest at 8 per cent and costs of Rs. 5,000/-.
2. The compensation applications in which the impugned order came to be passed were filed by the respondents herein under Section 12B of the Monopolies and Restrictive Trade Practices Act, 1969 (‘Act’). The facts leading to the filing of the present petition are being discussed in respect of the Popular Jewellery House only since the facts in the other two applications are more or less similar.
Background Facts:
3. On 4.2.1997 the petitioner American Express Bank entered into an agreement with the respondent Popular Jewellery House by which the latter was required to honour the credit cards(Amex Cards) issued by the petitioner to card members who could purchase goods and services by using the credit card instead of making payment in cash. It was stated in the compensation application that on 14.9.1997, a customer, one Shri P.K. Mann, sought to purchase the jewellery worth Rs. 75,887/- on his AMEX Card and the respondent made a telephone call in terms of the conditions, at the designated service centre of the petitioner, seeking overlimit authorisation. The petitioner gave its authorisation for the same along with an Approval Code No. 33. It was stated that the respondent had verified that the AMEX Card was within the validity period shown on the face of the card. On 12.10.1997 another customer, Shri S. Goswami, purchased jewellery worth Rs. 73,098/- on the AMEX Card which was also approved in the like manner. When the respondent submitted the charge slip to the petitioner for getting payment and when no payment was received, he was informed that the petitioner had decided to stop the payment as the card submitted by Shri P.K. Mann on 14.9.1997 was fake. The petitioner then proceeded to adjust the payment in respect of the second transaction against the payment made on the charge slip of Shri P.K. Mann.
4. Contending that this refusal to make payment by the petitioner was an unfair trade practice, the respondent filed a compensation application under Section 12 of the Act before the MRTP Commission. After completion of pleadings, the affidavits of evidence of the partner of the respondent as well as the authorised representative of the petitioner were filed. The MRTP Commission, after examining the evidence, as well as the Service Establishment Agreement (`SEA’) found that as regards the first transaction, the petitioner could not, at the time when the authorisation was taken, detect that the card was a counterfeit card. The MRTP Commission concluded as under:
…the applicant complied with terms and conditions of the Agreement, made the necessary scrutiny of the card presented by the Cardmember, obtained the necessary authorisation and thereafter made the sale transaction. In view of the above, the respondent’s refusal to make the payment on the basis of the Charge Slip is tantamount to adoption of and indulgence in unfair trade practices and accordingly, the respondents are liable and accordingly, are directed to pay compensation to the applicant of the aforesaid amount of Rs. 75,887/- involved in the sale transaction after deduction of commission with interest for the period the amount remained with the respondents. Similarly, in respect of the other two cases, the Commission found likewise and awarded the relief as mentioned hereinabove.
Submissions of the Counsel:
5. Mr. Abhik Mazumdar, the learned Counsel for the petitioner submits that the transactions in question are part of a series of such transactions involving a systematic fraud in respect of which a complaint has been made on 6.7.1998 to the Economic Offences Wing. He states that notwithstanding the fact that the authorised officer at the petitioner’s establishment gave an approval as well as a code number for the approval when an enquiry was made by the respondent over the telephone, it was incumbent on the respondent not to have entertained the transaction, in view of the training/ orientation, i.e., imparted by the petitioner. He states that on face of it the card did not have the commencement date but only the expiry date and that by itself should have alerted the respondent. Further, in view of Clause 6 of the SEA between the petitioner and the respondent, petitioner was within its rights not to make payment against the charge slip in the instant case. He urges that the impugned order of the MRTP Commission is, therefore, erroneous and required to be set aside by this Court in exercise of its jurisdiction under Articles 226 and 227 of the Constitution.
6. In reply, Mr. P.S. Bindra, learned Advocate for the respondents, submits that under Clause 2 of the agreement, the shop owner was bound to entertain the credit card when presented if it was prior to the expiry date and subsequent to the beginning date if shown, on the face of the card. He further submits that the respondents had exercised due care and diligence in getting a telephonic approval of the transaction from the petitioner’s office after furnishing of the details asked for by the latter. Having given such an approval, it was not open now for the petitioner to turn around and invoke Clause 6 of the agreement which, in any event, he submitted, was totally one sided. Further, the card in question was not included in the list of blacklisted cards, communicated to the respondents by the petitioner. In the circumstances, there was no occasion for the respondents to suspect that the card was a counterfeit one. It would be extremely unfair if the respondents are saddled with the liability when it has in fact complied with the terms of the agreement with the petitioner.
Our findings:
7. Clauses 2 and 3 of the SEA which spell out the binding stipulation on the respondents read as under:
2. ACCEPTING CHARGES You agree to permit Cardmembers to purchase goods and services with the Card at your Establishment(s) only if:
(a) the card is presented prior to the expiration date and subsequent to the beginning date, if shown, on the face of the Card.
(b) you have not been notified of the cancellation or suspension of the Card through our Cancellation Bulletin or otherwise;
(c) the Card bears the signature of the person whose name is embossed on its face;
(d) the Charge Record Form is signed by the Cardmember in the presence of an employee of any of your Establishments with the same signature as that written on the signature panel of the Card(if there is a question about the validity of a signature, a signed affidavit by the Cardmember stating whether the signature is his/hers shall conclusively determine whether this condition has been met);
(e) you obtain Overlimit Authorization (as defined in Paragraph 3) for charge(s) in the manner set forth in this Agreement;
(f) the Card is not visibly altered or mutilated; and
(g) all other relevant provisions in this agreement are complied with.
In the case of a purchase made with the Card by mail or telephone (a), (c), (d) and (f) shall not apply.
3. OVERLIMIT AUTHORIZATION
Overlimit Authorization is the authorization which you agree to seek from us by telephone before you allow a Cardmember to make a Charge or series of Charges (an Overlimit Charge) for more than Indian Rupees 2000 in one day (floor limit). We have the right to change your floor limit. If we do, we will notify you in writing of your new limit and the date it takes effect.
You can call us for Overlimit Authorization at the designated service centre or centres. We will make sure that at least one designated service centre is open to receive your calls 24 hours a day, seven days a week. We will have Full Recourse (as defined in Paragraph 6) for any Overlimit Charge (i) for which Overlimit Authorization is not properly requested or obtained; or (ii) for which Overlimit Authorization is requested and refused; or (iii) for which no Overlimit Authorization approval code number or other approval code is given; or (iv) for which the Overlimit Authorization approval code number or other approval code borne by the relevant Charge Record Form does not correspond with our record of the Overlimit Authorization approval code number or other approval code which we gave you.
8. The resort to the full recourse provision in Clause 6 of the SEA can be had only on the specific contingencies spelt out in Clause 3. Clause 6 reads as under:
6. FULL RECOURSE
If all the provisions of this Agreement and all of our procedures and rules are satisfied each time a Cardmember makes a charge at any of your Establishments we will make payment in respect of such Charges without Full Recourse. Full Recourse shall mean that we are entitled to reimbursement from you of the amount which we paid to you in respect of the Charge in question if the Cardmember refuses to pay us, and that we can offset such amount by deducting it from amounts due to your in respect of Charges. We will have Full Recourse for any Charges as to which you have not complied with the rules, procedures from time to time in force or conditions stated in this Agreement as amended from time to time, even if we had notice when we paid you that you did not follow such rules or procedures. We also will have other rights to Full Recourse as specified in this Agreement. Where we have the right to Full Recourse, we may delay asserting this right during any period in which we or you are attempting to resolve a dispute.
9. The admitted position is that in the instant case each of the Respondents sought the overlimit authorisation as stipulated in Clause 3 extracted hereinabove. At the time of the agreement, the cards were being issued without a beginning date and this is envisaged by Clause 2 (a) which specifically states that the beginning date is not mandatorily required to be shown. Therefore, where a shopkeeper is presented with a card which only has the expiry date then, at that time when the transaction took place, he was only required to follow the steps in Sub-clauses (b) to (g) in Clause 2 of the agreement. That admittedly was done in the present case. In the circumstances, we find no justification whatsoever for the petitioner to have resorted to the full recourse Clause in the SEA, since there was no way, the respondents, at that point of time could have known that the card was a counterfeit one.
10. As regards the plea of the petitioner that these transactions are part of a series of transactions involving a fraud, we would not like to comment on it since according to the petitioner it is the subject matter of investigations by the Economic Offences Wing. Be that as it may, we do not see how the respondents can be made to bear the liability arising out of such a fraud when it is not shown that they were a party to it or that they deliberately entertained the cardmember/customer’s request knowing fully well that the card was a counterfeit one.
11. We, therefore, find no valid ground to interfere with the impugned order of the learned MRTP Commission.
Conclusion
12. At the very first hearing of these writ petitions on 31.5.2004, the impugned order was stayed subject to the deposit of certain sums with the Registrar General of this Court. With the dismissal of the writ petitions, the sums deposited by the petitioner shall now be permitted to be withdrawn by the respondents. We direct that the remaining amount in terms of the impugned order of the MRTP Commission be paid by the petitioner to the respondents within four weeks from today and, in any event, not later than 21.10.2006. We further direct that costs of Rs. 10,000/- be paid by the petitioner to the respondents in each writ petition, within four weeks from today, and in any event not later than 21.10.2006.
13. With the above directions, the writ petitions are dismissed.