ORDER
A.N. Divecha, J. (Chairman)
1. The apparent conflict between two Division Bench rulings of this Commission in the case of Director General (Investigation and Registration) v. Rallis India Ltd. and another reported in (1995) 3 CTJ 151 (MRTPC) and in the case of Director General (Investigation and Registration) v. E. Merck (India) Ltd. reported in (1997) 62 Comp Cas 96 (MRTPC) has occasioned constitution of this Bench for resolution of the said conflict.
2. It would be quite proper to look at the facts giving rise to the present proceeding. The DG has moved one application under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969 (the MRTP Act for brief) charging the respondent with adoption of and indulgence in restrictive trade practices within its meaning contained therein on two counts. In the first place, according to the complaint application, the price list does not mention that products can be sold at prices lower than those mentioned in the price list and secondly discount in varying terms were offered with respect to its pharmaceutical products and animal health products. The respondent has filed its reply and has resisted the Notice of Enquiry (NoE) on several grounds. It has inter alia contended that the DG has mentioned only the price list and not the terms of business accompanying such price list. According to the respondent, it has clearly been mentioned in the terms of business :
“Prices mentioned in this list are the maximum prices and retailers are at liberty to charge prices lower than those stipulated herein.”
It has also contended that the prices of its products are fixed in accordance with the Drug (Prices control) Order, 1995 (the Drug Order of 1995 for brief) made under Section 3 of the Essential Commodities Act, 1955.
3. When this matter was taken up for hearing with respect to the application moved by and on behalf of the respondent under regulations 71 and 72 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1991, the apparent conflict between the aforesaid two decisions to this Commission was brought to the notice of the concerned Bench. Thereupon by the order passed by the Division Bench of this Commission on 30 March, 1999, the matter was referred to a larger Bench for resolution of such conflict.
4. Learned advocate Shri Pahwa for the DG has relied on the ruling of this Commission in the case of E. Merck India Ltd., supra, holding that non mentioning in the price list that it would be open to retailers to sell medicines below the prices as mentioned in the price lists would amount to restrictive trade practice. As against this, the Division Bench ruling of this Commission in the case of Rallis India Ltd., supra, has held that the respondent in that case need not be subjected to passing any cease and desist order if prices of its products are fixed under the Drugs (Price Control) Order of 1979 (the Drug Order of 1979 for brief) as prevalent at that time. It may be noted that the Division Bench of this Commission while deciding the case of E. Merck (India) Ltd., supra, did not refer to any Drug Order either of 1979 or any subsequent like order.
5. A copy of the Drug order of 1995 has been shown to us. Various provisions are made therein fixation of the maximum sale prices of bulk drugs and retails prices of scheduled formulations. Paragraph 16 thereof prohibits sale of any bulk drug or formulation by any person to any consumer at a price exceeding the price specified in the current price list or the price indicated on the label of the container or packet thereof, whichever is less, plus excise duty and all local taxes, payable in the case of scheduled formulations and the maximum retail price inclusive of all taxes in the case of non-scheduled formulations. If prices are fixed under the Drug Control Order which is made under the Essential Commodities Act, it can be said to have a force of law and it can be said that it is expressly authorised by law. We are fortified in our view by the binding ruling of the Hon’ble Supreme Court in the case of Union of India and Anr. v. Cynamide India Ltd. reported in AIR 1987 SC 1802 holding that price fixation by such Drug Control Order would be in the nature of a legislative activity. A legislative activity will certainly generate a force of law.
6. It would be quite proper at this stage to look at Section 37(3) of the MRTP Act. It has been provided therein that no cease and desist order with respect to any restrictive trade practice need be passed if such a trade practice is expressly authorised by any law for the time being in force. The fixation under the Drug order of 1995 is an authority of law and, if prices are fixed in accordance with the Drug order of 1995, such trade practice on the part of the respondent can be said to be expressly authorised by law in force. In that case, Section 37(3) of the MRTP Act enjoins a duty upon this Commission not to pass any cease and desist order. We are therefore of the view that the view taken by this Commission in its aforesaid Division Bench ruling in the case of Rallis India Ltd., supra, is the correct view and the respondent cannot be held guilty of restrictive trade practices for fixing prices of its pharmaceutical products in accordance with the Drug order of 1995. In that case it would not be necessary to mention expressly in the price list that retailers are free to sell products below their respective prices mentioned in the price list.
7. Even otherwise, the case would not fall under Section 33(1)(f) of the MRTP Act for the simple reasons that, when the prices are mentioned as maximum retail prices, it is obvious that retailers are authorised to sell products in question at prices below those mentioned in the price list. It is wisely said that the obvious need no telling or that coal need not be carried to the New Castle. It stands to reason that, when prices in the price list are mentioned as maximum retail prices, retailers are injuncted against charging prices exceeding prices mentioned in the price list for various products but they are given an express authority to sell such products below the prices mentioned in the price list. We are therefore, of the opinion that, if the price list mentions maximum prices of certain products to be charged by retailers, the authority is given to them to sell such products at prices below their prices mentioned in the price list and the deeming fiction raised under Section 33(1)(f) of the MRTP Act would thereby stand rebutted. In that case it would not be necessary to mention expressly in the price list that retailers are free to sell products below their respective prices mentioned in the price list. In that case, the respondent cannot be held guilty of adoption of and indulgence in any restrictive trade practice within the meaning of Section 33(1)(f) of the MRTP Act even in absence of a stipulation in express terms that products can be sold below their respective prices mentioned in the price list.
8. That brings us to the question of discounts offered to retailers as mentioned in the complaint application. So far as pharmaceutical products are concerned, the discount is made available at the uniform rate of 10%. Paragraph 19 of the Drug Order permits discount at the rate of 16% of the prices mentioned in the price list. In that view of the matter, discount of 10% cannot be said to be contrary to the Drug order of 1995. Even otherwise, if uniform discount is given to retailers, it cannot be said that the respondent has indulged in any unfair trade practice. So far as animal health products are concerned, the uniform discount is hardly 4%. We do not think that offering such low discount at 4% would amount to any restrictive trade practice on the part of the respondent.
9. In view of our aforesaid discussion, we are of the opinion that the respondent cannot be held guilty of adoption of and indulgence in restrictive trade practices falling within the purview of Section 33 of the MRTP Act.
10. In the result, the complaint application fails. It is hereby rejected. The NoE accordingly stands discharged, however, with no order as to costs on the facts and in the circumstances of the case.