CASE NO.: Appeal (civil) 891 of 1993 PETITIONER: Colgate Palmolive (India) Ltd. RESPONDENT: M.R.T.P. Commission & Ors. DATE OF JUDGMENT: 20/11/2002 BENCH: CJI. & S.B. Sinha. JUDGMENT:
J U D G M E N T
W I T H
CIVIL APPEAL NOS.2446 OF 1993 AND 2965 OF 1989
S.B. SINHA, J :
Interpretation of Section 36A of the Monopolies and Restrictive Trade
Practices Act, 1969 ( ‘the M.R.T.P. Act’) is in question in this batch of
appeals which arise out of the judgments and orders passed by the
Monopolies and Restrictive Trade Practices Commission (‘the Commission’),
New Delhi whereby and where-under advertisements issued by the appellant
herein announcing a contest was held to be an unfair trade practice within the
meaning thereof.
The fact of the matter is being noted from Civil Appeal No.891 of
1993 Colgate Palmolive (India) Ltd. vs. Monopolies & Restrictive Trade
Practices Commission & Ors,.
The appellant had inserted an advertisement in several newspapers in
September, 1984 announcing a contest known as “Colgate Trigard Family
Good Habits Contest”. ‘Trigard’ is the name of tooth-brush manufactured by
the appellant. By reason of the said advertisement, a contest apparently for
the purpose of educating the families for inculcating good habit of taking care
of dental health was announced.
The brief particulars of the contest are as under:-
As a condition precedent to participating in the contest each
prospective participant was required to send two upper portion of the cartons
in which the Trigard Tooth-brushes were sold. These two upper portions of
the carton were to be sent along with each entry form which was required to
bear the dealers’ name and address duly rubber-stamped on the form.
Obviously this necessitated the purchase of two Trigard Colgate brushes by a
prospective participant in the contest. The entry form contained four
questions, each with two alternative answers which were also printed. The
contestant was required to tick mark the correct answer.
By way of illustration the appellant had already ticked the correct
alternative in the case of first question which was as follows :-
“Brush in the morning;
(a) only in the morning;
(b) in the morning and after every meal”
In the form alternative (b) had been ticked.
There were similar three questions with alternative answers. Anyone
with an ordinary knowledge of dental health could tick mark the correct
answer to those questions. But this was not enough. In addition to answering
the questions as mentioned above, each contestant had to write a sentence not
exceeding ten words describing as to why the contestant’s family used
Colgate Trigard Tooth-brush. The best entry in this regard would win the
first prize. There were several other prizes for second, third and fourth
winners. In all there were fifty prizes.
Appellant further offered 825 consolation prizes of Rs.100/- each and
1200 early bird prizes of Rs.50/- each to be awarded to those 100 entries
which were received first every week. The last mentioned prizes were
irrespective of whether the answers to the questions were correct or not and
irrespective of the merit of the slogan which was to be provided by the
contestant.
A complaint was made to the Commission alleging that the said
contest which was organised by the appellant for the purpose of promotion
of sale of its product was in its own interest and prejudicial to the interest of
the consumer generally as a result whereof serious injury or loss to the
consumer concerned was caused. The complainant alleged that such
contests fell within clause (b) of paragraph 3 of Section 36A of the M.R.T.P.
Act.
On receipt of the said complaint, an investigation was directed to be
made, pursuant whereto and in furtherance whereof, upon an enquiry, a
preliminary investigation report was submitted by the Director General, who
also came to the conclusion that the said contest was covered by Section
36A(3)(b) of the M.R.T.P. Act.
In terms of the recommendations made by the Director General, a
notice of enquiry dated 3rd December, 1984 was issued, the relevant portion
whereof reads thus :-
“AND WHEREAS on perusal of the above-
said complaint and preliminary investigation report
submitted by the Addl. Director General, it appears to
the Commission that the Respondent is indulging in
the Trade Practice of conducting a contest (Colgate
Trigard Family Good Habits Contest) for the purpose
of promoting the sale of its product (Tooth Brushes)
and also for the purpose of indirectly promoting its
business interest;
AND WHEREAS it appears to the
Commission that such trade practice is an unfair trade
practice causing injury and loss to the consumers (of
tooth brushes);
AND WHEREAS it appears that the said
contest is arbitrary in nature and eliminates
competition among the manufacturers of tooth
brushes and thus amounts to a restrictive trade
practice:”
The appellant herein filed his reply pleading, inter alia, that such
contest did not cause loss or injury to the consumers by eliminating and
restricting competition or otherwise. It was contended that the contest was
educative inasmuch as by inducing the users of the tooth-brushes to think
upon the questions of the contest, they would be made aware of the necessity
to keep good dental health. It was pointed out that the best answer to the
question was to be judged by three eminent persons from different fields
being the Editor of Illustrated Weekly, the Editor of Eves Weekly and a T.V.
personality and thus there was no element or chance of arbitrariness in the
selection of the winning slogan.
A Bench of the Commission consisting of Mr. H.C. Gupta and Mr.
D.C. Aggarwal heard the said enquiry. Mr. Gupta came to the conclusion
that there was no loss or injury caused to the consumers; whereas Mr.
Aggarwal differed from the said view holding that the loss or injury was
inherent in the case of trade practices mentioned in paragraph 3 of Section
36A of the MRTP Act.
As the members of the Division Bench of the Commission did not
formulate any question to be decided by a third member, the matter was
directed to be heard by a Full Bench. By reason of the judgment under
appeal, the Commission, inter alia, agreed with the following findings of Mr.
Aggarwal :
“..”and thereby causes loss or injury to the
consumers” are words of description which indicate
that the trade practice described in Section 36A of
the Act are vehicles of loss or injury.”
It was further held :
“.The contest ceases to be innocent if it is held for
the purpose of promoting the sale or the business
interests of the organiser of that contest. Some of
the features of the contest under examination may
be noted. The contest induces the consumer to buy
minimum two tooth brushes to enable him to
participate in the contest. If he wants to send more
entries he is naturally required to purchase
proportionately greater number of tooth brushes.
There is no ceiling on the number of entries to be
sent by the contestant. An obnoxious feature of this
contest is about the prizes which were awarded to
the persons whose entries were received early in the
week. This aspect of the contest has nothing to do
with the skill and was based totally on chance. The
number of losers in terms of money in this part of
the contest cannot be insignificant. The early bird
aspect of the contest was purely in the nature of
lottery.”
Mr. Ashok Desai, learned Senior Counsel appearing on behalf of the
appellant would, in support of the Appeal, urge that the Commission committed a
manifest error of law in arriving at the aforementioned conclusion by misreading and
misinterpreting the provisions of Section 36A(3)(b) of the M.R.T.P. Act. The
learned counsel pointed out that the Commission did not find any actual loss or
injury caused to the consumers by reason of the said advertisement nor any
allegation in that behalf had been made. It was submitted that in a case of this nature
even no public interest was involved. In support of this contention, the learned
counsel has placed strong reliance upon a judgment of a Division Bench of this
Court in H.M.M. Ltd. v. Director General, Monopolies & Restrictive Trade
Practices Commission [(1998) 6 SCC 485] , (wherein one of us Hon. G.B. Pattanaik,
CJI. was a member).
Section 36A(3)(b) as it stood at the relevant time reads as under :-
“36A. Definition of unfair trade practice. In this
Part, unless the context otherwise requires, “unfair
trade practice” means a trade practice which, for
the purpose of promoting the sale, use or supply
of any goods or for the provision of any services,
adopts one or more of the following practices and
thereby causes loss or injury to the consumers of
such goods or services, whether by eliminating or
restricting competition or otherwise, namely :-
xxx xxx xxx xxx
3(b) the conduct of any contest, lottery, game
of chance or skill, for the purpose of
promoting, directly or indirectly, the sale, use
or supply of any product or any business
interest;”
A bare perusal of the aforementioned provision would clearly indicate
that the following five ingredients are necessary to constitute an unfair trade
practice :
1. There must be a trade practice (within the meaning of section
2(u) of the Monopolies and Restrictive Trade Practices Act);
2. The trade practice must be employed for the purpose of
promoting the sale, use or supply of any goods or the
provision of any services;
3. The trade practice should fall within the ambit of one or more
of the categories enumerated in clauses (1) to (5) of Section
36A;
4. The trade practice should cause loss or injury to the consumers
of goods or services;
5. The trade practice under clause (1) should involve making a
“statement” whether orally or in writing or by visible
representation.
Causation of loss or injury thus is a sine qua non for invoking the
principles of Section 36A of the M.R.T.P. Act. The Commission, in our
considered opinion, committed a manifest error in holding that the actual loss
or injury is not an essential ingredient of the unfair trade practice.
It is now a well-settled principle of law that a literal meaning should
be assigned to a statute unless the same leads to anomaly or absurdity. The
terminology used in the provisions is absolutely clear and unambiguous. As
noticed hereinbefore, in terms of the aforementioned provisions not only a
trade practice is resorted to for the purpose of promoting sale or use or supply
of any goods or services, as specified therein but thereby loss or injury to the
consumers of such goods or services must be caused. The word ‘thereby’
must be assigned its plain meaning for interpretation of the aforementioned
provision.
In H.M.M. Ltd’s case (supra), this Court has clearly held that for
holding a trade practice to be an unfair trade practice, it must be found that it
had caused loss or injury to the consumer.
We may notice that on or about 1993 an amendment has been made
whereby the words “causing loss or injury to the consumer” were omitted
which also goes to show the law as it stood thence, ‘loss or injury to the
consumer’ was a pre-requisite for attracting the provisions of Section
36A(3)(b) of the Act.
In interpreting the said provision, the ‘Mischief Rule” should be
resorted to.
For the view, we have taken, the impugned judgments cannot be
sustained, which are set aside accordingly. The appeals are allowed but in
the facts and circumstances of the case, there will be no order as to costs.