ORDER
R.L. Sudhir, Member
1. The Director General (Investigation and Registration) [DG for short] has moved an application under Section 36-B(c) of the Monopolies and Restrictive Trade Practices Act, 1969 [referred to as the MRTP Act hereafter] alleging that Can Fin Homes Limited, the respondent, has made a misleading representation in its advertisement published in the Hindustan Times dated 7th March, 1996, by stating that the deposits are ‘RISK FREE’. It has been alleged that the aforesaid claim is false and misleading amounting to unfair trade practice within the meaning of Section 36-A(1)(ii), (iv) and (vi) of the MRTP Act. The respondent Company is stated to have been sponsored by Canara Bank in association with HDFC, Unit Trust of India, Canfina and others and is engaged in the business of providing housing loans and financial assistance for construction, repair, renovation and purchase of ready built houses, flats, apartments, etc. The respondent also accepts deposits from the public and offers them high returns. DG also moved an application under Section 12-A of the MRTP Act seeking interim injunction against the respondent.
2. A Notice of Enquiry (NOE) was issued to the respondent on 6th July, 1996. The respondent filed its replies both to the NOE and the interim relief application. In its reply, the respondent has not only denied the allegation of false/misleading representation but has also challenged maintainability of the enquiry. DG filed a rejoinder to the reply of the respondent.
3. On the 12-A application, the Commission granted ex parte ad interim injunction restraining the respondent from
issuing such advertisements till further orders. The ad interim injunction was subsequently confirmed and made operative till the final disposal of the complaint petition.
4. After completion of pleadings, the following issues were framed :
(1) Whether this Notice of Enquiry is not maintainable for the reasons taken by the respondent as preliminary objection in its reply challenging the jurisdiction of this Commission under the Act ?
(2) Whether the respondent is or has been indulging in the unfair trade practices indicated in the NOE ?
(3) If the answer to the foregoing issue is in the affirmative, whether the alleged unfair trade practices are prejudicial to the public interest or to the interest of the consumer or consumers generally ?
Parties filed their affidavits of evidence along with supporting documents. The respondent led oral evidence as well which is on record. Arguments were heard on 19th March, 2002.
5. Mr. R.D. Makheeja, learned Counsel for the DG forcefully argued that the claim of ‘Risk Free’ deposits made in the impugned advertisement is patently false and misleading. Deposits such as those of the respondent are inherently susceptible to risk simply because they are unsecured. He further submitted that while the main advertisement conforms to the direction given in Rule 3 of the Non-banking Financial Companies and Miscellaneous Non-banking Companies (Advertisement) Rules, 1977, the short advertisement released subsequently does not meet this requirement as it does not specify that the deposits are unsecured. In Mr. Makheeja’s view, it should necessarily be done so as to put the depositors on guard. To the query, whether DG has received any complaint from any of the depositors, Mr. Makheeja replied in the negative but contended that absence of any default on the part of the respondent in the past is no
guarantee for the future. He, therefore, pleaded that the false and misleading representation made in the impugned advertisement deserves to be condemned as an unfair trade practice. Finally, he prayed for issuing an order directing the respondent to cease and desist from publishing such advertisements in future.
6. Mr. S.S. Kumar, learned Counsel for the respondent refuted the charge that the ‘RISK FREE’ claim of the respondent is false and misleading. He submitted that the ‘RISK FREE’
claim is not without any basis as presumed by the DG. The respondent’s claim is based on the credit rating done by an independent and reputed credit rating agency, namely, the ICRA Limited (Investment Information and Credit Rating Agency of India Limited) which rated the respondent’s deposits as ‘MAA’ indicating ‘high safety’. To demonstrate the creditworthiness of the respondent, he stated, that there has not been a single complaint from the depositors in the past. He stressed that the fact that all the deposits are held by Government Agencies, not only strengthens the confidence of the depositors but also shows the
creditworthiness of the respondent and the risk free nature of the deposits because of which he added, the deposit turnover of the respondent has swelled up to over Rs. 430 crores. Mr. Kumar placed reliance on the following rulings :
(i) Lakhanpal National Limited v. MRTP Commission and Another reported in (1993) 1 CTJ 345 (SC);
(ii) The Director General (Investigation and Registration) v. Arora Contractors and Builders Pvt. Ltd., reported in (1994) 2 CTJ 64 (MRTP);
(iii) Director General (I&R) v. Tata Finance Ltd., reported in II (1999) CPJ 75 (MRTP)=1999 CTJ 360 (MRTP); and
(iv) Director General (I&R) v. Sahara India Savings and Investments Corporation Ltd, and Another, reported in 2001 CTJ 346 (MRTP).
7. We have weighed and considered the submissions made by the learned Counsel for
the parties and have also gone through the relevant rulings and the evidence on record. In Lakhanpal National Limited’s case (supra), the Hon’ble Supreme Court has observed that “when a problem arises as to whether a particular act can be condemned as an unfair trade practice or not, the key to the solution would be to examine whether it contains a false statement and is misleading and further what is the effect of such representation … on the common man ? …..The issue cannot be resolved by merely examining whether the representation is correct or incorrect in the literal sense. A representation containing a statement apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly, a statement, which may be inaccurate in the technical literal sense can convey the truth and sometimes more effectively than a literally correct statement. It is, therefore, necessary to examine whether the representation, complained of, contains the element of misleading the buyer. Does a reasonable man on reading the advertisement form a belief different from what the truth is ? The position will have to be viewed with objectively, in an impersonal manner”. The Commission followed this ruling in Tata Finance Ltd.’s case (supra), decided on 29th June, 1999. In Arora Contractors and Builders Pvt. Ltd.’s case (supra), the Commissioner observed that, “It must, however, be remembered that before a ‘cease and desist’ order may be passed under Section 36D(1), it has to be affirmatively proved that the impugned trade practice is prejudicial to the public interest or to the interest of any consumer or consumers generally. This, in our opinion, is an independent requirement of law. It is noteworthy that while in regard to restrictive trade practices there is a presumption under Section 38 of the MRTP Act that such a trade practice is prejudicial to public interest, there is no such corresponding presumption available in regard to the unfair trade practices”.
8. When we look at the totality of facts and circumstances of this case in the light of the rulings referred to above, we find it difficult to accept the view that the ‘RISK FREE’ claim of
the respondent is false and misleading. Although we do feel that in the impugned short advertisement also, the respondent should have specified that the deposits were unsecured as it did in the first advertisement. But other factors being in favour of the respondent, this omission is of no consequence and it cannot render the advertisement false and misleading, firstly, because the respondent had mentioned this fact in the first advertisement and secondly, it is common knowledge that such deposits are generally unsecured. The intention of the respondent does not appear to be to keep the depositors in the dark. The ‘RISK FREE’ claim, on the face of it looks exaggerated. But we cannot ignore the fact that it is backed by credit rating done by the ICRA which rated these deposits as ‘MAA’. The past performance of the respondent and above all, the absence of complaints from any of the depositors lends further credence to the claim of the respondent.
9. In today’s competitive world, use of hyperboles and puffed-up statements couched in attractive words and phrases is an accepted practice in the advertising sector. Such advertisements cannot be struck down unless it is established beyond doubt that they contain a false or misleading representation which is prejudicial to public interest. In the instant case the ‘RISK FREE’ claim is merely an assertion of confidence and creditworthiness of the respondent which is duly supported by credit rating and past performance. Further, the DG has failed to establish if the impugned advertisement was in any way prejudicial to public interest. This being so, the claim made in the impugned advertisement does not meet the parameters of unfair trade practice as defined in Section 36-A of the MRTP Act.
10. In the light of the facts and circumstances discussed above, we conclude that no case of unfair trade practices is made out against the respondent. DG’s application accordingly fails and the NOE is discharged with no order as to costs.