ORDER
R.K. Anand, Member
1. A complaint was made by the Gujarat Alcohol Based Industries Development Association (GABIDA) that the members of
the All Gujarat Distilleries Association (AGDA) were charging from the users of ethyl alcohol a price in excess of and in violation of the Ethyl Alcohol (Price Control) Order, 1971. The Director-General (Investigation and Registration) (the DG) made an investigation and submitted his report. On the basis of the Director-General’s report a notice of enquiry was issued to the respondents. The Director-General also made on application under Section 12A of the Monopolies and Restrictive Trade Practices Act, 1969 (the Act for brief), for restraining the respondent association, its office bearers and members from fixing the price of ethyl alcohol in excess of the price determined by the competent authority under Ethyl Alcohol (Price Control) Order, 1971, and charging it from the users of ethyl alcohol, While the enquiry before the Commission was in progress, the Ethyl Alcohol (Price Control) Order, 1971, was amended and finally rescinded by the order No. 15021/94/91-CH II of the Ministry of Chemicals and Fertilizers (Department of Chemicals and Petrochemicals), published in the Official Gazette of the Government of India in April, 1993.
2. One of the respondents, Cellulose Products of India Ltd. (respondent No. 6) has made an application under Section 37(2) of the Act stating that the complaint on the basis of which the present enquiry was started does not survive with effect from the date the Ethyl Alcohol (Price Control) Order was rescinded in April, 1993. It has been stated that the enquiry pending before the Monopolies and Restrictive Trade Practices Commission has also become infructuous in the changed circumstances and the injunction order restraining the respondent may also be vacated.
3. The Director-General in reply has opposed the application under Section 37{2) on the ground that the respondent has not clearly admitted that it has indulged in the restrictive trade practices as alleged in the notice of enquiry and has also not given a clear cut undertaking not to repeat the same or similar trade practices in future. It has also been urged by the Director-General that as the evidence has been concluded in the enquiry, all the issues may be decided as the powers of the Commission to enquire into the alleged restrictive trade practices are not exhausted by discontinuance of the practice whether before or during the pendency of the enquiry.
4. We have heard the learned advocate for the Director-General as well as those present for certain respondents and perused the relevant notification by the Ministry of Chemicals and Fertilizers. In the course of his submissions Shri O.P. Dua, advocate for the Director-General has relied on the judgment of the Calcutta High Court in Bengal Potteries Ltd. v. M. R.T.P. Commission [1975) 45 Comp Cas 697, wherein it was held that admission of a charge is a condition precedent to accepting an application under Section 37(2) of the Monopolies and Restrictive Trade
5. Practices Act, 1909. The judgement of the Allahabad High Court in Special Appeal No. 249 of 1976, dated June 15, 1978, in the case of R.D. Saxena v. J.K. Synthetic, Ltd., was also cited in support of the contention that expiry or termination of an existing agreement would not be a ground for cessation of the proceedings and the enquiry on the basis of the infringement that took place at the relevant period of time, and was prejudicial to public interest would continue.
6. We have considered the submissions made by and on behalf of the Director-General as well as the contesting respondent and also gone through the judgments. Although the judgments of the High Courts are binding on the Commission, the facts of the case before the Calcutta High Court in Bengal Potteries Ltd. v. M.R.T.P. Commission [1975] 45 Comp Cas 697, are distinguishable from the facts in the instant case. In that case on the application filed by the Registrar of Restrictive Trade Agreements under Section 10(a)(iii) of the Act a notice of enquiry was issued to Bengal Potteries Ltd. and another for indulgence in restrictive trade practices as the sole selling agency agreement entered into by them on April 1, 1971, was allegedly objectionable. Subsequently after discussion with the Registrar of Restrictive Trade Agreements certain modifications in the agreement were carried out and directions of the Commission were sought for implementation of the modified agreement. Thus one of the issues before the Calcutta High Court was whether in view of the modifications in the selling agency agreement between the parties, the powers under Section 37(2) of the Act could be exercised by the Commission. It was held in the above judgment that before exercising any discretion under Section 37(2), the Commission must come to the conclusion that the party was guilty of adopting or indulging in restrictive trade practices or it admits that it has indulged in restrictive trade practices. This finding whether the party was guilty or not could be arrived at only at the termination of the enquiry. In other words, until the enquiry under Section 37 is completed and the Commission forms its opinion that the practice indulged in by the petitioner is prejudicial to the public interest, no order can be passed under Section 37(2) of the Act. In the instant case, admittedly a clear cut and categorical admission has not been made and the enquiry into the restrictive trade practice has also not been completed. But the facts are entirely different in the present case. While earlier by virtue of the Price Control Order of 1971, the prices of ethyl alcohol had been fixed and any contravention of this Order was an offence, after its rescission in April, 1993, there was no price restriction. In other words, with the rescission of the Price Control Order, there is no case of adoption of or indulgence in any restrictive trade practices by the respondents, The very cause of action for the enquiry by the Commission has been knocked out and what was a
contravention and restrictive trade practice ceased to he so with the rescission of the Order. In other words, the facts and circumstances had changed and therefore, the trade practice was no longer prejudicial to public interest. Accordingly, we are of the view that it is a fit case for the exercise of discretion by the Commission under Section 37(2) of the Act.
7. As regards admission by the respondents, we are of the view that it is implicit in the application made under Section 37(2) and it is not necessary that there should be an admission in so many words as contended by the learned advocate for the Director-General. We have also decided a case UTPE No. 102 of 1997, in the light of the Division Bench ruling of this Commission in UTPE No. 63 of 1985, decided on October 9, 1987, wherein it was held that it was not necessary for the respondent to admit in clear terms that it had been indulging in the unfair trade practices alleged in the notice of enquiry. Mere making of an application under Section 36D(2) of the Act would imply that there was an unfair trade practice in existence and it was on the basis of that assumption that an application under Section 36D(2) was made. Likewise in this case also it is not necessary that the respondent should be made to admit specifically that he has been indulging in the alleged restrictive trade practices. These two cases are similar except that in the instant case, the allegations against the respondents are that they were indulging in restrictive trade practices. In that view of the matter, we are of the opinion that the application under Section 37(2) deserves to he accepted.
8. Similarly, the other ruling of the Allahabad High Court is not on all fours with this case. Here it is distinguishable by the fact that the Price Control Order of 1971, was rescinded in April 1993, and after its rescission, there is no case of adoption or indulgence in any restrictive trade practice or its being prejudicial to public interest and in view of the undertaking given by the contesting respondent in para 5 of the application, there are no grounds for passing an order directing the respondent to desist from the alleged restrictive trade practices.
9. The contesting respondent has given an undertaking in the application itself that it would not indulge in the same or similar restrictive trade practice in future, It has also been stated by the contesting respondent (respondent No. 6) in its application that the orders passed by the Commission under Section 37(2) will be without prejudice to the claims of the parties for compensation under Section 12B of the Act. This order of ours shall not preclude any person from claiming compensation from respondent No. 6, according to law with respect to its adoption of and indulgence in restrictive trade practices as alleged in this case, [f such application is or such applications are made, it would be open to respondent No. 6 to defend the same on the merits on available grounds.
10. We are of the view that the undertaking satisfies the provisions of Section 37(2) and it is a fit case for the exercise of discretion under Section 37(2) of the Act. In view of the above discussion, the application is allowed and the notice of enquiry against the contesting respondent is discharged. The case against the respondent, Cellulose Products of India Ltd. is disposed of accordingly.
11. Pronounced in open court on July 6, 1998.