CASE NO.: Appeal (civil) 3224 of 1993 PETITIONER: Hindustan Ciba Geigy RESPONDENT: Union of India & Ors. DATE OF JUDGMENT: 20/11/2002 BENCH: CJI,H.K. Sema & S.B. Sinha.. JUDGMENT:
J U D G M E N T
S.B. SINHA, J :
The substantial question of law involved in this appeal under Section
55 of the Monopolies and Restrictive Trade Practices Act, 1969 (‘the Act’) is
whether under Section 36A of the Act, (as it stood then), causation of loss or
injury to the consumer of goods or service is a sine qua non for initiation of a
proceeding thereunder.
One H.D. Murzello made a complaint before the Director General of
Investigation and Registration alleging unfair trade practice against the
appellant herein as regards an advertisement issued by them which appeared
in “The Times of India” dated 16th September, 1986 to the following effect:
“Aerocol’s family background:
Aerocol’s credibility as a wonder wood adhesive
stems from 2 facts
* An addition to the Araldite and Aerolite family, it
is a product from Hindustran Ciba Geigy;.
* Already a market leader in UK, it is known for
living up to its promise.”
On the said complaint, the Director General was directed to make a
preliminary enquiry. Upon such inquiry, a report was submitted on 15th
April, 1987. On the basis of the recommendations made in the said
investigation report, a Notice of Enquiry was issued by the Commission on
30th July, 1987 against the appellant herein; the relevant portion thereof is as
under :-
“The respondent abovementioned is engaged in
selling adhesive under the trade name Aerocol. It had
issued an advertisement that appeared in Times of
India dated 16.9.1986, making claim that the product
is manufactured by it. It has come to the notice of the
Commission that the said product is manufactured by
M/s Kiran Industries. The respondent by
misrepresenting to the public that the product is
manufactured by it while it is manufactured by some
other company has caused loss and injury to the
consumers and thereby indulged in the unfair trade
practice falling within the purview of Section
36A(1)(v) of the Act.
The respondent had also claimed that its product is the
market leader in United Kingdom. It has come to the
notice of the Commission that the claim made by the
respondent has not been duly substantiated by it. The
respondent, by making such tall claim, has caused
loss and injury to the consumer and indulged in the
unfair trade practice falling within the meaning of
Section 36A(1)(i) of the Act.”
Pursuant to or in furtherance of the aforementioned Notice of
Enquiry, the appellant filed their reply not only controverting the allegations
raised therein but also raised preliminary objection as regards maintainability
thereof; whereupon the Commission, framed the following issues:-
“1) Is the enquiry not legally maintainable?
2) Did the respondent indulge in any unfair trade
practice as alleged in the N.I.E. and PIR?
3) In case Issue No.2 is decided in the affirmative,
is the unfair trade practice prejudicial to the
public interest or to the interest of any consumer
or consumers generally?
4) Relief.”
The Commission accepted the arguments raised on behalf of the
counsel for the Director General and held that the words “thereby causes loss
or injury to the consumer” would not mean actual loss or injury. The
Commission in aid of its aforementioned finding, relied upon the decision of
larger Bench in Colgate Palmolive (India) Ltd. v. M.R.T.P. Commission &
Ors. in U.T.P.E. No.41 of 1984 decided on 19th June, 1991.
Section 36A of the Act, as it stood then, reads as under :-
“36A. Definition of unfair trade practice.- In this
Part, unless the contest 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 :-
”
A bare perusal of the aforementioned provision would clearly go to
show that an unfair trade practice would mean 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 practices specified therein adopted
and as a result thereof loss or injury has been caused to the consumers of such
goods or services, either by eliminating or restricting competition or
otherwise. It would furthermore clearly go to show that the two conditions
precedent mentioned therein are required to be read conjunctively and not
disjunctively.
Thus, the aforementioned provision, in our considered opinion,
leaves no manner of doubt that an inquiry can be initiated against the noticee
not only when it adopts or one or more practices specified therein but also
thereby it must cause loss or injury to the consumers.
Furthermore from a perusal of the notice dated 30.7.1987 itself it
would appear that definite allegations were made therein that by reason of the
impugned action on the part of the Appellant, the consumers suffered loss or
injury.
The Commission, therefore, in our opinion, committed a manifest
error in holding that the actual loss or injury need not be caused to the
consumers. This aspect of the matter has been considered by this Court in
H.M.M. Ltd. v. Director General, Monopolies and Restrictive Trade Practices
Commission [(1998) 6 SCC 485], wherein it was held :
“For holding a trade practice to be an unfair
trade practice, therefore, it must be found that it
causes loss or injury to the consumer. Insofar as
prizes are concerned, there has to be the intention of
not providing them as offered or creating the
impression that they are being given or are being
offered free of charge when in fact they are fully or
partly covered by the amount charged in the
transaction as a whole. The conduct of a lottery for
the purpose of promoting the sale, use or supply of a
product is an unfair trade practice. It is difficult to
see clear sustainable findings on the these aspects in
the judgment under appeal.”
Be it noted that the decision of the larger Bench of the Commission in
Colgate Palmolive (India) Ltd., whereupon the Commission relied upon has
been reversed by this Court in Civil Appeal Nos.891 of 1993 etc. by a
judgment delivered this date.
For the aforementioned reasons, the impugned judgment cannot be
sustained, which is set aside accordingly. The appeal is allowed but in the
facts and circumstances of the case, there will be no order as to costs.
