ORDER
1. By the instant order we propose to deal with the application under Section 36B(c) of the Monopolies and Restrictive Trade Practices Act, 1969, moved by the Director-General for instituting an enquiry into an unfair trade practice as contemplated in Clauses (i) and (iv) of Sub-section (1) of Section 36A of the Monopolies and Restrictive Trade Practices Act and the application for interim injunction under Section 12A of the Monopolies and Restrictive Trade Practices Act read with Order XXXIX of the Code of Civil Procedure, 1908, whereby it has been prayed that M/s. Godfrey Philips India Limited of Bombay (hereinafter referred to as “the respondent”) be restrained from pursuing the unfair trade practice during the pendency of the enquiry. In the first instance, it is to be examined if an enquiry merits to be instituted in the wake of the application under Section 36B(c) of the Director-General.
2. It is stated by the Director-General that M/s. Rothmans of Pall Mall Ltd., London (hereinafter referred to for the sake of brevity as “the foreign company”), is incorporated under the laws of Liechtenstien and is engaged in the business of manufacturing and marketing of different brands of cigarettes abroad. The respondent company is said to have issued advertisements marked annexure I, annexure II, annexure III and annexure III-A for the promotion of sale of cigarettes manufactured in India by the respondent company, M/s. Godfrey Phillips India Ltd. It seems that the cigarettes manufactured by the respondent-company have been given the trade name ” Oxford “, but at the same time, by advertisements at annexure I and annexure II in particular, it is sought to be made out as if these cigarettes under the brand name ” Oxford ” are being manufactured by the foreign company and marketed in India through the respondent company, i.e., M/s. Godfrey Philips India Ltd. It is stated that a glance at the advertisement is sufficient to show that these cigarettes manufactured by the respondent company have affiliation with the cigarettes manufactured abroad by the foreign company. It is submitted that a letter was addressed to the respondent on March 30, 1988, to enquire if they had any technical collaboration or association with the foreign company in the matter of manufacturing of the cigarettes in India. By letter dated April 13, 1988, the respondent company sought time to reply to the queries of the Director-General, but they sent a copy of the trade mark agreement marked annexure VI. This agreement purports to have been entered into between the respondent company and the foreign company on June 9, 1987. By virtue of this agreement, the foreign company granted to the respondent company a licence for the use of the trade mark of the foreign company for the purpose of the sale of the cigarettes manufactured in India by the respondent company. Under Clause 11 of this agreement, the foreign company is not to be paid any royalty, technical service charges, fees or other remuneration in consideration of the use of the trade mark of which the foreign company is the proprietor. In the premises, the Director-General has laid emphasis that the tenor of the advertisements for the promotion of the sale of the cigarettes is misleading both from the standpoint of the quality, grade or composition of the cigarettes and also from the stand-point of the sponsorship or authorship, and the characteristics of these goods.
3. It is true that in para 2 of the agreement it is stated that the goods to be manufactured by the respondent-company will conform to the quality, specifications, standard, formula, processes or directions prescribed by the foreign company from time to time. Yet the fact remains that the cigarettes are being manufactured in India by the respondent-company and there is nothing to show that the foreign company has in any way an effective control on the manufacturing process of these cigarettes. In fact, Mr. O. P. Dua, Advocate, learned counsel for the Director-General, drew our attention to the Government of India policy statement, vide annexure VIII to stress that foreign collaboration can be permitted by the Government in sophisticated and high priority areas, in export-oriented or import substitution manufacturing or for enabling indigenous industry to update the existing technology to efficiently meet domestic requirements and/or to become competitive in the export market. According to learned counsel, there is no evidence furnished by the respondent-company to the effect that so much orchestrated foreign collaboration has at all been permitted in this case by the Government of India, much less the use of the foreign trade name for the sale of these cigarettes by the respondent-company. This being so, it is submitted by learned counsel that this para 2 in the agreement cannot be taken on its face value and may itself be deceptive. In the circumstances, we do agree that it is a fit case for the institution of an enquiry under Clauses (i) and (iv) of Sub-section (1) of Section 36A of the Monopolies and Restrictive Trade Practices Act inasmuch as a misleading impression is being created on the consumers that the cigarettes manufactured by the respondent company under the brand name ” Oxford” ensure a quality corresponding to the foreign made cigarettes and manufacturing collaboration with the foreign company. We order accordingly, directing that a notice of enquiry shall be issued to the respondents returnable by July 8, 1988.
4. This brings us to considering the application under Section 12A of the Monopolies and Restrictive Trade Practices Act for the issuance of an exparte interim injunction so that the public is no longer fed on false and misleading representations with respect to the quality, etc., and the manufacturing process of these cigarettes. It is particularly stated in this application that the arrangement with the foreign company does not appear to have been approved by the Government of India and also that the alleged arrangement has not been stated in the advertisement. The said agreement with respect to permitting the use of the trade name ” Oxford ” by the respondent-company, according to the Director-General, is a circumvention of the Government of India policy and the provisions of the Foreign Exchange Regulation Act. According to the Director-General, the advertisements have been designed in such a way as to confuse the consumer with respect to the company manufacturing the cigarettes. These cigarettes, as manufactured, are longer in size than the normal size prevalent in Indian markets. This fact coupled with the use of foreign brand name “Oxford” makes the confusion worse confounded for the Indian smoker in distinguishing whether it is a foreign-made cigarette or an Indian-made one.
5. After hearing Mr. O.P. Dua, Advocate, learned counsel for the Director-General, and having perused the photostat copies of the advertisements placed at annexures I, II and III-A and also the affidavit of Shri N.P. Bhat, Director-General, in these respects, we are left in no doubt that by the said advertisements the respondent-company is playing upon the minds of credulous consumers that the cigarettes which are being marketed are manufactured by or with the active collaboration of the foreign company by the same manufacturing process and with the same or identical characteristics as of the foreign-made cigarettes under the brand name ” Oxford ” which are selling abroad. This misleading impression is further accentuated in no less a measure by the brand name “Oxford” particularly when in advertisements in annexures I and II simply the name of M/s. Rothmans of Pall Mall, London, appears. Even
the advertisement marked as Annexure III prominently gives the name of the foreign company along with the respondent company with respect to the manufacturing of these cigarettes under the brand name ” Oxford “. It is nowhere shown, a fact which rather required to be shown prominently, that this brand name ” Oxford ” has merely been permitted to be used by the foreign company on the cigarettes manufactured in India by the respondent company. It would not be out of place to make a reference to F.T.C. v. Royal Milling Company (288 US 212) extracted from Dugar’s Monopolies and Restrictive Trade Practices Law and Practice, at page 301. In the said case, the complaince company was not actually grinding wheat into flour but was mixing, blending and packaging wheat into bags for sale. But they were using the trade name containing the words ” milling company “, ” mill ” or ” manufacturer of flour “. The court permitted them to use the word ” milling ” only on condition that these names were accompanied by a statement that the respondent was not a grinder of the grain.
6. This being so, it is a prima facie case of unfair trade practice of misleading the public with respect to the quality, standard and composition of cigarettes as well as with respect to the actual manufacturer thereof. Further, as regards the balance of convenience, obviously, it has to be weighed on considerations of public interest in preference to the individual interest. Larger public interest has to take precedence over the individual interest. We do feel that it is a fit case which requires this sort of advertising to be checked forthwith without loss of further time because the consumer should no longer be allowed to be fed on false notion of the source of these cigarettes. Any delay will tend to defeat the very object in a market like India where a large section of the people are crazy about foreign-made goods. At this stage, however, we should not concern ourselves with the use of the trade name ” Oxford “. What is required to be guarded against is that the name of M/s. Rothmans of Pall Mall, London, is not used in any advertisement or in any sort of representation to the public in the marketing or sale of these cigarettes. Consequently, we hereby direct the issuance of an ad interim injunction under Section 12A of the Monopolies and Restrictive Trade Practices Act read with Order XXXIX of the Civil Procedure Code directing that the respondent company shall refrain from using the name of Rothmans of Pall Mall, London, or any design as to highlight foreign collaboration or technology except to the extent of using the trade name ” Oxford ” and either directly or indirectly no impression shall be given that the foreign company is concerned in the manufacture or marketing of these cigarettes. The respondent company shall show cause why this interim injunction order be not made absolute for the duration of the enquiry and with this
object the case would come up before the Commission on May 13, 1988, for a hearing. Application or reply, if any, considered necessary by the respondent shall be filed before the date of hearing after furnishing advance copy thereof to the Director-General. In terms of Rule 3 of Order XXXIX of the Civil Procedure Code, the Director-General shall immediately send a copy each of the application under Section 36B(c), application under Section 12A, affidavit and the impugned advertisements to the respondent and an affidavit to the effect that the same has been carried out shall be filed before the Commission as contemplated by law.
7. It is to be made abundantly clear that whatever we have said or discussed in the course of this order shall not in any way influence the course of the enquiry or the final order as a result thereof.
8. Pronounced.