ORDER
1. This enquiry initiated suo motu by the Commission under Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969, read with regn. 58 of the, Monopolies and Restrictive Trade Practices Commission Regulations, 1974, raises a question of considerable public importance pertaining to what has been described by M/s. Sarabhai M. Chemicals Pvt. Ltd. (first respondent) as a ” sale of know-how ” by a foreign collaborator, M/s. E. Merck A.G. (second respondent), which in spite of service of notice of enquiry have not chosen to contest, and were set ex parte on September 20, 1976.
2. It is necessary to set out at some length and in detail certain background of facts which have been either admitted or made out. M/s. Jayant Vitamins Ltd., hereinafter referred to, for the sake of brevity, as J.V. and/ or the informant brought to the notice of this Commission the restrictive trade practice committed by both the respondents and referred, inter alia, to a certain clause in an agreement between the respondents, the details of which will be noticed presently. The Commission, however, initiated proceedings suo motu under Section 10(a)(iv). On the 28th October, 1958, two agreements were entered into between both the respondents purporting to be for the “sale” of ” know-how ” and for the rendering of certain services ; there were two separate agreements regarding, (i) the former, and (ii) the latter. The know-how agreement, as the same will be called hereafter for the purpose of convenience of reference, contained an exclusivity clause preventing the first respondent from disclosing the said know-how and also the second respondent from setting up or carrying on any similar competitive manufacture business in India. The agreement in respect of sale of know-how dated 28th October, 1958, between the respondents sets out that the first respondent, namely, the Indian company, had requested the second respondent, namely, the German company, to provide and make available to them technical and other data and know-how necessary for the manufacture of fine chemicals, pharmaceutical chemicals, vitamins, insecticides, analitical reagents and other allied products in India and that the second respondent had agreed to do so in the manner mentioned in the said agreement. Only 24 products had been listed specifically in the said agreement but there was reference to further products among the second respondent’s range of products, which might be agreed upon to be given to the first respondent from time to time. The second respondent agreed that it will, from time to time and at all times, make available in Germany to the duly authorised agents of the first respondent such know-how within the German company’s knowledge and capability necessary for the use of the first respondent in its manufacture in India of all such products which had been specifically mentioned as well as further products which were compendiously described as ” listed products “. Including 24 products referred to earlier, the first respondent claimed—and this was not disputed in the pleadings–that before the agreement was terminated in 1969, the know-how of (399 + 53 = 452) products had been passed on to the first respondent. Shri Dewan, learned counsel for the informant, however, explained that the 399 + 53 items were really 598 items. To this aspect we shall revert later. The consideration for providing such know-how was that 13% of the issued capital of the first respondent was to be paid to the second respondent by the allotment to the latter or its nominees fully paid-up equity shares in the capital of the company. The agreement was concluded for a period of twenty years beginning from the date of the incorporation of the company which was 28th May, 1958, with a further provision that if notice to the contrary was not given in writing by either party three years prior to its expiry, it would automatically continue to remain in force until three years. previous notice of termination was given in writing by either party; it is for this reason that we refer to the period provided by this agreement as for ” 20 years or more “. On the same day there was another agreement between the same parties described as ” agreement on services” wherein also the above earlier agreement was described as one ” for the outright sale of know-how ” ; it further provided for issue to the second respondent 2% of every issue of equity capital (in addition to the 13% provided in the earlier agreement) that would be made by the first respondent from time to time. It would be needless to refer to the other provisions in this service agreement.
3. On 15/24th July, 1969, nearly 10 years thereafter, in pursuance of a, ” mutual decision ” on the part of both the respondents, the above two agreements were terminated and a fresh agreement entered into. The expression ” listed items ” employed in the earlier agreements was clarified as referring to the products mentioned in annexures A and B to the new agreement, which make the total of 399 + 53, namely, 452, as noticed earlier. Either party released the other from all- proceedings, claims, demands, whatsoever, under the earlier agreements. Clause 3 specifically provided that the first respondent may continue to use the second respondent.s know-how which was already in the possession of the first respondent. It also contained the following Clause (Clause 9) which has been impugned as a restrictive trade practice :
” (9) E.M. (2nd respondent) agrees that from the date both parties signed this agreement up to the 28th October, 1978, E.M. shall not directly or indirectly either by itself or by its licensees or agents manufacture within the Union of India any of the LISTED ITEMS and shall not package, sell or distribute such products within the Union of India. E.M., however, shall be free to import into the Union of India any such products and shall be free to package.to sell and to distribute such imported product within the Union of India whether by itself or a licensee or an agent. ”
4. It was conceded during the hearing on behalf of the first respondent that the second agreement (dated 15th/24th July, 1969) was part of a process by which not only did the second respondent withdraw from first respondent.s business of manufacturing at a plant set up by it in India and selling the above products but also agreed to receive in cash such value of the shares as was allowed to the second respondent (initially and from time to time) in accordance with the earlier agreement and such further shares which it had acquired on payment of cash. The net result was that a sum of Rs. 4.5 lakhs was agreed to be paid in lieu of shares of the value of Rs. 6 lakhs, by certain persons on behalf of the first respondent-company to the second respondent-company and that the second respondent-company had thereafter no interest, whatsoever, in the business or other affairs of the first respondent in relation to the said products.
5. The thrust, in simple terms, of the contention put forward on behalf of the Director of Investigation before us is that under Clause 9, the first respondent had completely prevented the flow of further know-how in the field of the manufacture pertaining to a wide range of valuable and needed pharmaceutical and chemical products coming to India in any manner–the second respondent was not to give the further know-how (after May, 1969) to anybody in India nor manufacture any of these products itself in India. It could only import their own products manufactured outside India and sell them. It was explained that all these have been happening at a period when there has been ” extreme shortage ” of Vitamin C in particular (among others) in the country, a fact which was admitted by the first respondent itself in the letter dated 26th September, 1973, to the Under Secretary to the Government of India (page 7 of the compilation) in the following manner :
” As you are well aware, there has been an extreme shortage of Vitamin C in the country during the last three years and even though our licensed capacity is only 150 tons, we have been able to step up production by improving yields, taking bigger batches, cutting down time of reaction, working round the clock on Sundays and holidays, by addition of some balancing equipment and by various general improvements. We have thus stepped up our production from 150 tons to 261 tons per annum.” (emphasis added)
6. J.V. commenced commercial production of Vitamin C only in June, 1974, and of Sorbitol (the most valuable amongst the items in the range of items mentioned above) from October, 1975.
7. J.V.’s production figures were given by them as under :
8. Though it has been stated by the first respondent (page 83 of the com
pilation) that there are a number of manufacturers of Vitamin C and Sorbi
tol in India other than the first and second respondents, it only amounts
to a case of there being two other manufacturers of Sorbitol, namely, M/s.
Maize Products, Ahmedabad and Anil Starch Products Ltd., Ahmedabad
(said to have production capacity of about 2,000 tonnes each annually, half
of which is consumed by themselves) and Hindustan Antibiotics Ltd.,
Pimpri (a public sector undertaking) established to produce Vitamin C but
which is actually not producing any Vitamin C worth the name (though
the company has been in existence for nearly 20 years). The first respon
dent and J. V. are the only two producers of Vitamin C in the country and
till 1974, the first respondent was the only manufacturer in India of this
item. Regarding Sorbitol no particulars have been given except for a few
statements at the Bar to the above effect. Sorbitol is said to be a kind of base for the manufacture of various items like pharmaceuticals, cosmetics, etc. We have been furnished with no worthwhile information about the fine chemicals said to be manufactured in India. It was argued that there were 10 other international manufacturers of the products in question ; but none of them are stated to have made their know-how available to any in India (except in the case of Hindustan Antibiotics, as noticed above) or entered the field themselves. The further contention on behalf of the first respondent that there are a number of other manufacturers of Vitamin C, Sorbitol and fine chemicals in the rest of the world (as mentioned in pages 84-,85 of the compilation) which may serve as a source from which it might be possible for others to manufacture these items in India does not arise, nor has it to be canvassed. This would be so even independently of the difficulty that we face in the matter owing to lack of necessary particulars concerning the same. It was only vaguely stated at the Bar by Mr. Parekh that Roche Products Ltd., U.K., whose name has been set down as one of the international manufacturers of Vitamin C (page 84 of the compilation), is said to be now supplying the know-how for the Hindustan Antibiotics Ltd., Pimpri, but it was admitted in the same breath that there has been no appreciable production of Vitamin C by Hindustan Antibiotics Ltd.
9. Still we are told that imports of Vitamin C have been allowed by the
Government of India and that the quantum of such imports have been as
follows:
10. It may also be. pointedly noticed, even at this stage, that there is a specific admission of the first respondent (vide reply dated April 13, 1978, to the interrogatories served by the Director of Investigation by his letter dated 23rd March, 1978), as follows :
“Q. 1: After agreement dated the 15th July, 1969, terminating the two agreements of 1958, is it correct to say that respondent No. 1 has not received any know-how from respondent No. 2 for the manufacture of listed items as including list of new items mentioned in annexure B attached to the reply of respondent No. 1 to the notice of enquiry ?
Ans: It is true that after agreement dated 15th July, 1969, respondent No. 1 has not received any know-how from respondent No. 2 for the manufacture of ‘listed items’ as per annexure B attached to SMC reply dated October, 1975.
Q. 2: If the respondent No. 1 has received the know-how after 15th July, 1969, in respect of the above items mentioned in the preceding interrogatory, under what agreements or arrangements did it receive the same ? Ans: Does not arise." 11. It has been still further admitted that many listed products have not been manufactured at all till now by the first respondent. They amount to 234 products if the total of the products are taken at 598 (but not 399 + 53 = 452). It may also be noticed that out of the said 598 products, only 76 items, what has been called " graded " items, have been manufactured by the first respondent. Even if the total of the products are taken as 399 (excluding 53 according to calculation of the first respondent) even then no information has been given concerning them by the first respondent regard ing 147 items. It may also be noticed that even among the items manu factured, out. of the listed products, by the first respondent, there had been very long delay in manufacturing several of them--several of them were manufactured only after 1970 or thereabout. In respect of some which were not manufactured at all, ft has been merely stated in the reply of the first respondent dated April 13, 1978, that it was found advisable not to produce and market the same. It is also admitted by the first respondent in the above said reply itself (vide pages 6 & 7) that M/s. E. Merck Pvt. Ltd., subsidiary of the second respondent, is manufacturing several of the " listed items ". .When a specific question (No. 11) was put by the Director of Investigation to the first respondent, it elicited the following answer : "After the termination agreement of 15th July, 1969, E. Merck India started marketing number of items, which were included in the ' listed items ' and which they were debarred from marketing till October, 1978. E. Merck India bypassed the agreement by manufacturing and marketing .some of the items, but giving them different designation. For example, Ammonium Chloride pure cannot be manufactured and marketed by E. Merck (India). However, they have bypassed the agreement by market ing. Ammonium Chloride purified. Similarly, they have marketed Barium Chloride cryst pure instead of Barium Chloride pure cryst (listed item). Similarly, they have marketed Ammonium Sulphate purified instead of Ammonium Sulphate extra pure (listed item). Similarly, they have marketed Potassium Sulphate pure instead of Potassium Sulphate extra pure cryst (listed item) and so on. Similarly, they have marketed a number of other products by slightly changing the designation. For exam ple, if E. Merck is not allowed to market a product with the designation of extra pure', they have marketed it with the designation ' pure ' or ' for synthesis' and so on. There are no international standards laid down for
the purity of these chemicals and every manufacturer has its own standards of specification (Enclosure III-A). Respondent No. 2 is carrying out this activity in violation of Clause ‘9’. Respondent No. 1 gave the relevant facts to their Attorneys, Crawford Bayley, for their opinion. Respondent No. 1 were advised that for reasons of legal difficulties, it was not advisable to take action (please see enclosure III-B). ”
12. Still it was asserted by the first respondent that it was necessary for them to maintain Clause 9 of the agreement dated July 15, 1969, because if that clause were not there, E. Merck (India) would put in the market exactly the same designation as mentioned in the ” listed items ” of products manufactured and oust respondent No. 1 from the field of competition; besides E. Merck (India) being a foreign company would then score over the indigenous company as it has world-wide reputation and the customers generally prefer foreign goods taking them to be superior to the indigenous goods. It may also be noticed in this context (at some greater length than noticed earlier) that E. Merck (India) Pvt. Ltd. (subsidiary of the second respondent) had written a letter dated 10th February, 1975 (even before notice of enquiry was issued on August 25, 1975), informing the Commission that J.V., among many others, have been approaching them on several occasions for know-how of the items covered by the said agreement and that they had been constrained not to entertain those requests in violation of the agreement in force. This may well be viewed in the context of the director.s grievance that E. Merck has been violating the agreement in respect of some items at least. To this aspect, along with some others which are relevant, we shall revert later.
13. It is also of some importance to notice that between 1958 and 1962-63, the first respondent is said to have incurred losses every year ; even though the first respondent started making profits from the years 1963-64 onwards, the cumulative losses had to be brought forward in the accounts pertaining to the later years until the end of 1965-66; thereafter (from 1966-67 onwards) it has been constant upward of profits (vide page 82 of the compilation). It was suggested by mr. Parekh, learned counsel for the first respondent, that on account of continuing losses the second respondent severed its connection with the enterprise, a suggestion which stands flatly contradicted by the figures referred to above. For reasons best known to themselves (the suggested reason is that termination of the agreement was part of the Indianisation process of the first respondent) the respondents put an end to the two agreements of the year 1958 and entered into yet another in (15/24) July, 1969; it did not perpetuate the old undertaking but ex facie brought the old agreements to an end and extinguished all rights and obligations of both parties in the said agreements by a mutual decision to do so.
14. It is in the background of the above scenario that the following issues, which were framed on March 23, 1976, have to be discussed : Issues:
1. Whether the inquiry is competent and without .jurisdiction as alleged in para. 1 of the reply ?
2. Whether an individual restriction imposed on an individual manufacturer in connection with or as a condition of an agreement setting or assigning patent know-how or similar rights can constitute a restrictive trade practice in law in view of the submissions contained in the amended reply ?
3. Whether Clause 9 of the agreement dated 15/24th July, 1969, relates to restrictive trade practices as alleged in the notice of enquiry ?
4. If the said Clause of agreement relates to restrictive trade practices, whether the respondents are entitled to avail themselves of Section 38(1)(b), (e), (f) or (h) of the Act and the balancing Clause of Section 38(1) of the Act?
5. General including reliefs and costs.
15. Before proceeding to discuss them, it would be necessary to refer to certain orders of this Commission passed in the course of certain parleys, which appear to have become fairly common enough in proceedings of this kind before the Commission. By order dated May 27, 1977, this Commission disallowed an application on behalf of the first respondent to withdraw, drop, terminate or reject the notice issued in this case. The aspects raised by issue No. 1 were decided against the first respondent; certain questions regarding grant of copies, etc., were also disposed of; J.V. was also permitted to participate in the proceedings. By yet another order dated August 19, 1977, the Director of Investigation was required by this Commission to furnish further and better particulars, which he did. By yet another order dated December 1, 1977, the particulars set out were held sufficient since the field of competition which could be affected had been indicated by the Director; no further directions were considered necessary to be given. In the course of the said order, it was, however, observed that it will be open to the respondent (first respondent) to show that the collaboration agreement was not possible without Clause 9 and that it was in the public interest that the agreement was entered into and that it has no effect on the competitive situation prevailing between the manufacturers of the ” listed items “.
16. Issue 1 having been thus disposed of, only issues 2 to 5 survive for consideration. Issues 2 & 3 :
The substantial question raised by both these issues is whether Clause 9 of the agreement dated 15/24th July, 1969, amounts to a restrictive trade practice under Section 2(o) of the Act. The reason for prohibiting the German company from making available the know-how to any other party in India except the Indian company (R-1) has been explained in the note which the first respondent had prepared for its solicitors, Crawford Bayley & Co., Bombay, in order to ascertain whether the German, company could be stopped from marketing the items concerned. After setting out the existence of the two agreements dated October 28, 1978, and the termination by the later agreement of 1969, the following candid admission was made :
” The intention was to protect the Indian company against the competition from foreign company on all the items manufactured by S. M. (R-1). ”
17. The above statement is item No. 11 to enclosure III-B of the first respondent.s affidavit dated April 13, 1978. It was already noticed that Crawford Bayley had advised the first respondent that no permanent injunction could be served against the second respondent preventing them from manufacturing certain items in India in alleged violation of the agreement. We need not be detained by the correctness or otherwise of this opinion since all that matters for our purpose is that despite the alleged violation of Clause 9, the first respondent took no further action concerning it. The first respondent did not even care to take the opinion of the counsel; the solicitors (Crawford Bayley) do not say that they consulted counsel before giving such opinion. In any case, it is worth recalling that the Indian subsidiary of the German company (second respondent) have themselves informed this Commission by its letter dated February 10, 1975, purporting to speak on behalf of their German principals, that they could not give the know-how to J. V. or any other who have been asking for the same (many were stated to have been asking for it) since it would constitute a violation of the agreement between the respondents. It is also significant that the 1st respondent had explicitly stated, as aforesaid, that the second respondent was prevented by the 1st respondent from disclosing the know-how to any other Indian party or manufacture any of those items itself in India in order to protect themselves against competition from the foreign company.
18. At least after considerable amount of argument on aspects bearing on the above point it was realised at the Bar that the need for the first respondent getting such a protection restraining the second respondent in the manner visualised by the two agreements of 1958, could not by itself be said to be unjustified, at least to start with, because it seems plain that if the second respondent got some consideration from the first respondent for parting with the said know-how in favour of the first respondent and on that footing the first respondent spent considerably to erect their plant, etc., it would have made no sense if the 2nd respondent could have been allowed to frustrate the 1st respondent.s efforts completely by entering the field of manufacture, etc., in India either directly or indirectly. The crux of the matter, therefore, seems to be whether such a protection could have been reasonably sought by the 1st respondent and agreed to by the 2nd respondent to cover such a long period as 20 years or more having regard to the nature of the know-how which obviously pertained to an area where newer methods of manufacture and technology would have been reasonably anticipated to take place rather rapidly and frequently. In other words, a proper and relevant question that arises for consideration is whether such a long period as 20 years or more, as contemplated by the two agreements of 1958, was reasonable or excessive, having regard to the nature and circumstances of this case. It goes without saying that in the very nature of things no abstract or indefinite period could be regarded as either reasonable or excessive without regard to the circumstances ; this would, indeed, depend upon the facts and circumstances of each case. The discussion on this point has, therefore, to be confined to the facts, nature and circumstances of this case.
19. Before dealing with this crucial question, however, it may be convenient to dispose of a few other matters which were discussed at the Bar at great length but, in the ultimate analysis, seem to be of secondary importance. One of the questions debated was whether what was passed on by the second respondent to the first respondent was even more valuable than even a patent. This argument was advanced in the light of Section 15 of this Act and Section 53 of the Indian Patents Act. The former specifically restricts the application of orders made under this Act with respect to restrictive trade practices not operating so as to restrict the right of any person to restrain any infringement of a patent granted in India, or any person as to the condition which he attaches to a licence to do anything, the doing of which but for the licence would be an infringement of a patent granted in India or the right of any person to restrain any infringement of an extent to which the monopolistic or restrictive trade practice relates exclusively to the production, supply, distribution or control of goods for such export. The argument of Mr. Mukhi, for the Director, is that only patents are thus saved from the operation of orders that could be passed under this Act; the argument of Mr. Parekh, however, is that know-how covers a wide range of factors relevant for manufacture and hence more valuable than a patent right in any specific invention. It seems needless to discuss this question a priori in view of the statement which we find in a rather authoritative and knowledgeable work on the subject: Precedents on Intellectual Property and International Licensing by L.W. Melville, Second, 1-36. Melville says:
“The specific information on the production of a standardised product is usually unchanging and independent and often patentable. Generalised information on production methods is usually ephemeral and dependent on what article is being produced. The former may (unless and until patented) be classed as ” trade secrets ” and the latter as ” know-how “. Know-how usually is associated with either a patent, or a special quality product carrying a trade mark, and more rarely in association with a copyright design. Know-how is primarily a matter of tuition in shop-floor practices, personal guidance of skilled operatives, purpose-made tools, operational procedure and the like, and it tends to change as the years pass and new materials or new trends take over from the old.” The stress is, therefore, on whether the specific information bearing on production of a product is unchanging, if it is. not it is not patentable. Generalised information on production methods which is usually ephemeral and dependent on what article is being produced could not be patented. The former could be regarded as a trade secret until patented ; the latter would be know-how. The further statement in the same book. (1-37) that such information as is involved in a know-how not patentable, though confidential and valuable, is itself not property ; but in so far as it enhances the goodwill it has a value commensurate with such enhancement. As authority for the above statement in, the text, two decisions of the House of Lords and another of the Court of Appeal have been cited. It will be sufficient to specifically refer to English Electric Co. v. Musker [1964] TR 129 ; 41 TC 556 (HL), since it was decided after two other cases, both of them decided by the House of Lords, which were also cited before us during the hearing, namely, Rolls-Royce Ltd. v. Jeffrey (Inspector of Taxes) [1965] 56 ITR 580 (HL) and Moriarty v. Evans Medical Supplies Ltd. [1959] 35 ITR 707 (HL). Rolls-Royce, Evans and English Electric, all of them deal with the question whether the passing on of know-how for consideration under a transaction purporting to be a ” sale ” would be a capital or a revenue receipt for the purposes of computing income-tax. The holding in the later two cases was that the receipt of consideration by the person parting with a know-how from the person receiving it was a revenue and not a capital receipt in the hands of the person receiving such consideration. (These transactions were all prior to 19th of March, 1968. Subsequently, the statute was amended in England, the details of which are not germane to the present discussion).
20. The question that falls for consideration before us is not whether the payment of consideration was a capital or a revenue receipt. Reference was none the less made to these decisions only to lend support to the contention that such a transaction was regarded as a “sale ” in these cases despite the fact that the period of restriction following the transaction was only as short as 7 years in one of them, namely, Evans [1959] 36 ITR 707 (HL). It is needless to pursue even this aspect of the matter further because it was pointed out by Lord Radcliffe in English Electric Co. v. Musker [1964] 41 TC 556 (HL) at page 585, in language that cannot be bettered, that the transaction could, only by way of ” metaphor “, be called a sale. In other words, it was not a sale stricto senso. Mr, Mukhi, putting it at the lowest, at least doubted whether such a transaction could be a sale within the meaning of the Indian Sale of Goods Act. Even if it could be so regarded, he pointed out, in the case of an outright sale all the rights which the vendor had in the subject-matter of the sale would pass on to the vendee and there could be no scope or occasion thereafter for the vendee retaining any right in the subject-matter of the sale of the vendor imposing any condition on the vendee on the footing that the vendor had any subsisting right therein. How is it, he asked, that even after a transaction of sale (if sale it was) the German company (R-2) could have any right in the know-how that was sold in the territory (India) pertaining to the listed products for it to be able to impose such a negative covenant on itself ? When a period of time (20 years or more) was fixed (in 1958) in this regard, how could an outright sale be said to have been contemplated? Mr. Mukhi, therefore, emphasized the period of time (20 years or more) as being determinative of the same not being a sale of know-how. The so-called sale of know-how, to put it differently, was really not a sale (except by way of ” metaphor “) being a transaction for a period of time only and not without limitation of time as it should have been if it was a sale. It is well known that in the case of immovable property, for instance, an assignment of right therein for a period only–say 99 years–would be a ” lease ” and that it could not be regarded as a sale for that period. It is a well-established, principle of construction of document, for its legal effect, that the nomenclature adopted therein is not conclusive ; it will be only one of the circumstances to be taken into consideration along with other relevant considerations to find out the legal effect of that document.
21. It is, therefore, apparent, that by whatever name the said agreement of 1958 was called, it was to be effective in the matter of know-how only for a period of 20 years or more until terminated by requisite notice. It is worth recalling that it could be effective for even more, than 20 years in the eventuality of the twenty-year period expiring without any earlier notice being given and, later, three years. notice being required to put an end to the agreement. There can be no doubt that such a long period of time in relation to know-how in an area such as chemical and pharmaceutical products would be clearly excessive owing to the research and development efforts being highly sophisticated and intensive producing improvements intermittently and fairly quickly. In the matter of know-how, as noticed earlier, it is claimed that any one acquiring a mere know-how cannot claim higher rights than a patentee. Section 53 of the Indian Patents Act, 1970, provided for not more than 7 or 14 years of protection, as the case may be ; the Monopolies and Restrictive Trade Practices Act (Section 15) takes out of purview under the said Act orders passed in respect of patents (there is no such provision in the said Act for know-how being outside the Act’s purview). Section 53 of the Indian Patents Act reads as follows :
” 53. (1) Subject to the provisions of this Act, the term of every patent granted under this Act shall–
(a) in respect of an invention claiming the method or process of manufacture of a substance, where the substance is intended for use, or is capable of being used, as food or as a medicine or drug, be five years from the date of sealing of the patent, or seven years from the date of the patent whichever period is shorter ; and
(b) in respect of any other invention, be fourteen years from the date of the patent.
(2) A patent shall cease to have effect notwithstanding anything therein or in this Act on the expiration of the period prescribed for the payment of any renewal fee, if that fee is not paid within the prescribed period or within that period as extended under this section.
(3) The period prescribed for the payment of any renewal fee shall be extended to such period, not being more than six months longer than the prescribed period, as may be specified in a request made to the Controller if the request is made and the renewal fee and the prescribed additional fee paid before the expiration of the period so specified. ”
22. On the above lines Mr. Dewan, appearing for the informant, sought help from the legislative policy in this respect from the above and claimed that protection, even in the case of patents (certainly higher than know-how) could not be more than 14 years in any case and that it ought to be much less in the present case (of know-how) for this reason alone. However attractive this argument might be, it seems unnecessary to go into this question for the purpose of this case since the agreements of 1958 being for 20 years or more is not so important as the same being terminated abou-t ten years thereafter, in 1969, and both the respondents being absolved of all rights and claims arising under the earlier agreement of 1958. After the termination, in 1969, no further know-how in any of the ” listed products ” was to be passed on by the German company (R-2) to the Indian company (R-1). It is admitted by the 1st respondent that a total of Rs. 3 lakhs worth of shares (according to face value) were allotted to the 2nd respondent as consideration for the know-how and that the 2nd respondent also purchased Rs. 3 lakhs worth of shares at par ; finally, the 2nd respondent sold the said shares at a discount, namely, Rs. 4 1/2 lakhs to some persons associated with the 1st respondent. The details were furnished by the 1st respondent after the hearing was concluded. The entire value of the shares (Rs. 3 lakhs) issued to respondent No. 2 in consideration for the said know-how up to the date of the termination had been admittedly realised in cash by R-2 from some persons paying the same to R-2 on behalf of R-1 (the details pertaining to this are not important). All these were part of the termination arrangement under which R-1 was to retain all the know-how in the ” listed products ” which had been given by R-2 to R-1 that far. The impugned Clause 9 in the 1963 agreement was a purely negative covenant which totally restrained R-2 from thereafter and up to 28th October, 1978 (a few months alone are now left), directly or indirectly, either by itself or by its licensees or agents, from manufacturing Within the Union of India any of the ” listed products”. R-2 was also not to pack, sell or distribute such products within the Union of India. It was free, however, to import into the area (India) such products and also be free to package, to sell and to distribute such imported products whether by itself or licensee or agents. The ambit of this impugned Clause 9, therefore, extended beyond what had been passed on to R-1 by R-2 up to the date of the termination (15/24 July, 1969) of the previous agreement; neither the 1st respondent nor any other could get the further flow of know-how in relation to ” listed products ” and even the 2nd respondent was not to manufacture any of these products utilising the further and improved know-how that may become available after 15/24 July, 1969. The Indian scenario is well known; even judicial notice could be taken of the same. It is and has been such that there has been acute scarcity of some of these pharmaceuticals and chemicals, so vital for the health of our nation. In imposing a negative covenant of this kind on the second respondent it is obvious that the first respondent was actuated by purely private interest, an interest which completely conflicted with and was detrimental to the national interest. Even apart from it being possible to take judicial notice of the Indian scenario, the admissions made by the 1st respondent in this respect, noticed above, and the import figures regarding at least Vitamin C are clearly sufficient to draw the above inference, which seems compelling. Not only was there, in 1958 and 1969, but there is even to-day need to manufacture an increasing range of chemicals and pharmaceuticals. A perusal of the report submitted to the Government by Shri Jaisukhlal Hathi, at present Governor of Punjab, (popularly known as the Hathi Report) should be sufficient, even without more, for this purpose. It does not appear to be necessary that we should labour further what appears to us to be so obvious.
23. It is necessary to read Section 2(o) of the Act at this stage :
” 2. (o) ‘ restrictive trade practice ‘ means a trade practice which has, or may have, the effect of preventing, distorting or restricting competition in any manner and in particular:–
(i) which tends to obstruct the flow of capital or resources into the stream of production, or
(ii) which tends to bring about manipulation of prices, or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions.”
24. The importance of not only the know-how available at the time of the first agreement (1958) but also of the later know-how being passed on by R-2 to R-1 was sufficiently realised and provided for in that agreement; but when it came to a question of terminating that agreement in 1969 a complete embargo on further flow, of know-how into the country was placed. It is not as if (it is not so explained) that there was no further know-how flowing out of R & D efforts of R-2 in West Germany (FRG) or that the same was either not contemplated or had become unnecessary from the Indian point of view. The facts narrated earlier show that out of the “listed products “, about which alone discussion took place before us (neither side unfortunately referred in any significant manner to the other items among the whole range of ” listed products “), at least two major products among them, namely, Vitamin C and Sorbitpl, have been in short supply. The extreme shortage in respect of Vitamin C at least was expressly admitted by the 1st respondent in its letter (referred to above) to the Government. Despite these facts, which are obvious even otherwise, a total restriction was placed by R-1 on R-2 by means of the impugned Clause 9 in 1969, preventing further know-how flowing into India. This was clearly a calculated and deliberate attempt to make private profit at the expense of public (national) interest. The vice of this Clause is aggravated by reason of the fact that under Clause 3 of the said agreement of .1969, R-1 had safeguarded its rights in the ” listed products ” to the extent needed by providing that the know-how up to that moment in the listed products was with R-1 ; the attitude of R-1 becomes even more inexcusable when ev,en without preventing respondent No. 2 from violating the impugned Clause 9 (when in fact the violation either took place or was noticed in 1973) they sought to use Clause 9 to prevent Indian parties from acquiring further know-how at least in the listed products despite R-2, through its Indian subsidiary saying in its letter to the Commission (in 1975) that it cannot violate Clause 9 (despite its earlier violations). Except saying that in terms of the cases, Tata Engineering & Locomotive Co. Ltd. v. Registrar of Restrictive Trade Agreements [1977] 47 Comp Cas 520 (SC) and Hindustan Lever Ltd. v. Monopolies & Restrictive Trade Practices Commission [1977] 47 Comp Cas 581 (SC) the onus of proving that the practice came under Section 2(o) of this Act lay on the Director, Mr. Parekh was not able to explain to us how the impugned Clause 9 does not have on the facts of this case as explained above the effect of preventing, distorting or restricting competition in the relevant geographical area (which is the Union of India) in respect of the listed products out of which in the two major items mentioned earlier there has been acute scarcity; still not only R-1 disabled itself from getting further know-how in the ” listed products ” subsequent to 15/24 July, 1969, but also prevented R-2 as well as others manufacturing the same in India from manufacturing those products utilising later acquired and improved knoV-how in the manufacture of those products in India (a very wide range of them) being available to Indian manufacturers. The facts noticed earlier show that the 1st respondent did not manufacture many of the said products until 1970; as on date they have admittedly not even attempted the manufacture of many of them. These are sufficient to show that in the context described at length above the impugned Clause did have an adverse effect on competition and that it is highly likely to have such an effect, in terms of Section 2(o), in future also unless the situation is remedied by passing a cease and desist order against the respondents.
25. We will now briefly notice the legal position regarding ” know-how ” agreements as it seems to obtain in the USA, UK and the European Economic Community (EEC).
26. There is a .detailed discussion on the topic of secret process and technology in the USA by Wilbur Lindsay Fugate in Foreign Commerce and the Anti-trust Laws (Second Edition), pages 263-267, Section 8.7 & 8.8. The following passage on page 265 appears worth quoting :
” A former head of the Anti-trust Division, Judge Richard W. McLaren, indicated his view that the owner should be able to license secret and valuable technology for royalties because of the . public interest in getting to the market place new ideas which may be characterized as trade secrets . (Richard W. McLaren, Common Law Protection of Unpatented Ideas, speech before Symposium on Patent Law, September 25, 1969). He also included ‘ new techniques of production, which we commonly refer to as know-how (Ibid)’. With respect to restrictions in such licenses, he stated it as an ” elementary principle ” that an inventor should not be permitted to do, in a trade secret or know-how license, that which he could not do if his idea had patent protection (Ibid). The American Bar Association Antitrust Section expressed similar ideas (ABA, Section of Anti-trust Law, Anti-trust Developments, 1955-1968, 187 (1968)). See, however, A & E Plastik Pak Co., Inc. v. Monsanto Co. [1968] Trade Cases 72, 487 (9th Cir. 1968), in its 1968 supplement to the 1955 Attorney General’s Committee Report.”
27. The statutory position in England is as laid down in Section 8(5) of the U.K. Act, which has been quoted by Lord Wilberforce in Restrictive Trade Practices and Monopolies (second edition) in Section 653 on pages 300-301. Section 8(5) of the U.K. Act reads as follows :
” This part of this Act does not apply to any agreement between two persons, neither of whom is a trade association within the meaning of section six of this Act, for the exchange of information relating to the operation of processes of manufacture (whether patented or not), being an agreement to which no other person is party and under which no such restrictions as are described in Sub-section (1) of section six of this Act are accepted except in respect of the description of goods to be produced “by those processes or to which those processes are to be applied.”
28. After setting out the above provision Lord Wilberforce observed as follows :
” This Sub-section relates to ‘ know-how ‘ agreements, and is strictly limited in scope. The parties must be two (not more) individuals “or companies (including in any individual any partners and in any company any interconnected bodies corporate) and there must be no other party to the agreement. The information must relate to ‘ operation of processes of manufacture’, not to trading or selling methods, or pricing or to installation techniques. The restrictions accepted must only relate to the ‘ descriptions of goods to be produced ‘–i.e., must not be of the kind referred to in Section 6(1)(a), (b), (d) or (e) nor must they be related to the quantities of goods to be produced. The agreement must be for the ‘ exchange ‘ of information, so that each party must supply information to the other : an agreement by which information was furnished by one side only would not be within the section.”
29. The legal position in the EEC has been explained by D. Barounos in EEC Anti-Trust Law, Principles and Practice (1975). On pages 235-237 he explains the legal position concerning know-how agreements/licences and refers to the decision in Re Burroughs-Delplanque, 22nd December, 1971, JO 1972, CMLR D 67 of the E.E. Commission in the following terms :
” The more general opinion among commentators is that, with some caution, restrictions which can be included in a patent licence should mutatis mutandis be capable of inclusion in a know-how licence–this being the position under German Law from which much of the EEC.s competition law is inspired. In contrast, both the United States and the United Kingdom anti-trust laws are very much stricter.
30. US anti-trust law and doctrine in this area are unsettled veering from an extreme position (now apparently abandoned) condemning all licensing of unpatented know-how to a more cautious view that limitations as to territory, field of use and quantity can be defended in licences if the know-how is, (1) essential to the licensee.s ability to manufacture the product, (2) truly unavailable to other producers, and (3) related to only one or very few products representing either a new enterprise for the licensee or a significant improvement over anything he has produced before. The limitations should not extend in time beyond the period when the know-how has satisfied all the above criteria. These provisions fall far short of what would be permitted in a patent licence. Moreover, certain commentators in the United States deny that the owners of secret know-how need any particular encouragement for its dissemination. For example, R.H. Stern writes (R.H. Stern, Chief of the Patent Unit, Anti-trust Division, US Department of Justice, in Les Nouvelles, Vol. 5, No. 5, at page 223):
‘ Nor is any broader or longer territorial restriction to be justified by reference to public policies favouring the dissemination of technology. In fact, there are strong incentives for the sale or licensing of technology, which assure that it will normally take place to a substantial extent without the inducement of allowing continuing anti-competitive arrangements. These incentives include the advantage to the licensor of royalty payments, the demand by customers for alternative sources of supply, the licensor.s unwillingness to invest in additional production facilities, and the licensor.s concern about competitors. inventing around the technology. Moreover, the licensor will seek to recoup, by means of the royalty charge, any economic loss anticipated by reason of the licensee.s competition. The existence of substantial domestic patent and know-how licensing programmes of American corporations would seem to indicate that the prospect of licensing competition, in general, does not unduly hinder the. transfer of technology in return for the payment of reasonable royalties.’
31. In the United Kingdom the position is governed by RTPA 1956, Section 8(5) to the effect that in an agreement for the exchange of know-how a restriction can be imposed as to the kind of goods which can be produced with the know-how ; the imposition of any other restriction renders the licence registrable.
32. There is therefore respectable precedent for far greater stringency in relation to permissible restrictions in know-how licensing than under German law, and the view that clauses which are permissible in a patent licence should also be allowed in know-how licence must therefore be treated with caution pending guidance from the Commission–which, let it be hoped, will not be delayed much longer so that undertakings should at least know what is the law which they are required to observe. Nothing is worse than uncertainty. While this prevails it would be advisable for the parties to know-how agreements to agree to the consequences which are to ensue in the event that it is found that the know-how licence infringes Article 85. It is arguable that any such agreement should be included in a collateral agreement io avoid the nullity of the licence agreement (in so far as the offending provisions are not severable) affecting also a Clause in the agreements setting out the consequences of such nullity.
33. In the meantime the Commission has in Re Burroughs-Delplanque allowed clauses to ensure the secrecy of the know-how on the ground that the essence of the technical know-how, which is an ensemble of industrial processes unprotected by legal provisions on industrial property, is secrecy. The secrecy is a necessary condition for the owner of technical know-how to grant it to other undertakings for its full exploitation and it is therefore a precondition for any marketing of technical know-how, so long as the latter has not fallen into the public domain.’
34. The permitted clauses were :
(1) the licensee of know-how may during the currency of the agreement and for a period thereafter be prevented from disclosing the know-how communicated during the currency of the agreement and from using the know-how after the end of the agreement. In the Burroughs-Delplanque licence the period of continuing secrecy at the end of the agreement was ten years, and this was approved by the Commission, but it is understood that the ten year period is not a maximum. What is a reasonable period depends on the circumstances of each particular case. The prohibitions on the use or disclosure of the know-how cannot however be indefinite.
(2) The licensee may be prevented from granting Sub-licences as the secrecy cannot be guaranteed unless the licensor knows to whom the secret will be communicated.”
35. What seems to be of special relevance is the decision of the EEC Commission in Re Burroughs-Delplanque dated 22nd December, 1971, said to be reported in JO 1972 L13/50 (1972) CMLR D67. The full report of the case not being available to us we have been obliged to refer to the discussion in D. Barounou’s book; we prefer to also refer to a slightly longer account of it in yet another book Competition Law of Britain and the Common Market by Valentine Korah, second edition, page 244, where the facts of that case are stated more fully. It seems necessary to set out verbatim what Valentine Korah has to say about the decision in Burroughs :
” Burroughs (1971) was the first decision granting negative clearance to two patent licences. Burroughs is an American undertaking which granted licences for the manufacture of plasticized carbon paper to two firms, Geha in Germany and Delplanque in France. The licensee had the exclusive right to manufacture in the respective countries, but all three undertakings were entitled to sell throughout the Common Market. Since such carbon papers are valuable in relation to their bulk, freight would be no barrier to such sales. The Commission considered each licence in the light of the other. It stated that an exclusivity clause, such as that under which Burroughs agreed not to license anyone but Delplanque in France might, in theory, infringe Article 85(1), but that in this case the restriction of competition was not significant, (emphasis added) owing to the small share of the French market for multi-use carbon paper supplied by Delplanque and to the freedom of Geha and Burroughs to sell there. This was the first clear indication that the Christmas Message might no longer be a reliable guide. One might argue that licences to two undertakings amounted to ‘ multiple parallel licences’, to which the ‘Message’ did not extend, but the Commission did not make this point and its reasoning was quite general. Why was the existing market share of Delplanque relevant ? When a patent represents a breakthrough, the initial market share of both licensor and licensee may well be nil, yet the patent may enable one of them to supply the whole market. The Commission did not consider the extent of the advantage of plasticized carbon papers over other multi-use ones but merely selected the wider market without comment.
A product enjoying patent protection frequently differs to some extent from its substitutes. The Commission stated that certain other clauses do not restrict competitions :
(a) the non-exclusive right to use the Burroughs trade mark, when the licensee was entitled also to affix his own as well;
(b) the licensee.s duty to produce sufficient quantities and comply with technical instructions;
(c) the duty after the end of the licence, not to use the ‘ know-how ‘ or to communicate it to anyone else during the period of the licence and for ten years afterwards, since secrecy is the essence of ‘ know-how ‘, which is not protected by any statutory monopoly right ;
(d) the prohibition on Sub-licences, since the patentee must be able to decide who may use his invention, and otherwise the secrecy of the ‘ know-how ‘ might be at risk ;
(e) the arbitration clause.”
36. Before analysing the impact of Burroughs case JO 1972 L13/50 (1972) CMLR D67, as we understand it from the above extract from valentine Korah, it would be necessary to read Article 85(1) of the Treaty of Rome :
” 1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decision by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which:
(a) directly or indirectly fix purchase or selling prices or any other trading conditions ;
(b) limit or control production, markets, technical development, or investment;
(c) share markets or sources of supply ;
(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage ;
(e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.”
37. The import of Article 85(1) is nearly the same as Section 2(o). Article 85(1) refers to practices affecting trade between Member States, which have as their object or effect the prevention, restriction or distortion of competition within the Common market. Except for the words ” which have as their object ” (which is an addition) the other relevant expressions are nearly the same and it seems to us that we can, for this reason, derive assistance from the decision in Burroughs case JO 1972 L13/50 (1972) CMLR D67. The actual decision in Burroughs, however, was, as Valentine Korah explains, that the restriction of competition was not significant owing to the small share of the French market.
38. A later decision of the European Commission (Reuter v. BASF Agreement), the details of which appear in Guide to Legislation on Restrictive Business Practices, Vol. IV, EEC Supplement, pp. 100-101, may also be usefully referred to in this context. That case concerns an eight-year ban on competition imposed on Dr. Cottfried Reuter, an inventor and businessman, in a contract for the sale of the Elastomer Group of companies to BASF. In response to a complaint from Dr. Reuter the Commission found the ban to be in violation of Article 85 of the Treaty of Rome. Its decision states that in such contract clauses in restraint of trade are not caught by Article 85 where they are necessary to safeguard the business assets being sold and that the seller cannot be required to accept any such restrictions unless they are “indispensable for the purpose” and “continue no longer than is absolutely necessary ” to protect the assets transferred. It was further observed that the said ruling applies to the transfer of goodwill as well as to the transfer of know-how.
39. The fact, therefore, that in the initial agreement of 1958 it was found necessary by the first respondent to prevent the second respondent from either using the know-how for the purpose of manufacture in India or to enable others to do so was, even according to the principle of the ruling of this decision justifiable ; but a further question as already noticed, namely, whether it was necessary to make the restriction or ban to last for as long a period as 20 years was altogether different. As we have already explained, in the present case we are even relieved of the necessity of pronouncing on this aspect of the matter because what really falls for consideraion is the validity of the restrictive Clause 9 of the termination agreement of 1969. Not only Burroughs but any other decision which may concern itself with the total period for which such a restrictive Clause may be held not excessive in agreements concerning the passing of know-how by one party to another would not be, strictly speaking, relevant. After the termination of agreement in 1969 in the present case, there was a complete ban on the passing of the know-how concerning a wide range of chemicals and pharmaceuticals, particularly Vitamin C and Sorbitol, which were important for national health and well-being especially at a time when these have been manifestly in short supply–there had to be even. imports of Vitamin C, as noticed earlier.
40. Mr. Parekh contended that such agreements, operative in the Indian scene, should be treated differently for the reason that what applies to a developed area ought not to be made applicable to a developing area. We are of the view that this picture, painted by Mr. Parekh, is really against him ; restrictions on flow of know-how to a developing country from a developed country ought in fact to be of lesser severity. Even pursuing Mr. Parekh.s line of reasoning this may have some bearing only at the initial stage, at the time of obtaining the know-how, but not at the later stage when the agreement was completely terminated, when what appears to be unfair advantage was sought to be taken by the 1st respondent to prevent totally the know-how coming to the country from the 2nd respondent.
41. We have no hesitation, therefore, in finding that Clause 9 in this case, which prevents the further flow of know-how into India subsequent to the termination of the original agreement in 1969, for a period as long as ten years in respect of an extremely wide range including some important items, thus enuring to the benefit of the 1st respondent and not at all to the general public, acts as a barrier to entry to other intending manufacturers in the relevant field, is and amounts clearly to a restrictive trade practice within the mischief of Section 2(o) of the Act.
42. Issues Nos. 2 and 3 are accordingly answered against the respondents. (Respondent No. 2 has not even cared to contest the proceedings and as already noticed were set ex parte by an order dated September 20, 1976). Issue No. 4
43. This issue raises the question of whether the first respondent is entitled to any of the “gateways” provided in Section 38 of the Act. Reference was made in the pleadings, on the basis of which issue No. 4 was framed, only to Section 38(1)(b), (e), (f) and (h) of the Act; Mr. Parekh said that he would like to invoke Section 38(1)(a) also ; since it is a pure question of law, he was permitted to do so. Even before discussing each one of these specific gateways which have been claimed by the first-respondent it may be observed, generally speaking, that the first respondent has not placed any material before the Commission which would be sufficient to invoke any of the gateways claimed by it. Reference has already been made to the ” mere ” existence of a number of international manufacturers of certain chemicals and pharma-ceuticals of the type involved in this case ; it was already pointed out how the mere existence of such sources would be of no avail to the first respondent in the matter of claiming a gateway unless he can show facts and a state of affairs existing in this country showing that the adoption of a restrictive practice by the first respondent would not be prejudicial to the public interest. The concept of public interest has been specifically alluded to in Section 38(1) of this Act and it has been provided that a restrictive trade practice (once it is made out) shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more of the circumstances referred to in (a) to (h).
44. Section 38(1)(a) can hardly avail the first respondent because it has reference to factors said to be necessary for protecting the public against injury to persons or to premises in connection with the consumption, installation or use of those goods. Section 38(1)(a) is, therefore, entirely off the mark and was, therefore, not rightly pleaded by the first respondent. Section 38(1 )(b) reads as follows :
” that the removal of the restriction would deny to the public as purchasers, consumers or users of any goods, other specific and substantial benefits or advantages enjoyed or likely to be enjoyed by them as such, whether by virtue of the restriction itself or of any arrangements or operations resulting therefrom. ”
45. We are wholly unable to understand how reference is made to (b); Mr. Parekh did not even advance any argument concerning (b) before us.
46. The same is the position with reference to Section 38(1)(e) or (f) which reads as follows :
” (e) that having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to have a serious and persistent adverse effect on the general level of unemployment in an area, or in areas taken together, in which a substantial proportion of the trade or industry to which the agreement relates is situated ;
(f) that, having regard to the conditions actually obtaining or reasonably foreseen at the time of the application, the removal of the restriction would be likely to cause a reduction in the volume or earnings of the export business which is substantial either in relation to the whole export business of India or in , relation to the whole business (including export business) of the said trade or industry.”
47. The only other provision to consider on this part of the case is (h), which reads as follows :
“(h) that the restriction does not directly or indirectly restrict or discourage competition to any material degree in any relevant trade or industry and is not likely to do so. ”
48. As the provision itself says that the onus is heavily on the first respondent to prove that the restriction under Clause 9, as explained above, does not discourage competition to any material degree in any relevant trade or industry and is not likely to do so. Our discussion explaining how a restrictive trade practice as explained in Section 2(o) has been made out in this case and the utter paucity of any material on the side of the first respondent compel us to hold that Section 38(1)(h) has not been shown to be applicable to this case.
49. It only remains for us to notice that the ” balancing Clause “, in the last para of Section 38(1), is also not of any application ; no reference at all was made to it either in the pleadings or in the course of Mr. Parekh.s submissions made on behalf of first respondent before us.
50. We direct that Clause 9 of the agreement dated 15/24 July, 1969, between the respondents shall be void in so far as it concerns the restrictive practice to which it relates as explained above and that the said restrictive trade practice shall be discontinued “forthwith” and shall not be repeated.
51. Despite discussing the matter before us for a considerably long period; the first respondent did not finally agree to any consent order. This inquiry has been pending since 1975, The State has had to engage senior counsel to conduct these proceedings and even the final hearing before us has been a fairly long one, spreading over 4 days. In the circumstances we consider it necessary to direct that the first respondent do pay the Director of Investigation the costs of these proceedings, which we fix in the sum of Rs. 7,500.