ORDER
Order on the application of Registrar of Restrictive Trade Agreements dated 22-2-1977.
1. This is an application by the Registrar of Restrictive Trade Agreements, hereinafter referred to as ” Registrar “, seeking permission to amend his application dated 13th September, 1974, by inserting therein paras. 6A and 10A setout in annexure II to the present application.
2. Respondent No. 1 is a public limited company doing, inter alia, business as distributors. Respondent No. 2 is the manufacturer of portable electric tools, valve refacers and stands, etc. (collectively known as ” Wolf” Industrial Equipment), Respondent No. 2 is a subsidiary of respondent No. 1; who holds 60% of equity capital of respondent No. 2. The balance of 40% of the equity capital is held by Wolf Electric Tools (Holdings) Ltd., U.K.
3.By an application dated the 13th September, 1974, the Registrar made two sets of allegations. One set of allegations related to the agreement between the respondent No. 1 and some of its distributors The other set of allegations related to the appointment by respondent No. 2 or respondent No. 1 as sole distributors of its, products for the Union of India and Nepal, We are not concerned in these proceedings with the first set of allegations because the Commission has already passed an order relating thereto on 20th February, 1976. In regard to the second set of allegations with which we are concerned in these proceedings the Registrar particularly drew attention to Clauses 2, 3, 4, 5 and 6 of the agreement, which read as under :
” Clause 2
The manufacturer will sell to the distributor the electric tools manufactured as aforesaid at such, prices, less discounts and other usual terms as may be mutually agreed upon from time to time. The distributor shall be at liberty to sell the products to the dealers at any prices fixed by the distributor.
Clause 3
The distributor will during the continuance of this arrangement use its best endeavours to sell or secure buyers within the territory for the products. Clause 4
The distributor does not undertake to absorb the full output of the manufacturer’s factory. The manufacturer shall be entitled to appoint alternative or additional distributors for the whole or any part of the territory if the distributor is not absorbing a satisfactory portion of the manufacturer’s output. Similarly, the manufacturer may appoint alternative or additional distributors for the whole or any part of the territory in the event of the distributor relinquishing its distributorship over any portion of the territory.
Clause 5
The distributor shall take delivery of the electric tools sold to them within such period as may be mutually agreed and shall pay for the same within 30 days of the date of actual delivery of the electric tools to or to the order of the distributor,
Clause 6
The distributor shall be responsible for advertising and publicity. ”
4. The Registrar made the following allegations in para. 10 of his application :
” That having regard to the holding-subsidiary relationship between respondent No. 1 (Rallis India Ltd.) and respondent No. 2 (Ralliwolf Ltd.), the arrangement entered into between these parties for sale/distribution of the products of respondent No. 2 by respondent No. 1 is an arrangement to siphon off the profits of respondent No. 2 and is a device to reap the profits by respondent No. 1. The arrangement is a restrictive trade practice and has the effect of keeping the resale price higher than the prices that are likely to obtain in the absence of such arrangement and it also brings about/tends to bring about manipulation of prices and conditions of delivery and affects the flow of supplies in the market in a manner as to impose on the consumers unjustified costs and restrictions.”
5. On the basis of the Registrar’s application a notice of enquiry was issued to the respondents referring, inter alia, to the allegations made in
the application. The respondents thereafter filed memorandum of appearance on 19th November, 1974. Both the respondents filed their replies, which they described as written statements, on 30th January, 1975. The Registrar filed his rejoinder on 13th March, 1975, and thereafter applied for directions to the respondents. The Commission by its order dated the 18th April, 1975, gave directions to the respondents for furnishing certain further and better particulars and permitting the Registrar to deliver interrogatories to respondent No. 2. The respondents were also directed to make and file affidavits of documents in terms of Order 11, Rule 13 of the Code of Civil Procedure. Thereafter, respondent No. 1 applied on 8th October,
1975, to the Commission for amendment of its reply and the Commission by its order dated the 20th October, 1975, granted leave to respondent No. 1 to amend its reply, inter alia, by adding para. 2A to its original reply.
6. The Registrar filed supplementary rejoinder dated March 10, 1976, to the amended reply. He applied on March 15, 1976, for further directions praying, inter alia, delivery of supplementary interrogatories and requesting that the respondent be ordered to make discovery of certain documents. By its order dated March 26, 1976, the Commission issued directions as per the prayers of the Registrar. He also framed issues.
7. Thereafter, the respondents filed applications praying that some of the issues framed by the Commission by its order dated March 12, 1976, should be treated as preliminary issues and disposed of without taking evidence as pure questions of law. The Commission by its order dated November 16,
1976, ordered that two issues will be heard as preliminary issues in the enquiry and that after the decision of these issues, the affidavit on behalf of the respondent dated April 19, 1976, relating to interrogatories will be considered for directions. Before the preliminary issues could be considered the respondents applied to the Commission on February 15,
1977, that in view of the decision of the Supreme Court dated January 21, 1977, in the case of Telco [1977] 47 Comp Cas 520 the enquiry initiated on the application of the Registrar be terminated or dropped.
8. Soon thereafter by his application dated February 22, 1977, the Registrar applied for amendment of his application dated September 13, 1974, under Section 10(a)(iii) of the Act. He requested that the following paras., viz., 6A and 10A, may be allowed to be added to his original application after paras. 6 and 10, respectively. The proposed paras, are reproduced below :
” 6A. By and as a result of the aforesaid agreement/arrangement referred to in para. 5 hereinabove and in the implementation of the aforesaid provisions of the said arrangement/agreement, the respondents have been producing the goods specified in column 1 of the statement herein-below, at the manufacturing cost in column 2 of the statement hereinbelow, and they have been selling the same to the consumers at the figure given in column 3 of the statement hereinbelow. The figures given in columns 1, 2 and 3 of the statement hereinbelow are as were effective on 1st March,
1974.
The aforesaid figures would per se show that the respondents have imposed on the consumers of the said products unjustified costs and that they have been indulging in manipulation of prices and/or conditions of delivery and/or that the trade practices in force affect the flow of supplies in the market relating to the said goods in such manner as to impose on the consumers unjustified costs as stated hereinabove.”
” 10A. The respondents have been able to and are in a position to burden the consumers of the goods particularised in para. 6A hereinabove as a result of the arrangement/agreements prevailing between the respondents and set out in para. 5 hereinabove. By the said arrangement, the distributor has been enabled to determine the selling price arbitrarily and the said arrangement/agreement did not prescribe any criteria or guidelines on the basis whereof the said selling prices are to be determined, thus resulting in unreasonable and arbitrary determination of the selling prices, resulting in the imposition of unjustified costs on the consumers.
Besides the foregoing, the arrangement to distribute the product of the respondent No. 2, solely through the respondent No. 1, is a restrictive trade practice which restricts persons or classes of persons to whom goods are sold within the meaning of Clause (a) of Section 33(1) and/or Section 2(o).”
9. The respondents have filed two affidavits in reply to the application by the Registrar. In the reply on behalf of both the respondents it is stated that the Commission should exercise its judicial discretion and should refuse to allow the Registrar to incorporate in the allegations made in the original application figures of standard cost of production and maximum consumer price in respect of various items of tools which were from information furnished by the respondents on the express condition that evidence of it was not to be given. It was stated that the figures were taken from the consolidated information submitted on January 7, 1976, to the Commission in the endeavour to settle the matter amicably, that the information was given in a compilation expressly marked ” without prejudice “, that the negotiations for settlement regarding outstanding issues did not follow, that the information submitted in these circumstances should not be permitted to be relied upon in the Registrar of Restrictive Trade Agreements’ application. It is further stated that both on grounds of public policy and on grounds of expediency this information should not be allowed to be used because it would shake the confidence of persons and parties litigating before the Commission in future matters and would prejudice attempts at negotiation and settlements before the Commission. It is next stated that the application of the Registrar had not been duly and properly verified and the facts alleged in paras. 6A and 10A cannot support the inference as contained in para. 10 of the original application and were in fact inconsistent therewith, Attention of the Commission was drawn to certain inaccuracies in the statement contained in the proposed amendments. Firstly, the goods had been produced by the second respondent and not by both the respondents. Secondly, the figures mentioned in col. 3 of para. 6A were entirely misleading as they included the margin of the distributors and Central sales tax which is not included in the estimated cost of production. The figures of cost given in col. 2 of para. 6A cannot possibly be regarded as manufacturing cost of the tools mentioned therein because these figures were of standard cost being estimated manufacturing costs prepared at the commencement of each manufacturing period. It was also stated that the allegations set, out in the proposed para. 10A were all in the nature of inferences without containing any adequate facts or particulars. It was finally prayed that the application should be dismissed.
10. At the outset the learned counsel for respondent No, 1 raised a preliminary objection that the application by the Registrar was not properly verified and that lack of proper verification assumed significance in relation to proposed amendment by addition of para. 6A. The learned counsel for the Registrar stated that she will meet this objection in the course of her arguments. She went through the application of the Registrar dated February 22, 1977, and also the original application dated September 13, 1974, and pointed out that both these applications were based on an agreement which was duly registered by the respondent with the Registrar. She then referred to the order of the Commission dated August 22, 1975, and the affidavit dated October 1, 1975, filed by Shri Ramakrishna Panchu and stated that figures in column 2 in the proposed para. 6A were given by the Registrar from Ex. A to the affidavit of Shri Panchu. She next referred to the written statement dated January 30, 1975, filed by respondent No. 1 and contended that figures in col. 3 given in para. 6A were on the same lines as figures in annex. ” B” to this statement. When it was pointed out to her that while the figures in annex. ” B ” to the written statement dated January 30, 1975, related to August 30, 1974, the figures in col. 3 of para. 6A related to March 31, 1974, she pointed out that the figures could be collected from any catalogue and if necessary in para. 6A the date could be changed from March 31, 1974, to August 31, 1974. She next contended that giving any material without prejudice only meant that the material so given was not binding on the giver and that in this particular case there will be no prejudice caused to the respondents because they had full right to reply to the claims made by the Registrar, She next pointed out that the respondents in this case themselves had applied for amendment by an application dated October 20, 1975, and the same application was granted by the Commission, although by that time the pleadings were closed. She referred to the decisions of the Commission in RTP Enquiry No. 5 of 1973 (In re Andhra Pradesh Paper Mills Ltd. [1977] 47 Comp Cas 252), RTP Enquiry No. 3 of 1974 (RRTA v. Bata India Ltd. [1976] 46 Comp Cas 441), RTF Enquiry No. 1 of 1971 (RRTA v. Inchek Tyres Ltd. [1976] 46 Comp Cas 187) and the Delhi High Court decision in Premier Tyres case [1976] 46 Comp Cas 297 and contended that in view of these decisions the amendment should be allowed. She also referred to the Supreme Court decisions in (1) A.K. Gupta & Sons Ltd. v. Damodar Valley Corporation, AIR 1967 SC 96, (2) Nichhalbhai Vallabhai v. Jaswantlal Zinabhai, AIR 1966 SC 997 and (3) Jai Jai Ram Manohar Lal v. National Building Material Supply, AIR 1969 SC 1267, and contended that in order to avoid multiplicity of proceedings especially when no time bar was involved amendment should always be allowed. She also contended that the agreement to which the proposed amendment related was the same agreement
to which the original application related and that there was only difference in the approach and there was no attempt at making out a new case. There was no suggestion of a new cause of action because the agreement on which the allegations were based in the amendment was the same as the agreement referred to in the original application. She stated that by an amendment even an RTP could be suggested even though in the original application there was no suggestion of that RTP. She stated that in view of the absence of time-bar no prejudice would be caused to the respondent since the Registrar could always make a fresh application and the question of balance of convenience did not arise. She referred to the decision of the Supreme Court in V. Nagaraj v. R. Dayanand Sagar, AIR 1975 SC 349 and contended that the larger interest of the general community of consumers had to be borne in mind just as the Supreme Court had taken into account the silent constituency in the election case. She also contended that Regulation 72 in terms permitted amendment and in view of the decision of the Delhi High Court and the Commission, the application by the Registrar had to be taken as pleading, She went on to contend that the proposed amendment only tried to show how the trade practices were restrictive trade practices within the meaning of Section 2(o) and that the constituent facts which were required to be stated in view of the decision of the Supreme Court had necessarily to be considered after rioting the difference between a civil suit and an enquiry under the Act. She placed great reliance on the Bombay High Court decision in Misc. Petition No. 322 of 1975–Raymond Woollen Mills v. MRTP Commission (since reported in [1979] 49 Comp Cas 686) and the decision of the same High Court in the case of Crompton Greaves (since reported in [1979] 49 Comp Cas 757) in support of her plea. She also referred to Regulation 35 and contended that such wide powers given by that regulation clearly showed that the proceedings before the Commission were not comparable to that before a civil court. She also contended that the proposed addition by way of amendment was not inconsistent with the plea made by the Registrar in the original application.
11. The learned counsel for respondent No. 1 referred to the affidavit filed by Shri Laskari in reply to the application by the Registrar and pointed out that the averments made in that affidavit have not been contradicted by the Registrar. His main contention was that figures in cols. 2 and 3 in the proposed para. 6A had been taken from a document given to the Registrar and the Commission ” without prejudice ” in an attempt to settle the matter amicably without going through full enquiry and particulars given in these circumstances could not be utilised by the Registrar in this manner. He pointed out that figures given in Ex. A to Panchu’s affidavit dated October 1, 1975, did not relate to March 1, 1974, but they related to 1973-74 and that annex. “B” to the original statement of the case dated
January 30, 1975, referred to August 31, 1974. He emphasised that the dates for figures in respect of cols. 2 and 3 in the proposed para. 6A had to be in the nature of things identical. According to him the sources indicated by the learned counsel for the Registrar could not be the real sources for the figures given in cols. 2 and 3 of the proposed para. 6A and he contended that the failure of the Registrar to file an affidavit in support of the application was significant in this context, and clearly showed lack of bona fides on his part. He went on to contend that it was against public policy to encourage the use of material presented ” without prejudice ” in this manner and that such a practice, if allowed, would greatly damage the working of the Commission where quite a lot of cases have been settled without full enquiry on the parties giving lot of material ” without prejudice” in order to convince the Commission and the Registrar/Director of Investigation. He referred to the observations of Lord Denning in Rabin v. Mendoza & Co. [1954] 1 All ER 247 (CA) and also pointed out that Section 23 of the Indian Evidence Act was also based on the same assumptions. He next contended that the original application by the Registrar could not be treated as a pleading and both under the scheme of the Regulations and the Act, it was the notice by the Commission which started the proceedings and anything done prior to that could not be treated as part of the proceedings, much less a pleading. He referred in this connection to reglns. 58, 59, 63 and 72 and contended that the scope of Regulation 72(1) was very limited as it was confined only to defect or error and Regulation 72(2) was confined to the pleadings by the parties and the application by the Registrar could not be treated as a pleading. In regard to Regulation 72(3) his contention was that it probably could refer to the application by the Registrar but it applied only when amendment was sought to be made before the notice was served on the respondent. He then referred to Regulation 70 and contended that pleadings and supplemental pleadings referred to in that section had a limited connotation and it was in that context that the word “supplemental pleadings” was used in Regulation 72(2). He next contended that even assuming that the Commission had power to allow the amendment of the application, it could be allowed only if it helped in determining the real issue between the parties and that it could not be used for turning an invalid notice into a valid notice. He also contended that having regard to the totality of the circumstances and the gross delay in submitting the application, there was lack of good faith on the part of the Registrar and total non-application of mind on his part. He also contended that there was no question of multiplicity of proceedings when the proceedings were ab initio void and pointed out that no prejudice would be caused to either party if the amendment is not allowed because the Registrar, if he is so advised, could always start fresh proceedings if he had the necessary
material. He then referred to the decision in (1) Tejilal Narayandas v. Godubhai Ramchandra, AIR 1944 Bom. 245, (2) State of Bihar v. Ramgarh Farms and Industries Ltd., AIR 1961 Pat 302. He then referred to what he called the inaccuracies in the proposed amendment and pointed out that the respondents had made it clear they did not have the actual manufacturing cost of their productions, that the statement in the first portion of para. 6A, column 2, which gave manufacturing cost was misleading, that it was not true that both the respondents were selling the goods to the consumers, that respondent No. 2 was selling its products to respondent No. 1, that respondent No. 1 had a number of dealers who in turn were selling the goods to the consumers and that there was no question, therefore, of any of the respondents imposing on the consumers unjustified cost. He also pointed out that the observations in the Bombay High Court decision relied upon by the learned counsel related to the furnishing of particulars and had nothing to do with the amendment of the notice. He also contended that reference to Regulation 35 was not relevant because only after the investigations were complete, the enquiry could really start.
12. The learned counsel for respondent No. 2 while broadly arguing on the same lines as the learned counsel for respondent No. 1 contended that once the notice of enquiry was issued by the Commission, the application of the Registrar on which it was based exhausted itself and it could not thereafter be amended so as to have any impact on the proceedings itself. He referred to the Regulations 58 and 72 and contended that Regulation 72(3) was concerned with amendment of notice and it had nothing to do with the amendment of the application. According to him no part of Regulation 72 dealt with the possibility of the Registrar being allowed to amend his application. He next contended that apart from the principle underlying Section 23 of the Evidence Act, it was against public policy to allow material produced ” without prejudice ” to be utilised in the manner in which the Registrar proposed to do. According to him such a procedure will undermine the confidence of the public in the procedure of the Commission and will make them unwilling to come forward for settlement before a full scale enquiry. The learned counsel for the Registrar in her reply contended that the decision of the Delhi High Court turned on an identical issue and the ratio of the decision was binding on the Commission. She also contended that material produced without prejudice could be used by the recipient, if it could be referred to alternative sources of supply.
13. The Registrar by his affidavit dated 9th April, 1977, stated that figures given in cols. 2 and 3 of the proposed para. 6A were to be found in Ex. A to the affidavit dated October 1, 1975, of the second respondent and enclosure to the letter dated 23rd April, 1974, of the first respondent addressed to Registrar of Restrictive Trade Agreements. The Ex. A gives in the last column the
figures which had been set out in col. 2 of para. 6A. The figures shown in decimals in the last column of Ex. A had been rounded off to the nearest rupee while reproducing the same in col. 2 of proposed para. 6A. The enclosure to the letter dated April 23, 1974, entitled ” Trade price list effective from March 1, 1974 “, was stated to have been issued by or on behalf of the first respondent to the distributors on February 28, 1974. It was further stated by the Registrar that figures given in col. 2 of para. 6A were matter of record before the Commission and the figures given in the enclosure to the letter dated April 23, 1974, had been widely circulated by the first respondent and could not be treated as confidential.
14. The learned counsel for respondent No. 1 contended that the averments made in the affidavit were based on faulty memory, that figures given in cols. 2 and 3 in para, 6A in the proposed amendment were bodily taken from annex. ” I ” at page 31 of papers submitted “without prejudice ” on or about 9th December, 1975, that the figures given in para. 6A tally verbatim with the figures given in annex. ” I “, that on the other hand, the sources indicated by the Registrar were not exact sources, that the figures in Ex. A of Shri Panchu’s affidavit did not exactly relate to March 31, 19,74, that as a matter of fact they clearly referred to the period 1973-74, that in col. 3, the last item relating to tool NWB gave maximum consumer price at Rs. 800 that this figure was given by the respondent in annex. ” I “, that this was a mistake committed on the part of the respondent, that the same mistake was repeated by the Registrar in col. 3 in para. 6A and that as a matter of fact according to the price list referred to by the Registrar the price for NWB was only Rs. 787, that there was no satisfactory explanation about this amount being rounded off to Rs. 800 and that as a matter of fact in the price list there were more items than were shown in col. 3. He contended that the figures were really taken by the Registrar from papers submitted by the respondent” without prejudice” and that this practice should be put down if parties were to be, encouraged, to settle matters amicably with the Commission and the Registrar and the Director on the basis of utmost good faith. The learned counsel for the Registrar pointed out that the Registrar had selected figures in col. 3 relating to items for which the respondent had given particulars in col. 2 and that the present Registrar had taken the figure of Rs. 800 for item NWB according to the pencil figures which were shown in the price list on the record.
15. I have examined the contentions of the parties and the authorities quoted by them carefully. Some of the contentions raised by the parties have been disposed of by the Commission’s order dated 22nd April, 1977, in R.T.P. Enquiry No. 24A of 1974, (RRTA v. Atul Products Ltd. [1978] 48 Comp Cas 852). It has been held in that decision by the Commission that:
(i) The liability to set out the constituent facts by the complainant or the referor or the applicant-Registrar was always there and was in no manner abridged by the decisions of the Commission or the Bombay High Court in the cases of Raymond Woollen Mills (since reported in [1979] 49 Comp Cas 686) and Crompton Greaves (since reported in [1979] 49 Comp Cas 757) or by any of the regulations, viz., Regulation 35 or 29.
(ii) The ratio 1; id down by the Supreme Court in the case of Telco [1977] 47 Comp Cas 520 was that in an enquiry in the restrictive trade practice the initial responsibility would be on the Registrar to show that the trade practices to which the clauses in the agreement impugned by him related were restrictive in character by reason of the injury caused by them to the competition and it was only thereafter that the respondent would have to rebut the presumptions which would arise against it regarding the public prejudice as consequence of the trade practices and which it could rebut only by successfully claiming exit, through one or more of the gateways provided in Section 38(1).
(iii) The Supreme Court did make observations on Regulation 55 and its exact implications but it was no part of the decision of the Supreme Court that any omission to give any constituent parts of the application would render it a nullity or that it would automatically fail to disclose the cause of action or that enquiry was liable to be terminated merely by reason of the fact that it did not contain some of the essential components of the application as required under Regulation 55 as interpreted by the Supreme Court. All that the Supreme Court laid down was that Regulation 55 enjoined on the Registrar to set out facts or features showing how the trade practice alleged had adverse effect on competition in the context of facts.
(iv) In its decision in Hindustan Lever case (Civil Appeal No. 680 of 1976) [1977] 47 Comp Cas 581 (SC), the Supreme Court laid down that in certain cases the very introduction of clauses in an agreement might constitute a restrictive trade practice if on a reasonable and natural interpretation of the clauses of the agreement and their reasonable possible effects it was found, that the introduction of the clauses conferred wide powers which would result in adverse effect on competition. The Supreme Court bad no occasion in that decision to consider Regulation 55 or the adequacy or otherwise of the notice of enquiry. There was also no suggestion, in the decision that responsibility of the Registrar to disclose relevant facts was in any manner relaxed.
(v) The difference in the nature of proceedings between the enquiry before the Commission and the civil suit would not in any manner reduce the Registrar's responsibility to disclose constituent facts. The only basic requirement whether of a complaint under Section 10(a)(i) or reference under
Section 10(a)(ii) or application under Section 10(a)(iii) and/or charge sheet under Section 10(a)(iv) was that the charge of restrictive trade practice should he spelt out with sufficient precision so that the other party knew what was alleged against it and was not taken by surprise about the nature of his burden. But all that was necessary was to set out a prima facie case and that prima facie case must indicate the grievance of the complainant or the referor or the applicant about the damaging effect on competition of the trade practice. The source must indicate the constituent facts only and these facts comprised the facts which constitute the cause that brings about the effect on competition, the facts which show the process or chain of causation and the facts which represent the effect on competition.
(vi) If there was a gap or a deficiency or a missing link in the complaint or the reference or the application by the Registrar, the enquiry could not be dropped if the restrictive practice was indicated although in a cryptic or laconic manner and if the sufficiency could be achieved by the procedure permitted by the Regulations of the Commission. The lack of sufficiency would not be fatal to the start of the enquiry unless the lack was so vital as to leave the allegation without any meaning or purpose.
(vii) Amendments could be allowed in the application made by the Registrar or the notice issued by the Commission for the purpose of determining the real question or issue raised by or dependent on the proceedings. Amendments could be allowed even if they introduced new restrictive trade practices if the agreement from which the new restrictive trade practices flowed was the same which was the basis of the original application and from which the original restrictive trade practices were alleged to flow. The amendments, however, could not be allowed to introduce a totally new or different case as contrasted with the case originally raised. The amendments asked for must not be such as would destroy the identity of the subject-matter originally proposed. Nor should the amendments be such as would be completely incongruous with the issue originally raised. The amendment could not be allowed to support a claim that the applicant had precluded himself from raising or reintroduce a claim that he had abandoned. The amendment could not be permitted to enlarge the scope of the enquiry in such a way as to include issues or questions which had not been raised either in the beginning or throughout the proceedings which required an altogether separate set of facts in support thereof, or which were not at all consistent with the issue raised originally or in the course of subsequent proceedings. When the basic facts sought to be introduced by amendment were independent of the facts originally set out and gave rise to an issue which was different from the issue originally raised, it could not plausibly be suggested that the proposed amendment was for determining the issue raised originally or in the proceedings. The same was the case where on the same facts which were originally canvassed for, an issue was raised which ran counter to or was in conflict with an issue originally raised. The amendment in that case was not for determining the issue raised but for replacing that issue by another issue.
(viii) The question of multiplicity of proceedings would not be strictly relevant when one was considering whether an enquiry unconnected with the original facts and unconnected with the original issue should be tagged on to the original enquiry.
16. The matter was further examined in the decision of the Commission in R.T.P. Enquiry No. 5 of 1975 (RRTA v. Telco) (since reported in [1979] 49 Comp Cas 30). Apart from the principles set out in the previous paragraph, it was held in this decision that in regard to Regulation 55 as interpreted by the Supreme Court, the question turned on sufficiency of material. In similar situations arising under the C.P.C., the courts had evolved a test and that test was to find out whether even if all the prayers set out in the plaint were accepted as true, the plaintiff would be non-suited. Applying the same principle to the enquiry under the MRTP Act, the test would be if the allegations made in the complaint were assumed to be true, will the applicant be entitled to claim relief or will he not be. The deficiencies can be made good by resorting to any of the procedures laid down under the Regulations, viz., by the Registrar applying for amendment of the application or the notice, by the respondent asking for further and better particulars or by the Commission calling upon the Registrar to file supplemental pleadings. It may depend on circumstances of each case what procedure is to be adopted. It will also depend on the stage at which the deficiency is brought to light.
17. Apart from the contentions covered by the earlier decision referred to above, an additional question was raised whether certain materials furnished by the respondent ” without prejudice ” could be utilised by the Registrar for being incorporated in the proposed amendments. I do not consider it necessary to examine this question because, on the facts and in the circumstances of the present case, I am not inclined to allow the introduction of para. 6A and of the first portion of para. 10A by way of amendment of the Registrar’s application. The Commission has no doubt wide powers to order or allow amendments but this power has to be exercised judicially and judiciously. The manner in which the power is to be exercised will depend on the matter which is sought to be amended, the nature of the amendment proposed, the stage at which it was sought to introduce them and other relevant circumstances of the case. In the present case, we arc concerned with the application for amendment of the Registrar’s original application. The whole purpose of the application as pointed
out earlier is to set out constituent facts which constitute restrictive trade practice alleged. The idea is that the other party should be left in no doubt about the case if; has to meet and should not be taken by surprise about the objective and the scope of the inquiry it has to face. II the application is completely blank about all these requirements, the inquiry cannot be proceeded with. If, however, the application is deficient in certain respects, the inquiry cannot be terminated altogether. In the present case, it cannot be suggested that if all the allegations made in the application in the present case were accepted as true, even then no order under Section 37(1) could be passed. There is an allegation that arrangement between the respondents is a restrictive trade practice. For the sake of argument at this stage, it has to be assumed that the allegation is true. In that case, an order declaring the arrangement void can be passed. The application, therefore, could not be rejected off hand. Three possibilities were available in the circumstances. Firstly, the Registrar could apply for amendment of the application as he had done in the present case, Secondly, the respondent can apply for further and bettor particulars and, thirdly, the Commission on its own can ask for supplemental pleadings by the Registrar. In the present case, the first alternative has to be taken into account. For reasons given in detail in the decision of the Commission in Atul’s case [1978] 48 Comp Cas 852, the contentions put forward on behalf of the respondent in the present case that the application of the Registrar cannot be allowed to be amended or the Commission has got very limited powers of amending its own. notice of enquiry, cannot be accepted. The main reason for this conclusion is the decision on that point by the Delhi High Court in the case of Premier Tyres [1976] 46 Comp Cas 297. The Commission, therefore, has power to permit amendment in the application by the Registrar and also to order amendment of the notice of enquiry, if the circumstances so required.
18. The power to allow amendment or to order amendment, however, is subject to obvious limitations. The application of the Registrar or the notice of enquiry based thereon is concerned only with constituent facts representing the restrictive trade practice. The facts involved are, as is laid down by the Supreme Court in Telco’s decision [1977] 47 Comp Cas 520, facts showing how the trade practice affects competition. The amendment in, the application of the Registrar or the notice of enquiry based thereon can be allowed if they seek to remove the deficiencies in stating any of these facts. The application made by the Registrar in the present case is avowedly as a result of the Telco judgment. The Telco judgment laid emphasis on facts and features showing how the trade practice alleged was restrictive in character, i.e., how it adversely affected competition. Examining proposed para. 6A from that point of view it is clear that it has
no relevance to effect on competition alleged. It is concerned with alleged differences between prices of tools charged to consumers and their cost. Even ignoring the inaccuracies in this statement as alleged by the respondents, these figures do not at all show how competition is affected and where it is affected. The allegation in the original application shorn of inessentials was that by reason of introduction of respondent No. 1 as distributor, competition was affected and as a consequence some results including unjustified cost to consumers followed. If para. 6A’s avowed purpose was to show how competition was affected and/or where, it does not serve that purpose. These difficulties arise because it is often overlooked that the two particular instances given in Section 2(o) have also to satisfy the primary requirement, viz., that competition in the relevant field is prevented, distorted or restricted in any manner. The other consequences set out in Clauses 1 and 2 of Section 2(o) are additional consequences which have to be looked for if the deterioration in the competitive situation is indicated. Unless there is deterioration in the competitive situation, the consequences set out in Clauses 1 and 2 of Section 2(o) are not at all relevant for purposes of Section 2(o). If this is borne in mind, it followed that the amendment proposed in para. 6A did not, have; any relevance to the question whether the arrangement impugned had adverse effect on the relevant competitive situation. Similar is the position with regard to the first portion of para. 10A proposed. That portion in the first sentence refers to para. 6A and would, therefore, be subject to the same objections. But it goes on to refer to determining the selling price arbitrarily and also the failure of the arrangement to prescribe any criteria or guidelines on the basis of which the selling prices are to be determined. Now, both these allegations are not at all borne out by the original application. The original application was aimed at the holding company-subsidiary relationship between respondent No. 1 and respondent No. 2 and the allegation was that profit which should have gone to respondent No. 2 had in fact gone to respondent No. 1. There was the further allegation that the effect of the arrangement was that the resale price would be higher than the price that was likely to obtain in the absence of such an arrangement. That only meant that, by reason of the arrangement there was addition to the price. There was no suggestion of arbitrariness or lack of guidelines. The reference to manipulation of prices in the last sentence of para. 10A had to be read in the context in which it had been made, and if so read, it only meant that by reason of the interposition of respondent No. 1, the prices were higher than what would have been without such an inter-position. The allegations now sought to be introduced did not follow from the terms of the arrangement set out in the original application. Apart from this, as pointed out earlier, the first portion of para. 10A did not in any manner give facts or features showing how the
arrangement had restricted competition and/or between whom, etc. Both the amendments, therefore, had no bearing whatsoever on the question as to how the trade practices alleged had any impact on competition and if so on what field of competition. These amendments, therefore, were not at all justified by reference to the decision of the Supreme Court in Telco’s case [1977] 47 Comp Cas 520. Even on general principles governing amendment, the amendments proposed do not throw any further light on the restrictive character of the trade practices alleged. The primary purpose of the amendment was to help in determining the real question or issue raised by or dependent on the proceeding and since the stage at which the application of the Registrar and the notice of enquiry is concerned, is the initial stage, the primary purpose of an amendment can only be to define the real question or issue in the first instance. In other words, the idea is to define the subject-matter of enquiry with a degree of precision so that the applicant makes his grievance or allegation clear and the respondent knows the charges it has to meet. At that stage it is not a question of determining the real issue but only defining it and all amendments which help in defining the issue or the subject-matter with some degree of precision would be permissible. That also limits the scope of amendment in the Registrar’s application or the notice of enquiry. Any amendment seeking any other additions or refinements to the application or the notice of enquiry would not be justified. In other words, if the amendment is not necessary for the purpose of defining the real question in controversy between the parties, the leave to amendment will have to be refused.
19. There is also other aspect of the matter which cannot be ignored while considering the proposal for amendment. According to the Registrar the figures given in cols. 2 and 3 in para. 6A have been taken from certain papers already on the record. It was not necessary to go into the controversy whether the claim put forward on behalf of the Registrar was right or whether, as was contended on behalf of the respondent, the Registrar had taken the figures from certain papers given by the respondent ” without prejudice'”. Assuming for the sake of arguments that the figures were available, as claimed by the Registrar, I do not see the justification for introducing these figures in the application by way of amendment, They are not, as stated earlier, likely to help in the definition of the issue whether the trade practice alleged had anticompetitive effects. If they had any other relevance in the arguments, they will always be available to both the sides, because the material is on record and the matter can be argued at the time of hearing on merits. There is no justification for introducing by way of amendments these figures which are available elsewhere in the pleadings at the earlier stage of application or notice of enquiry. It was not necessary to so introduce them for defining the issue. They will be
available to the parties for finally deciding the issue since they are already introduced in the pleadings. It is from this point of view that I consider the whole controversy turning on para. 6A to be somewhat misconceived and this aspect of the matter only underlines my conclusion that introduction of para. 6A was not justified by way of amendment of the Registrar’s application. In this view of the matter I do not consider it necessary to decide the larger issue whether the Registrar will be justified in introducing these paragraphs and especially para. 6A when the matter sought to be incorporated therein was furnished by the respondent ” without prejudice”.
20. In regard to first portion of para. 10A apart from its irrelevance to the effect on competition, it sought to introduce new allegations which bore no relation to the arrangement alleged in the original application. It could not be allowed to be introduced in the original application by way of amendment. In regard to the second portion of para. 10A, however, the same does relate to the restrictive aspect of the trade practice and there could be no objection to the same being introduced in the application of the Registrar by way of amendment. Accordingly, the following portion of para. 10A is permitted to be introduced by way of amendment as para. 10A:
” The arrangement to distribute the products of respondent No. 2, solely through the respondent No. 1 is a restrictive trade practice which restricts persons or classes of persons to whom goods are sold within the meaning of Clause (a) of Section 32(1) and/or Section 2(o).”
21. The application by the Registrar is accordingly partly allowed. His prayer for introduction of para. 6A and the first portion of para. 10A by way of amendment of his original application is rejected. His prayer for introduction of the second portion of para. 10A in the original application is allowed. The respondent’s application dated February 15, 1977, should be fixed for hearing on July 6, 1977.
There will be no order as to costs.