TMI Blog1999 (8) TMI 742X X X X Extracts X X X X X X X X Extracts X X X X ..... 18-8-1999 - B.N. KIRPAL AND UMESH C. BANERJEE, JJ. Kapil Sibal, Dr. A.M. Singhvi, Ashok H. Desai, R.N. Karanjawala, S. Ganesh, Gaurab Banerjee, Ms. Nandini Gore, Ms. Ruby Singh Ahuja, Ms. Manik Karanjawala for the Appellant. Rakesh Dwivedi, Harish N. Salve, Dalip Kumar Malhotra, Rajesh Malhotra and P. Parmeswaran for the Respondent. JUDGMENT Banerjee, J. - These two appeals under section 55 of the Monopolies and Restrictive Trade Practices Act, 1961 ( the MRTP Act ) are directed against the order of the Monopolies and Trade Practices Commission under section 12A of the MRTP Act dated 30-4-1998 in matter No. UTPE 415 of 1997. The matter pertains to Colgate toothpaste, a product of Colgate Palmolive India Ltd. and by reason of a complaint from Hindustan Lever Ltd. being the appellant in the 2nd appeal. Whereas CA No. 2620 of 1998 is against the order of the Commission containing an order of restraint as regards the display of the ring round the family as Suraksha Chakra in Colgate Palmolive s hoardings, print advertisements and T.V. commer-cials, the CA No. 3288 of 1998 filed by Hindustan Lever Ltd. is against the order of refusal on the part of the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction, as they apply to a temporary injunction issued by a Civil Court, and any reference in any such rule to a suit shall be construed as a reference to an inquiry before the Commission. Explanation I - For the purposes of this section, an inquiry shall be deemed to have commenced upon the receipt by the Commission of any complaint, reference or, as the case may be, application or upon its own knowledge or information reduced to writing by the Commission. Explanation II- For the removal of doubts, it is hereby declared that the power of the Commission with respect to temporary injunction includes power to grant a temporary injunction without giving notice to the opposite party." On a plain reading of the provision the following requirements thus emerge : ( a )Temporary injunction can be granted only during an inquiry. ( b )There must be proof of certain practices mentioned therein to have been carried on or are about to be carried on by the person specified therein. ( c )Such practices are likely to affect prejudicially the public interest and there must be some evidence either by way of an affidavit or otherwise. 3. The situation thus after the incorporation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the interlocutory remedy by way of a grant of an order of injunction is intended to preserve and maintain in status quo the rights of the parties and to protect the plaintiff, being the initiator, of the action against incursion of his rights and for which there is no appropriate compensation being quantified in terms of damages. The basic principle of the grant of an order of injunction is to assess the right and need of the plaintiff as against that of the defendant and it is a duty incumbent on to the law courts to determine as to where the balance lies. 8. Another redeeming feature in the matter of grant of interlocutory injunction is that, in the event of a grant of injunction in regard to a party defendant where the latter s enterprise has commenced and in that event the consideration may be somewhat different from that where the defendant is yet to commence its enterprise. 9. The decision of this Court in Wander Ltd v. Antox India (P.) Ltd 1990 Suppl. SCC 727 lend support to the observations as above. This Court in paragraph 9 observed : "Usually, the prayer for grant of an interlocutory injunction is at a stage when the existence of the legal right assert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, compliance with the other fundamentals as noticed below. A strong prima facie case, there- fore, stands substituted by a serious issue to be decided. 11. At this juncture, however, the decision of the House of Lords in American Cyanamid Co. s case ( supra ) though raised certain eye-brows lately, ought to be considered in slightly more greater detail. 12. Lord Diplok in American Cyanamid s case ( supra ) laid down the following guiding principles for the grant of interlocutory injunction : "( 1 ) The plaintiff must first satisfy the Court that there is a serious issue to decide and that if the defendants were not restrained and the plaintiff won the action, damages at common law would be inadequate compensation for the plaintiff s loss. ( 2 ) The Court, once satisfied of these matters will then consider whether the balance of convenience lies in favour of granting injunction or not, that is, whether justice would be best served by an order of injunction. ( 3 ) The Court does not and cannot judge the merits of the parties respective cases and that any decision of justice will be taken in a state of uncertainty about the parties rights." 13. It would ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unction is granted to mitigate the risk of injustice to the plaintiff during the period before that uncertainty could be resolved. The object of the interlocutory injunction is to protect the plaintiff against injury by violation of his right for which he could not be adequately compensated in damages recoverable in the action if the uncertainty were resolved in his favour at the trial. The need for such protection, has, however, to be weighed against the corresponding need of the defendant to be protected against injury resulting from his having been prevented from exercising his own legal rights for which he could not be adequately compensated. The court must weigh one need against another and determine where the "balance of convenience" lies, ( see: Wander Ltd v. Antox India (P.) Ltd [1990] (supp.) SCC at pp. 731 -32.) In order to protect the defendant while granting an interlocutory injunction in his favour the court can require the plaintiff to furnish an undertaking so that the defendant can be adequately compensated if the uncertainty were resolved in his favour at the trial." As noted above, lately the triable issue concept as introduced by Lord Diplock in American ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er , this means that it is legitimate for the court to look at the relative strength of the parties case as disclosed by the affidavits. The warning contained in the second of the quoted sentences is to avoid courts at the interlocutory stage engaging in minitrials, which is what happened, at least in the Court of Appeal, in American Cyanamid itself. Interlocutory applications are meant to come on quickly and to be disposed of quickly. The supposed problem with American Cyanamid centres on the following statement by Lord Diplock ([1975] AC 396 at 409): [Assessing the relative strength of the parties cases], however, should be done only where it is apparent upon the facts disclosed by evidence as to which there is no credible dispute that the strength of one party s case is disproportionate to that of the other party. If this means that the court cannot take into account its view of the strength of each party s case if there is any dispute on the evidence, as suggested by the use of the words only and no credible dispute , then a new inflexible rule has been introduced to replace that applied by the Court of Appeal. For example, all a defendant would have to do is raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest for violation of his rights though, however, having regard to the injury that may be suffered by the defendants by reason therefore; ( iii )the court while dealing with the matter ought not to ignore the factum of strength of one party s case being stronger than the others; ( iv )no fixed rules or notions ought to be had in the matter of grant of injunction but on the facts and circumstances of each case the relief being kept flexible; ( v )the issue is to be looked from the point of view as to whether on refusal of the injunction the plaintiff would suffer irreparable loss and injury keeping in view the strength of the parties case; ( vi )balance of convenience or inconvenience ought to be considered as an important requirement even if there is a serious question or prima facie case in support of the grant; and ( vii )whether the grant or refusal of injunction will adversely affect the interest of general public which can or cannot be compensated otherwise. It is on this backdrop that exercise of discretion by the Commission shall have to be considered and it is at this juncture certain further factual details ought to be noted. 19. On the factual score it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r promotion of sale of Colgate Dental Cream (CDC), the Respondent has inter alia, made the following claims, which it is submitted, are both false and misleading : ( a )The Respondent s CDC toothpaste is claimed to have action of Germ Fighter , which is projected as a process by which germ activity (which is the root cause of oral problems viz., tooth decay and bad breath) is controlled. ( b )The Respondent s CDC toothpaste is stated to have the ability to fight tooth decay . ( c )The Respondent s toothpaste is stated to have the ability to Stop bad breath . The abovementioned claims are false and highly misleading qua the consumers and trade. It is submitted that the advertisement of the Respondent s CDC toothpaste purport to set up germs as the cause of both tooth decay and bad breath. It then suggests that Colgate Dental Cream has a special Germ Fighter . The advertising then goes on to suggest that as a result the toothpaste offers the benefit of Stops Bad Breath, Fights Tooth decay and provides a ring or circle of safety or protection. The complainant craves leave to refer to and rely upon cassettes of all these TV advertisements at the time of hearin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby causes loss or injury to the consumer of such goods or services, whether by eliminating or restricting competition or otherwise and in this context specific refer-ence may be made to specific sub-sections appended thereunder which are of some relevance and as such noted herein below : "( i )falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model; ( ii )falsely represents that the services are of a particular standard, quality or grade; ( iii )and ( iv ) ****** ( v )represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have ; ( vi )makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; ( vii )gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof : Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be false if it is false in substance and in fact; and the test by which the representation is to be judged is to see whether the discrepancy between the fact as represented and the actual fact is such as would be considered material by a reasonable representee. Another way of stating the rule is to say that substantial falsity is, on the one hand, necessary, and, on the other, adequate, to establish a misrepresentation and that where the entire representation is a faithful picture or transcript of the essential facts, no falsity is established, even though there may have been any number of inaccuracies in unimportant details. Conversely, if the general impression conveyed is false, the most punctilious and scrupulous accuracy in immaterial minutiae will not render the representation true . Let use examine the relevant facts of this case in this background." 26. Similar is the finding of this Court that "for holding a trade practice to be unfair trade practice, therefore, it must be found that it causes loss or injury to the consumer" [Emphasis supplied] - H.M.M. Ltd. v. MRTP Commission [1998] 6 SCC 485 at p. 490. 27. In the instant matter there are no allegations ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resentation but by a description of permissible assertion. In this context a passage from Anson s Law of Contract, (27th edn.) may be of some relevance and the same is quoted herein below : "Commendatory expressions, such as advertisements to the effect that a certain brand of beer refreshes the parts that other beers cannot reach , or that an after-shave lotion is irresistibly attractive to the opposite sex, are not dealt with as serious representations of fact. A similar latitude is allowed in private contracts to a man who wants to gain a purchaser, though it must be admitted that the borderline of permissible assertion is not always easily discernible. At a sale by auction, land was stated to be fertile and improvable ; it was in fact partly abandoned and useless. This was held to be a mere flourishing description by an auctioneer" [ Dimmock v. Hallett [1866], LR 2, Ch. App. 21]. But where in a sale of a hotel the property was said to be let to a most desirable tenant , whereas his rent could only be obtained under pressure and was currently much in arrear, such a statement was held to entitle the purchaser to rescind the contract. [ Smith v. Land and House Property ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of injunction in regard thereto does not and cannot arise. Mr. Desai ascribed this move of the respondent herein as nothing but a counter blast and we do find some justification in regard thereto. The Commission according to Mr. Desai was in clear error when it recorded that Suraksha Chakra was assailed first before the Commission. Mr. Desai contended that Suraksha Chakra was not at all an independent complaint and at least cannot but be ascribed to be merely an incidental one by reason of the three specific complaints as noticed above. Mr. Desai contended that the Commission as a matter of fact was persuaded to issue interim order pertaining to Suraksha Chakra by reason of the factum of an order of injunction granted by the Federal Trade Commission in the United States of America wherein a complaint was made in respect of Colgate Dental Cream with Gardol in November 1959 in the United States. In the U.S. advertisement incidentally, there was an invisible shield protecting the tooth. But in the facts of the matter under consideration, there is no such protection as was offered in the United States but it is the resultant effect of the foaming action which stops bad breath ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Commission itself which runs to this effect: "falsity or otherwise of these claims can be established conclusively at the stage of trial when evidence will be adduced by the informant/complainant by examining experts and their cross examination by the respondent. Due weight and consideration has to be given to the opinions of experts while appreciating and evaluating evidence in order to arrive at a just conclusion and this can be done at the final stage of the enquiry." In our view the observation or expression of opinion as above, as a matter of fact, runs counter to an order of injunction as has been granted by the Commission. Obviously the Commission was persuaded to pass the order of injunction pertaining to Suraksha Chakra as and by way of an interlocutory order by reason of the factum of the injunction as granted by the Federal Trade Commission in the United States of America and we have already noticed earlier that in the advertisement under controversy no invisible shield to protect the tooth is available. It is the complainant s definite case that the advertisement pertaining to the foaming action, stopping bad breath and tooth decay canno but be said to be a misrepr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been carried out to show in unequivocal terms that fluoride is capable of reducing tooth decay. The complainant encloses a summary of literature on tooth decay and the role of fluoride in reducing the same in support of the fact that presence of fluoride can help in reducing tooth decay. [Annexure 8 (Colly)]. The Complainant/informant submits that Colgate Dental Cream does not have soluble fluoride. The fact that Colgate Dental Cream does not have soluble fluoride can be ascertained from the pack of Colgate Dental Cream (copy CDC pack photocopy is enclosed as Annexure 9). The Complainant further submits that even the claim of Stops Bad Breath is false and misleading, as bad breath is the result of action of oral bacteria that act on proteins present in saliva or food particles giving Volatile Sulphur Compounds (VSC) like hydrogen sulphide and Indoles. These compounds are volatile and are currently considered as root cause of bad breath. Process of generation of VSCs is well reported (Steenberghe van D and Rosenberg M (ed.), Lueven University Press 1995). The Respondent has also published a report (Niles H.P., J dent, Res. 73 sp. issue, Abst, No. 1579) demonstrating th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvenience of the parties have not been dealt with or discussed in the order of the Commission. Mr. Salve in continuation of his submission contended that there is, in fact, a cross appeal by the complainant by reason of the failure of the commission to pass orders as regards the three limbs of the advertisement, namely, germ fighting , tooth decay and bad breath and the fact, however, remains that the Commission was otherwise satisfied that this cannot but be termed to be a case similar in nature as was heard by the Federal Trade Commission wherein the invisible shield was taken recourse to by the appellants. Mr. Salve contended that at least there would be an arguable case by reason of the order of FTC and as such question of interference in appeal by this court in terms of provisions of section 55 does not arise more so by reason of the fact that the Commis-sion has not returned any finding as regards the three principal issues and passed an order of injunction only as regards the "Suraksha Chakra by reason of the specific order of the FTC as noticed above. 34. The submission of Mr. Salve at the first blush is rather attractive that at this stage we are not really conc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not possibly suggest an order of injunction without any factual support. There ought to be some such support on facts without which there would not be any justification for grant of an interim order. 35. Mr. Salve next contended that the complaint pertains to vindication of a public right and since the public interest is involved, question of any delay for moving the Commission does not arise and more so, it is a remedy to public wrong and not being a personal relief. We are, however, unable to record our concurrence at this juncture. Public wrong, if any, needs to be assessed and proved, without which question of having an order of injunction would not arise. While it is true that the relief prayed for is statutory in nature but that does not clothe the Commission to pass orders de hors the basic principles of law. 36. In fine, the submission of Mr. Desai as regards the bona fides of the application under section 12A cannot also be brushed aside and in our view non consideration thereof by the Commission has resulted in a clear error on the part of the Commission. The fact that within a period of 10 days of the application by the appellant herein before the Commission, ..... 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