TMI Blog1995 (2) TMI 436X X X X Extracts X X X X X X X X Extracts X X X X ..... ferent agreements. 3. On 26.11.1986, notices were issued under Section 10(a)(iii) read with Section 37 of the Act, informing the appellant that the agreements between the appellant and the different companies, some of which have their Head Offices in foreign countries contain conditions which amount to restrictive trade practices under clauses (a) and (c) of Section 33(1) of the Act. In the notices aforesaid, the terms and conditions in different agreements which are alleged to be violative of Section 33(1)(a) and (c) of the Act were reproduced. Pursuant to the notices aforesaid, show cause was filed in different cases initiated by the Commission against the appellant. Documents and affidavits were also filed on behalf of the appellant in support of its stand that none of the agreements referred to in the notices issued to the appellant related to restrictive trade practices, calling for any action under the Act. The Commission, however, by the impugned judgment and order directed the appellant in respect of each of the 15 enquiries to discontinue the restrictive trade practices as mentioned in the Notice of Enquiry, and not to repeat the same in future. It was also directed tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itions of delivery or to effect 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; In view of Section 10, the Commission may inquire into any restrictive trade practice (i) upon receiving a complaint of facts from any trade association or from any consumer or (ii) upon a reference made to it by the Central Government or a State government, or (ill) upon an application made to it by the Director General, or (iv) upon its own knowledge or information. Subsection (1) of Section 33 which is relevant is as follows:- 33. Registerable agreements relating to restrictive trade practices.- (1) Every agreement failing within one or more of the following categories shall be deemed, for the purposes of this Act, to be an agreement relating to restrictive trade practices and shall be subject to registration in accordance with the provisions of this Chapter, namely - (a) any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought; (b)any agreement requiring a purchaser of goods, as a conditi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gistration, in accordance with the provisions of Chapter V of the said Act. Section 35 requires the Central Government to specify a day by notification in the Official Gazette on and from which every agreement falling within Section 33 shall become Registerable under the Act. Section 37 vests power in the Commission to inquire into any restrictive trade practice, the relevant part whereof is as follows:- 37. Investigation into restrictive trade practices by Commission.-(1) The Commission may inquire into any restrictive trade practice, whether the agreement, if any, relating thereto has been registered under Section 35 or not, which may come before it for inquiry and, if, after such inquiry it is of opinion that the practice is prejudicial to the public interest, the Commission may, by order, direct that - (a) the practice shall be discontinued or shall not be repeated, (b) the agreement relating thereto shall be void in respect of such restrictive trade practice or shall stand modified in respect thereof in such manner as may be specified in the order. The Commission may inquire into any restrictive trade practice in connection with any agreement which has been regis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... well settled. The Legislature by a statute may create a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, but even then Court has to give full effect to such statu- tory fiction after examining and ascertaining as to for what purpose and between what parties such statutory fiction has been resorted to. In the well known case of East End Dwellngs Co.Ltd. v. Finsbury Borough Council, (1952) A. C. 109(B), Lord Asquith has said:- If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative, state of affairs had in fact existed, must inevitably have flowed from or accompanied it..... The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs. This Court in the cases of State of Bombay v. Pandurang Vinayak and others, AIR 1953 SC 244 = 1953 SCR 773, Chief Inspector of Mines, and another etc. v. Karam Chand Thapar etc. AIR 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mission is required to examine and ascertain as to whether any of the terms of a particular agreement relates to restrictive trade practices (ii) if such agreement relates to restrictive trade practices whether it is prejudicial to the public interest. Unless the finding is recorded in respect of the agreement in question on both counts, no order under Section 37 of the Act can be passed. In other words, first it has to be examined as to whether the agreement relates to any of the restrictive trade prac- tices and if the Commission is satisfied that it relates to one or more restrictive trade practices within the meaning of Section 2(o) of the Act, then the Commission has to examine as to whether such agreement is prejudicial to the public interest. The Commission can direct that the prac- tice be discontinued or should not be repeated or the agreement or part thereof shall be void, only after the Commission is satisfied that any of the clauses of the agreement relates to any restrictive trade practice, within the meaning of Section 2(o) of the Act and such restrictive trade practice is prejudicial to public interest. In this connection, reliance was placed on the judgment of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is its actual and probable effect. It was further said in respect of sub-section 1 of Section 33 as it stood then that it deals with registration of certain types of restrictive trade practices, which had been prescribed in categories mentioned in clauses (a) to (1) of sub-section 1 of Section 33 of the Act. It was then said:- An agreement will be Registerable, when it will have both the effect of restricting competition within the meaning of Section 2(o) of the Act and also deal with the subject matter described in Clauses (a) to (1) of sub- section (1) of Section 33 of the Act. Clauses (a) to (1) aforesaid describe some species of agreement which require registration if they are within the genus of restrictive trade practice defined in Section 2(o) of the Act. A practice which is not restrictive under Sec- tion 2(o) of the Act cannot be restrictive trade practice only because of Clauses (a) to (1) of sub-section (1) of Section 33 of the Act. Section 33 does not provide statutory illustrations to Section 2(o) of the Act but only enumerates some types of trade practices which, if they are restrictive within Section 2(o) of the Act require registration. Court in the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estrictive trade practice. 9. But now with the amendment of man part of sub-section 1 of Section 33 with a statutory fiction the situation has changed. It can be said that clauses (a) to (1) of Sub- Section 1 of Section 33 provide statutory illustrations of restrictive trade practices. The framers of the Act have now in clear and unambiguous words said that every agreement falling within one or more of the categories specified in clauses (a) to (1) of sub-section 1 of Section 33, shall be deemed for the purposes of the said Act, to be an agreement relating to restrictive trade practices and shall be subject to registration in accordance with the provisions of Chapter V. Now it is no more open to the Commission or to this Court to test and examine any of the trade practices mentioned in clauses (a) to (1) of sub-section 1 of Section 33 in the light of Section 2(o) of the Act, for the purpose of recording a finding as to whether those types of trade practices shall be restrictive trade practices within the meaning of Section 2(o) of the Act. This exercise has to be done only in respect of such trade practices which have not been enumerated in any of the clauses from (a) to (1). O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their agreements registered under Section 35, will be in an advantageous position inasmuch as in respect of their agreements, Commission will have to examine both aspects (i) whether the agreement relates to any restrictive trade practice (ii) even if it relates to restrictive trade practice, whether the said practice is prejudicial to the public interest. It is true that under Section 37, the Commission has been vested with the power to inquire in respect of agreements which have been registered under Section 35 as well as those which have not been registered. But the fact remains that once the Commission is satisfied that a particular agreement which has not been registered under Section 35, falls within any of the clauses from (a) to (1) of subsection 1 of Section 33, then no further inquiry is to be done, as to whether such agreement relates to restrictive trade practices or not. The statutory fiction incorporated in sub-section 1 of Section 33 shall also be applicable in respect of such agreements apart from the penalty provided under Section 48 of the Act. As such there is not much scope for discrimination between persons who have got their agreements registered and those who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry fiction because it says that for purposes of any proceedings before the Commission under Section 37,a restrictive trade practice shall be deemed to be prejudicial to the public interest' unless the Commission is satisfied of any or more of the circumstances specified in clauses (a to (k) of sub-section 1 of Section 38. The scheme of the Act appears to be that first it specifies some trade practices, under sub-section 1 of Section 33, as restrictive trade practices. Then it has prescribed a forum under Section 37, to inquire as to whether any such trade practice is prejudicial to the public interest. This question has to be examined in the light of Section 38 which in many judgments have been described as 'gateways'. In other words, inspite of a finding that a particular agreement contains a clause which is related to a restrictive trade practice, if the Commission is satisfied in respect of the existence of any of the circumstances specified in clauses (a) to (k) of sub-section 1 of Section 38, no order under Section 37 is to be passed to desist or discontinue such practice or to declare any part of the agreement as void. One of the circumstances specified in clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Mahindra and Mahindra Ltd. v. Union of India (supra), it was said that after the Commission is satisfied in respect of restrictive trade practices then it has to proceed to consider whether any of the 'gateways' provided in Section 38(1) exist so that the trade practice, though found restrictive, is deemed not to be prejudicial to the public interest. 15.In the light of what has been said above, if the order of the Commission is examined, it shall appear that the Com- mission has set out briefly the facts of 15 cases. Then the Commission has pointed out that the Director General in support of his case has tendered the various agreements. Thereafter reference has been made to the affidavits file on behalf of the appellant and other documents. The real dis- cussion is only in para 40 of the Order under appeal which is as follows: We have gone through voluminous records and pleadings pertaining to these enquiries, evidence produced by the parties, oral arguments, written submissions and cases referred to by the parties and are of the view that no case for gateways under Section 38(1), as pleaded, has been made out by the Voltas in these proceedings. Likewise the manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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