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Tata Engineering and Locomotive Company Ltd. Versus The Director (Research) for and on behalf of Deepak Khanna & Ors.

Monopolies and Restrictive Trade Practices - Booking of cars - three complaints were made before the Commission by persons who claimed that they had intentions to make the booking but were dissuaded by the high quantum of deposit required for the purpose. Their specific objection was that the demanded amount exceeded the basic price of the car if cess, taxes and transportation cost were left out. According to the complainants the appellant had indulged in Unfair Trade Practice (UTP) by demanding .....

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o be refunded within a short time or else it was to carry interest at the rate of 10% per annum.

The order of the Commission appears to be largely influenced by a conclusion that the appellant should not have asked for deposit of an amount above the basic price because in the opinion of the Commission it was unfair for the appellants to keep excise and sales tax with itself for any period of time. Such conclusion of the Commission is based only upon subjective considerations of fairne .....

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practice is made out. - Decided in favor of appellant. - CIVIL APPEAL NO. 2069 OF 2006 - Dated:- 7-9-2015 - VIKRAMAJIT SEN AND SHIVA KIRTI SINGH, JJ. For Appellant : Mr. Rajan Narain,Adv. For Respondent : Mr. P. Parmeswaran,Adv. JUDGMENT SHIVA KIRTI SINGH, J. 1. This is an appeal under Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (for brevity hereinafter referred to as the Act ). The appellant is a company engaged in manufacture and sale of automobiles. It is aggrieved .....

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99 when the appellant was to begin the manufacture and delivery of newly introduced Tata Indica cars into the market with effect from February 1999, with the installed capacity of approximately 60,000 cars in a year. The appellant invited the prospective customers to book the car through dealers. The booking amount demanded by the appellant was quite high and close to the estimated price finally payable which would include excise duty, sales tax and transportation charges. The terms and conditio .....

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remaining bookings will be refunded to the customers, without interest, at the earliest but in any case within a month from the closing of the booking. For refunds after a month, interest will be paid at the rate of 10% per annum. The order booking form mentioned in Clause 7 that the person concerned had carefully read the terms and conditions of the bookings and agreed to the same. (ii) Although the initial allotment was confined only to 10,000 cars, the appellant received as many as 1,13,768 b .....

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with or without interest, as the case may be. (iii) However three complaints were made before the Commission by persons who claimed that they had intentions to make the booking but were dissuaded by the high quantum of deposit required for the purpose. Their specific objection was that the demanded amount exceeded the basic price of the car if cess, taxes and transportation cost were left out. According to the complainants the appellant had indulged in Unfair Trade Practice (UTP) by demanding an .....

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Enquiry under Sections 36-B (d), 37, 36-D of the Act and under Regulation 51 were issued to the appellant who contested the complaints. The appellant filed its reply to the Notice of Enquiry in which it also raised a preliminary objection that the allegations of the restrictive trade practice were vague and not permissible by law. Their further defence was that there are no facts and material to show that the alleged practice is prejudicial to the public interest requiring an enquiry under Sect .....

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ing of Tata Indica cars, the applicants made the bookings with open eyes being aware about the stipulation for payment of interest. According to appellant by letter dated 6.2.1999 the successful applicants were intimated of the priority number allotted to them and the unsuccessful applicants were also informed that they had an option to be considered for the second phase of 50,000 cars and such optees would be entitled to receive interest at the rate of 11% per annum with effect from 1.2.1999 ti .....

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d in the market. For this speculative bookings were required to be discouraged and the same was sought to be achieved by demanding an amount closer to the anticipated price which the customer would be required to pay. According to submissions, such practice could not have promoted the sale of their vehicle rather it was discouraging. The large response shows peoples faith in the products of the appellant and also that the interest rate offered by the appellants was appreciable and fair. 5. Learn .....

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ch, for the purpose of promoting the sale, use or supply of any goods or for the provisions of any services, adopts any unfair method or unfair or deceptive practice including any of the following practices, namely :- (1) the practice of making any statement, whether orally or in writing or by visible representation which,- (i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or mode; (ii) falsely represents that the services are of a p .....

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contained in the definition noted above. 7. The second limb of arguments also flows from the definition in Section 36A of the Act. By placing reliance upon judgment of this Court in the case of Rajasthan Housing Board vs. Parvati Devi (Smt) (2000) 6 SCC 104, it was contended that when supplier and consumer have entered into an agreement then the Commission, in order to hold the supplier guilty of unfair trade practice on the basis of allegations made against it, is required to go into the terms .....

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such a representation made to the common man. The issue cannot be resolved by merely holding that representation was made to hand over the possession within the stipulated period and the same is not complied with or some lesser constructed area is given after the construction of the building. The Commission has to find out whether the representation, complained of, contains the element of misleading the buyer and whether buyers are misled or they are informed in advance that there is likelihood .....

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d for unfair trade practice. 8. On behalf of appellant reliance was also placed upon judgment of this Court in the case of M/s Lakhanpal National Limited vs. M.R.T.P. Commission and Another (1989) 3 SCC 251, particularly paragraph 7 and 9 thereof. In paragraph 7 it was held that the definition of Unfair Trade Practice in Section 36A is not inclusive or flexible, but specific and limited in its contents. The Court also considered the object of this provision with a view to resolve the issue as to .....

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ing honesty and truth in the relationship between the manufacturer and the consumer. When a problem arises as to whether a particular act can be condemned as an unfair trade practice or not, the key to the solution would be to examine whether it contains a false statement and is misleading and further what is the effect of such a representation made by the manufacturer on the common man? Does it lead a reasonable person in the position of a buyer to a wrong conclusion? The issue cannot be resolv .....

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ains the element of misleading the buyer. Does a reasonable man on reading the advertisement form a belief different from what the truth is? The position will have to be viewed with objectivity, in an impersonal manner. It is stated in Halsbury s Laws of England (4th Edn., paras 1044 and 1045) that a representation will be deemed to 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 repr .....

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ession conveyed is false, the most punctilious and scrupulous accuracy in immaterial minutiae will not render the representation true ; Let us examine the relevant facts of this case in this background. 9. In reply Mr. A.K. Sanghi, Senior Advocate defended the impugned order of the respondent Commission. According to him the Commission acted fairly in entertaining the complaints from three persons who found the booking amount very high and therefore did not deposit the same. According to him onc .....

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ection 36-A (1) but still it felt compelled to conclude against the appellant and resultantly pass a cease and desist order under powers conferred upon the Commission by Section 36-D (1) (a) of the Act. 10. Mr. Sanghi also sought to support the finding of the Commission on issue number one that the appellant has indulged in unfair trade practice by referring to certain narratives in the Preliminary Investigation Report (PIR). As per his submission the Commission had not only communicated the pre .....

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ged only after serving further notice with necessary details of allegations and supporting facts. This was clearly not done by the Commission. It is a flagrant violation of audi alteram partem rule. It renders the impugned order invalid and bad in law. The order is also bad for non application of mind to requirement of law as stipulated in Section 36A(1) of the Act and the relevant facts. 11. We have gone through the Preliminary Investigation Report, the Notice of Enquiry as well as the Order un .....

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ade practices falling precisely and only under clauses (i), (ii), (iv) and (vi) of Section 36A(1) of the Act. The enquiry, as per the notice, was to cover:- (a) whether the respondent has been indulging in the above said unfair trade practice(s) and (b) whether the said unfair trade practice(s) is/are prejudicial to public interest. 12. A scrutiny of the judgment under appeal discloses that the Commission failed to keep in mind the precise allegations against the appellant with a view to find ou .....

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