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Tata Engineering And Locomotive Company Ltd. Versus The Director (Research) For And On Behalf of Deepak Khanna & Others

2015 (12) TMI 914 - SUPREME COURT

Monopolies and Restrictive Trade Practices Act, 1969 - Commission directed the appellant to cease and desist from continuing with the practices complained of and not to repeat the same in future - Held that:- Commission failed to keep in mind the precise allegations against the appellant with a view to find out whether the facts could satisfy the definition of Unfair Trade Practice(s) as alleged against the appellant in the Notice of Enquiry. The Commission was apparently misled by the Prelimina .....

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rating the facts, but failed to take note of this crucial aspect while discussing the relevant materials for the purpose of arriving at its conclusions. Such consideration and discussion begins from paragraph 32 onwards but without ever indicating that the booking amounts had to 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 as .....

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s to a considerable extent in favour of respondent Commission, we are unable to sustain the Commission's conclusions that the allegations and materials against the appellant make out a case of unfair trade practice against the appellant. Nor there is any scope to pass order under Section 36-D(1) of the Act when no case of any unfair trade practice is made out. Hence, we are left with no option but to set aside the order under appeal. - Civil Appeal No. 2069 of 2006 - Dated:- 7-9-2015 - Vikramaji .....

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/99 whereby the Commission has directed the appellant to cease and desist from continuing with the practices complained of and not to repeat the same in future. 2. Since there is no dispute on facts, the case of the parties on facts is common and to the following effect: (i) The practice under scrutiny is of the year 1999 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 .....

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ce of vehicle as well as taxes, duties and cess will be as applicable on the date of delivery. Those making valid booking were to be supplied the vehicle as per priority numbers generated and allocated by a computerized technique, for the first 10,000 bookings only. The terms also provided that the payments against the remaining bookings will be refunded to the customers, without interest, at the at the rate of 10% per annum. The order booking form mentioned in Clause 7 that the person concerned .....

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ed for refund, along with interest as represented. No complaint was made to the Commission by any of the persons who made the booking and thereafter either purchased the car or withdrew the deposits 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 a .....

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ctor (Research) for investigation. The Director submitted Preliminary Investigation Reports (PIR) in all the three matters and three cases were registered as per numbers noted earlier. The Notices of 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 v .....

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ocus standi to file the complaints in the capacity of consumers. On merits the appellant also took the defence that there was no false and misleading statement made by the appellant for inviting booking 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 als .....

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icles and hence in their initial venture into the car segment, they were not sure of public response and they had decided to plan their production schedule on the basis of reality test of car's demand 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 the .....

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e aforesaid provisions need to be noticed. They read as follows: "36A. Definition of unfair trade practice - In this Part, unless the context otherwise requires "unfair trade practice" means a trade practice which, 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 .....

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g representation concerning the need for, or the usefulness of, any goods or services;" 6. According to Mr. Desai the allegations against the appellant do not attract any of the practices mentioned in the Notice of Enquiry and 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 co .....

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"14. For deciding such question, the Commission has to find out whether a particular act can be condemned as an unfair trade practice; whether representation contained a false statement and was misleading and what was the effect of 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 th .....

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Board has adopted unfair method or deceptive practice for the purpose of promoting the sale, use or supply of any goods or for the provisions of any services. Unless there is a finding on this issue, the appellant Board cannot be penalised 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 parag .....

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, the question in controversy has to be answered by construing the relevant provisions of the Act. The definition of "unfair trade practice" in Section 36-A mentioned above is not inclusive or flexible, but specific and limited in its contents. The object is to bring 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 .....

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sing tricky language. Similarly a statement, which may be inaccurate in the technical literal sense can convey the truth and sometimes more effectively than a literally correct statement. It is, therefore, necessary to examine whether the representation, complained of, contains 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 .....

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dequate, 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 us examine the relevant facts of this case in this backgrou .....

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blic and not further amount which can cover only excise duties and sales tax that goes to the Government and that such amount should not have been retained by manufacturing units for a long period of time, the Commission although did not find the appellant guilty of any of the four specific provisions of Section 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 .....

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precisely communicated through the Notice of Enquiry. We find no merit in these contentions. The Commission could not have travelled beyond the specific allegations in the Notice of Enquiry because such a course would violate rules of fairness and natural justice. The scope of enquiry could have been enlarged 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 .....

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i) of Section 36-A (1) of the Act. A careful perusal of the Notice of Enquiry dated 25.9.2000 reveals that no doubt a copy of the PIR was enclosed but the notice made it clear itself that the Commission came to a considered opinion that the Director (Research) had found the appellant indulging in unfair trade 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 .....

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nvestigation Report also which claimed to deal with reply received from the appellant in course of the preliminary enquiry but patently failed even to notice the stipulation as regards payment of interest on the booking amount although this fact was obvious from the terms and conditions of the booking and was reportedly relied upon by the appellant in its reply even at the stage of preliminary investigation. The Commission noticed the relevant facts including provision for interest while narrati .....

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