1998 (11) TMI 455 - SC - Companies Law

Supreme Court limits Commission's power to pre-approve ads under Monopolies Act

The Supreme Court ruled that the Commission did not have the authority to require pre-approval of all future advertisements by the appellant, a water ... Scope of power of the Commission Held that:- Appeal allowed. The amended provision cannot be so read as enabling the Commission to require all advertisements that the appellant might issue in the future to be approved by the Commission in advance. The requirement to disclose information relates only to the unfair trade practice then under inquiry. As to public interest, the Commission is sufficiently armed under the Act with powers to take action against those who breach its cease and desist orders. We do not think that it requires the additional power of supervi- sion of the kind indicated either in the impugned direction of the Commis-sion or in the order under challenge to effectively carry out its obligations. The Commission cannot incorporate such direction in its final cease and desist orders. Issues:1. Power of the Commission to issue further directions regarding advertisements by the appellant.2. Interpretation of relevant sections of the Monopolies & Restrictive Trade Practices Act, 1969.3. Scope of the Commission's powers in regulating unfair trade practices.Analysis:The Supreme Court addressed the issue of the Commission's power to issue additional directions concerning advertisements by the appellant. The appellant, a manufacturer of water purifiers, had issued advertisements claiming to provide safe drinking water instantly. The Commission, through a notice of enquiry, directed the appellant to seek approval for future advertisements. The appellant challenged this direction, arguing that the Commission lacked the authority to issue such a directive. The High Court modified the direction, requiring the appellant to submit proposed advertisements to the Director General for approval. The appellant contended that the relevant section of the Act did not empower the Commission to issue such directions. The Court examined the original and amended provisions of the Act and concluded that the Commission did not have the authority to require pre-approval of all future advertisements by the appellant.Regarding the interpretation of the Monopolies & Restrictive Trade Practices Act, 1969, the Court analyzed Section 36D, which outlined the powers of the Commission in addressing unfair trade practices. The original provision did not grant the Commission the authority to mandate pre-approval of advertisements. The Court also reviewed an amended provision cited by the High Court, which focused on disclosing information related to unfair trade practices. However, the Court clarified that this provision did not extend to requiring advance approval of all future advertisements by the Commission. The Court emphasized that the Commission already possessed adequate powers to address violations of cease and desist orders without the need for additional supervision over future advertisements.In determining the scope of the Commission's powers in regulating unfair trade practices, the Court held that the Commission could not include a direction for pre-approval of future advertisements in its final cease and desist orders. The Court emphasized that the Commission's existing powers were sufficient to address breaches of its orders and that additional supervision over future advertisements was not warranted. Consequently, the Court allowed the appeal, set aside the High Court's judgment, and granted relief to the appellant by ruling that the Commission's direction for pre-approval of future advertisements was invalid.