2001 (1) TMI 868 - SC - Companies Law

Appeal granted due to lack of findings on competition impact and consumer costs.

The Court allowed the appeal against the cease and desist order issued by the Monopolies and Restrictive Trade Practices Commission. The Court found the ... Whether the respondent has been and/or is indulging in the trade practices as alleged? Whether the said trade practices have or may have the effect of preventing/distorting or restricting competition? Whether the said trade practices have or may have the effect of imposing unjustified costs or restrictions on the consumers? Whether such trade practices are prejudicial to public interest? Held that:- Appeal allowed. Apart from the fact that the evidence on record does not show that there was any protest by Jain General Stores to the appellant against the so-called practice of sending more slow moving goods and less of fast moving goods, we find that neither in the show-cause notice nor in the additional particulars was there any mention with regard to Jain General Stores. Principles of natural justice would require that the appellant against whom an order of cease and desist could be passed under the provisions of the MRTP Act is entitled to know the case which it has to meet. Passing of an order like the present one results in civil consequences and it is now well settled that in such an event principles of natural justice have to be followed. Issues:Cease and desist order challenge against the appellant by the Monopolies and Restrictive Trade Practices Commission.Analysis:1. Background and Allegations:The appeal challenges a cease and desist order issued by the Monopolies and Restrictive Trade Practices Commission against the appellant based on complaints from former stockists. The complaints arose due to the termination of agreements by the appellant with the stockists, leading to a preliminary inquiry and the issuance of a notice to the appellant under relevant sections of the Monopolies and Restrictive Trade Practices Act, 1969.2. Legal Proceedings and Allegations:The appellant requested relevant material from the Commission, denying the allegations and charges against it, citing a denial of natural justice principles. Evidence was presented before the Commission on issues related to the maintainability of the inquiry, alleged trade practices, and their impact on competition and consumers.3. Commission's Order and Appeal:The Commission found the appellant guilty of restrictive trade practices and directed the discontinuation of such practices. The appellant appealed the decision, arguing against the justification of the order. The Commission's order was based on allegations of tie-up sales, refusal to deal, and their impact on competition and consumer costs.4. Court's Analysis and Decision:The Court analyzed the definition of restrictive trade practices under the MRTP Act, focusing on the effects on competition and consumer costs. It noted the lack of a clear finding on the impact of the appellant's actions on competition and consumer costs. The Court also highlighted the absence of specific mention of certain terminations in the notices provided to the appellant, emphasizing the importance of natural justice principles in such cases.5. Conclusion:The Court found the Commission's order to be contrary to law due to the lack of specific findings on competition impact and consumer costs, as well as the absence of notice regarding certain terminations. As a result, the Court allowed the appeal, setting aside the Commission's order and directing parties to bear their own costs.