2002 (11) TMI 359 - SC - Companies Law

Interpretation of Unfair Trade Practices under Monopolies Act: Emphasis on Causation and Mischief Rule

The Court held that the interpretation of section 36A of the Monopolies and Restrictive Trade Practices Act required the contest organized by the ... Unfair Trade Practice - Held that:- This Court has clearly held that for holding a trade practice to be an unfair trade practice, it must be found that it had caused loss or injury to the consumer. We may notice that on or about 1993 an amendment has been made whereby the words 'causing loss or injury to the consumer' were omitted which also goes to show the law as it stood thence, ‘loss or injury to the consumer’ was a pre-requisite for attracting the provisions of section 36A(3)(b) of the Act. In interpreting the said provision, the ‘Mischief Rule’ should be resorted to. For the view, we have taken, the impugned judgments cannot be sustained, which are set aside accordingly. The appeals are allowed but in the facts and circumstances of the case, there will be no order as to costs. Issues:Interpretation of section 36A of the Monopolies and Restrictive Trade Practices Act, 1969; Whether a contest organized by the appellant constitutes an unfair trade practice under the Act.Analysis:The case involved a dispute regarding a contest organized by the appellant through newspaper advertisements, termed as the 'Colgate Trigard Family Good Habits Contest.' Participants were required to send in carton portions of the toothbrushes along with entry forms bearing dealer information. The contest included questions, answers, and a slogan-writing component for a chance to win prizes. Allegations were made that the contest was unfair, causing injury or loss to consumers, falling under section 36A(3)(b) of the M.R.T.P. Act.The Monopolies and Restrictive Trade Practices Commission conducted an inquiry where one member found no consumer loss or injury, while another member disagreed, citing inherent loss in such trade practices. The matter was referred to a Full Bench, which agreed with the view emphasizing that trade practices causing loss or injury are considered unfair under the Act.The appellant argued that the Commission erred in its interpretation of section 36A(3)(b) by not requiring actual loss or injury to consumers as an essential element of unfair trade practices. The Court emphasized that causation of loss or injury is crucial under the Act, and the literal meaning of the statute should be followed unless leading to absurdity.Referring to a previous judgment, the Court highlighted that for a trade practice to be unfair, it must result in loss or injury to consumers. The Court noted an amendment omitting the specific mention of 'causing loss or injury to the consumer,' indicating its significance as a prerequisite under the Act.In conclusion, the Court applied the 'Mischief Rule' for interpreting the provision and held that the judgments were unsustainable as they did not require actual loss or injury to consumers. The judgments were set aside, and the appeals were allowed without costs.