2005 (8) TMI 377 - SC - Companies Law

Supreme Court sets aside compensation order under MRTP Act, emphasizes proof of actual loss.

The Supreme Court allowed the appeal, setting aside the MRTP Commission's order for compensation under section 12B of the MRTP Act. The Court emphasized ... Application for compensation under section 12B of the Monopolies and Restrictive Trade Practices Act, 1960 - Held that:- Appeal allowed. In the application filed by the applicant/respondent apart from saying that the defective machinery fitted with old/second hand parts had been supplied after considerable delay the respondent did not say a word regarding the actual loss and injury or a notional loss caused to the respondent. There is nothing on the record to suggest that any actual loss or injury was caused to the respondent. The application filed by the applicant/respondent was not only cryptic but lacked in particulars to fall-within the definition of unfair trade practice as defined in section 36A read with section 2(u) of the MRTP Act. The MRTP Commission in its order has not adverted to this fact and has not recorded a finding as to the any actual loss or injury caused to the respondent. Since the respondent in the present case failed to aver as well as prove that actually any loss or injury was caused to it which was the sine qua non for invoking the provisions of section 36A, this appeal is accepted. The MRTP Commission has also not recorded any finding as to whether any actual loss or injury or a notional loss was caused to the respondent. Accordingly, impugned order is set aside and the appeal is allowed. Issues:1. Compensation under section 12B of the MRTP Act for delayed and defective supply of machinery.2. Preliminary objections raised by the appellant.3. Allegations of unfair trade practices under section 36A of the MRTP Act.4. Interpretation of unfair trade practices and causation of loss or injury as essential elements.Analysis:The case involved an appeal against an order passed by the Monopolies and Restrictive Trade Practices Commission (MRTP Commission) granting compensation under section 12B of the MRTP Act due to delayed and defective supply of machinery. The appellant had raised preliminary objections, including lack of privity of contract and absence of unfair trade practice allegations. The respondent alleged that the supplied machine was non-working, old, and fitted with second-hand parts, constituting unfair trade practices under section 36A.The MRTP Commission overruled the preliminary objections and found in favor of the respondent, directing the appellant to refund the amount paid with interest and compensation for mental agony. The Commission held that the delay in supply and defects in the machinery constituted unfair trade practices. The appellant challenged this decision in the Supreme Court.The Supreme Court analyzed the elements of unfair trade practices under section 36A, emphasizing the necessity of causation of loss or injury to consumers. Referring to previous judgments, the Court highlighted that actual loss or injury is a crucial element for invoking the provisions of section 36A. In this case, the Court found that the respondent failed to prove any actual loss or injury caused by the alleged unfair trade practices, rendering the application insufficient to establish a violation of section 36A.Consequently, the Supreme Court allowed the appeal, setting aside the MRTP Commission's order. The Court emphasized the importance of proving actual loss or injury to invoke the provisions of section 36A and noted the lack of such evidence in the present case. The Court held that without demonstrating actual loss or injury, the application did not meet the criteria for unfair trade practices, leading to the decision in favor of the appellant.