Mahindra & Mahindra Ltd. Vs. Union
of India & ANR [1979] INSC 18 (24 January 1979)
BHAGWATI, P.N.
BHAGWATI, P.N.
SINGH, JASWANT SEN, A.P. (J)
CITATION: 1979 AIR 798 1979 SCR (2)1038 1979
SCC (2) 529
CITATOR INFO :
RF 1989 SC 222 (3) RF 1989 SC 516 (49) E 1992
SC2214 (7)
ACT:
Monopolies & Restrictive Trade Practices
Act, 1969-S.
13(2) and 55-Scope of-Nature of order passed
under s. 13(2).
Monopolies & Restrictive Trade Practices
Commission-If should give reasons for its order even in ex-parte orders.
Registrar of Restrictive Trade
Agreements-Obligations under the Act when presenting an application alleging
restrictive trade practices in an agreement.
Interpretation of statutes-Reference and
incorporation of one enactment in another-Distinction between-Substantial
question of law-Meaning of.
HEADNOTE:
Section 10(a) (iii) of the Monopolies and
Restrictive Trade Practices Act, 1969 empowers the Monopolies and Restrictive
Trade Practices Commission to enquire into any restrictive trade practices upon
an application made to it by the Registrar of Restrictive Trade Agreements.
Section 13(2) provides that "any order made by the Commission may be
amended or revoked at any time in the manner in which it was made."
Section 55 provides that any person aggrieved by an order made by the Central
Government or the Commission under s. 13 or s. 37 may prefer an appeal to the
Supreme Court on one or more of the grounds specified in s. 100, Code of Civil
Procedure, 1908.
On the date on which the Act came into force
s. 100 C.P.C. specified three grounds on which a second appeal could lie to the
High Court one of them being that the decision appealed against was contrary to
law. By an amendment made in 1976 s.100 was substituted by a new section which
provides that a second appeal shall lie to the High Court only if the High
Court is satisfied that the case involves a substantial question of law.
The appellant, who was a manufacturer of jeep
motor vehicles, their spare parts and accessories, submitted for registration
to the Registrar of Restrictive Trade Agreements, standard distributorship
agreements entered into by it with its distributors. After registering the
agreements, in his application to the Commission, the Registrar alleged that
certain clauses in the agreement related to restrictive trade practices and
that some of them were prejudicial to public interest.
The appellant, in reply to the Commission's
notice, stated that it did not wish to be heard in the proceedings before the
Commission, pointing out at the same time that there was nothing in the
impugned clauses of the agreement which could be said to constitute restrictive
trade practices the reasons whereof had already been explained in its reply.
1039 The Registrar filed before the
Commission an affidavit in support of his application but that too did not
contain any further or additional material than what was set out in his
application. No other evidence, oral or documentary, was produced by him before
the Commission in support of the allegation that the agreement constituted a
restrictive trade practice.
By its order dated May 14, 1976 the
Commission declared certain clauses of the appellant's distributorship
agreement to be void. While correspondence was going on between the Registrar
and the appellant on the submission of a revised distributorship agreement,
this Court in Tata Engineering & Locomotive Co. Ltd. v. Registrar of
Restrictive Trade Practices, [1977] 2 SCR 685 gave its interpretation on the
relevant provisions of the Act. Thereupon the appellant made an application to
the Commission pointing out that it did not contest the enquiry proceedings under
s. 37 in the first instance because the Commission's decision in the Telco case
was directly applicable; but now that that decision had been reversed by the
Supreme Court in appeal, its order dated May 14, 1976 needed
amendment/modification. An application under s. 13 (2) read with regulation 85
was accordingly made for revocation, amendment or modification of the
Commission's order of May 14, 1976. The Commission rejected this application by
an order dated 28th February 1978.
In its appeal under s. 55 of the Act
impugning the Commission's order dated 28th February 1978 the appellant
contended that (1) the Registrar's application alleging restrictive trade
practices did not set out any facts showing how the appellant's trade practices
were restrictive in nature and that the Registrar's application not having been
made in accordance with the law laid down by this Court in Telco case the
impugned order of the Commission was liable to be revoked or modified under s.
13(2); (2) the order did not give any reasons for its decision and so was
vitiated; and (3) the order was a continuing order because it required the
appellant not merely to cease but also desist from the restrictive trade
practices set out in the order and was, therefore required to be continually justifiable
and since it was, contrary to the law laid down in Telco case it was liable to
be revoked or amended; in any event the decision of this Court being subsequent
to the making of the Commission's order, there was enough justification for
revoking or modifying the order under s. 13(2) of the Act.
The respondent, on the other hand, contended
that (1) on an application of the rule of interpretation enacted in s. 8(1) or
the General Clauses Act, reference in s. 55 to s. 100 C.P.C. must be construed
as a reference to the new s.
100, C.P.C. and so construed an appeal to the
Supreme Court would lie only if the case involved "a substantial question
of law" and not otherwise and since in this case no such question was
involved, the appeal was not maintainable; (2) s. 13(2) could not be used by
the appellant as a substitute for s. 55; and (3) by reason of its subsequent
conduct in acquiescing in the Commission's order and unconditionally accepting
it, the appellant was precluded from raising any contention against its
validity in appeal to this Court.
Allowing the appeal,
HELD: The appeal is maintainable under s. 55
of the Act. [1064 C] 1(a) On a proper interpretation of s. 55 it must be held
that the grounds specified in the then existing s. 100 CPC were incorporated in
s.
55 and the substitution of the new s. 100 did
not affect or restrict the grounds as incorporated in s. 55. In any event, the
present appeal raises substantial questions of law, and so is maintainable.
[1064 C] (b) There is a distinction between a mere reference to or citation of
one statute in another and an incorporation.
Where there is a mere reference to or
citation of one enactment in another without incorporation, s. 8(1) of the
General Clause Act applies and the repeal and re-enactment of the provision
referred to or cited has the effect set out in that section and the reference
to the provision repealed is required to be construed as reference to the
provision as re-enacted. But where a provision of one statute is incorporated
in another, the repeal or amendment of the former does not affect the latter.
The effect of incorporation is as if the provision incorporated were written
out in the incorporting statute and were part of it.
Once the incorporation is made, the provision
incorporated becomes an integral part of the statute in which it is transposed
and thereafter there is no need to refer to the statute from which the
incorporation is made and any subsequent amendment made in it has no effect on
the incorporating statute. [1060 C-G] Collector of Customs, Madras, v. Nathella
Sampathu Chetty & Anr., [1962] 3 SCR 786; New Central Jute Mills Co. Ltd.
v. The Assistant Collector of Central Excise, Allahabad at 69; Council v.
Hindustan Co-operative Insurance Society Ltd., 58 I.A. 259, Ramswarup v. Munshi
& Ors. [1963] 3 SCR 858; Bolani Ores Ltd. v. State of Orissa, [1975] 2 SCR
138; referred to.
(c) Section 55 is an instance of legislation
by incorporation and not legislation by reference. In enacting s. 55 the
legislature did not want to confer an unlimited right of appeal but wanted to
restrict it. It found that the grounds set out in the then existing s. 100 CPC
were appropriate for restricting the right of appeal and hence incorporated
them in s.55. The legislature could never have intended to limit the right of
appeal to any ground or grounds which might from time to time find place in s.
100 without knowing what those grounds were. [1063 B-D] (d) Secondly, the Act
is a self-contained code and it is not possible to believe that the legislature
could have made the right of appeal under such a code dependent on the
viscititudes of a section in another statute. [1063 F] (e) That apart, an
indissoluble link between s. 55 and s. 100, CPC would lead to a startling
result. If, for example, s. 100 were repealed, s. 55 would be reduced to
futility and the right of appeal under the Act would be wholly gone. It would
be absurd to place on the language of s. 55 an interpretation which might in a
given situation result in denial of the right of appeal altogether and thus
defeat the plain object and purpose of the section. [1063 H] (f) Even assuming
that the right of appeal under s.55 is restricted to the ground specified in
the new s. 100 CPC the present appeal would still be maintainable because it
involves a substantial question of law relating to the interpretation of s.
13(2) of the Act. [1064 D] 1041 (g) The test for determining whether a question
of law raised in an appeal is a substantial question of law is to see whether
it is of general public importance or whether it directly or substantially
affects the rights of parties and if so whether it is an open question in the
sense that it is not finally settled by this Court or by the Privy Council or
by the Federal Court or is not free from difficulty or call for discussion of
alternative views. [1064 E] Sir Chunilal V. Mehta & Sons Ltd. v. The
Century Spinning and Manufacturing Co. Ltd., [1962] Supp. 3 SCR 549;
referred to.
In the present case the appeal clearly
involves a substantial question of law within the meaning of the Act, because
the interpretation of s. 13(2) directly and substantially affects the rights of
the parties and is not finally settled by this Court.
2(a) The words "in the manner in which
it was made-' occurring in s. 13(2) have no bearing on the content or the scope
and ambit of the power but merely indicate the procedure to be followed by the
Commission in amending or revoking an order made by it. [1064 H] (b) The power
conferred under s. 13(2) is of the widest amplitude and in this respect it is
unlike s. 22 of the English Act. This power is intended to ensure that the
order passed is and continues to be in conformity with the requirements of the
Act, and the trade practice condemned by the order is really and truly a
restrictive trade practices and it must therefore, be construed in a wide sense
so as to effectuate the object and purpose of the grant of the power.
[1065 B] (c) The powers under s. 13(2) and s.
55 are distinct and independent powers and one cannot be read as subject to the
other. The scope and applicability of s. 13(2) is not cut down by the provision
for appeal under s. 55. It is perhaps because the right of appeal given under
s. 55 is limited to a question of law that a wide and unfettered power is
conferred on the Commission to amend or revoke an order in appropriate cases.
[1066 A] (d) The conferment of such wide and unusual power under s. 13(2) was
necessary to ensure that an erroneous order is capable of being corrected. An
order made under s. 37 or under any other provision of the Act may affect not
only the parties before the Commission but also others such as the whole
net-work of distributors or dealers who were not before the Commission. It may
also affect the entire trade in the product. There may be some Facts or
circumstances having a crucial bearing on the determination of the enquiry
which, if taken into account, may result in a different order being made or
some fact or circumstance may arise which may expose the invalidity of the
order or render it bad. There may be a material change in the relevant
circumstances subsequent to the making of the order.
Therefore, by its very nature. the order of
the Commission is transient or pro-tempore and must be liable to be altered or
revoked according as there is material change in the relevant economic facts
and circumstance. [1366 B-E] (e) But howsoever large may be the power under s. 13(2),
it cannot be construed to be so wide as to permit a rehearing on the same
material without anything more with a view to showing that the order was wrong
on facts. [1067] 1042 (f) When Regulation 85 says that the provisions of s.
114 and O. XLVII, r. 1 CPC shall as far as
may, be applied to the proceedings under s. 13(2) it cannot be read to mean
that an application under s. 13(2) can be maintained only on the grounds set
out in s. 114 and O. XLVII r. 1. This regulation does not in any manner limit
the width and amplitude of the power under s. 13(2). A good part of it is
procedural in nature and has nothing to do with the grounds on which an
application under s. 13(2) may be maintained.
The words "as far as may" occurring
in its last part do not indicate that an application under s. 13(2) can be
maintained only on the grounds set out in s. 114 and O.
XLVII, r. 1, CPC. All that they indicate is
that the provisions of s. 114 and O. XLVII, r. 1 are to be invoked only to the
extent applicable, and if in a given case they are not applicable they may be
ignored; but that does not mean that the power conferred under s. 13 (2) would
not be exercisable in such a case. The reference to the provisions of s. 114
and O. XLVII, r. 1 does not limit the grounds on which an application may be
made under s. 13(2). Clearly, therefore, even if a case does not fall within s.
114 and O. XLVII, r. 1, the Commission would have power in an appropriate case
to amend or revoke an order made by it in the exercise of its power under s.
13(2). [1067 E-H] 3(a) The power of the Commission under s. 13(2) was
exercisable in the present case and the order dated 14th May 1976 was liable to
be revoked. [1077 B] (b) The submission of the distributorship agreement for
registration under s. 33 cannot be construed as admission on the appellant's
part that the clauses in the agreement constituted restrictive trade practices.
The appellant had possibly submitted the agreement for registration on the
erroneous view (which was also the view of the Commission in the Telco case)
that the moment an agreement contains a trade practice falling within any of
the clauses of s. 33(1) the trade practice must, irrespective of whether it
falls within the definition of s. 2(o) or not, be regarded as a restrictive
trade practice and the agreement must be registered. The question whether a
particular trade practice is restrictive or not is essentially a question of
law based on the application of the definition in s. 2(o) to the facts of a
given case and no admission on a question of law can ever be used, in evidence
against the make of the admission.
Therefore, even assuming that there was an
admission in submitting the agreement for registration it could not be used as
evidence against the appellant in the enquiry under s. 37. [1075 C-G] (c) There
was nothing in the conduct of the appellant which would amount to acquiescence
or raise an estoppel against it. The appellant did not at any time, accept the
impugned order knowing that it was erroneous. There can be no acquiescence
without knowledge of the right to repudiate or challenge. [1068 H] (d) Neither
did the failure of the appellant to prefer an appeal amount to acquiescence on
its part because an application under s. 13(2), which is An alternative and a
more effective remedy, was available to it. [1069 G] (e) The fact that the
appellant did not implement the impugned order by entering into revised
distributorship agreements with its distributors also showed that there was no
acquiescence on its part so far as the order dated 14th May 1976 was concerned.
[1070 C] 1043 (f) Estoppel can arise only if a party to a proceeding had
altered his position on the faith of a representation or promise made by
another. In the instant case there is nothing to show that the Registrar had
altered his position on the basis of the application for extension of time made
by the appellant. [1107 D] 4(a). The order of the Commission was bad because it
was based on no material and, could not possibly have been made by the
Commission. [1076 A-B] (b) The definition of restrictive trade practice in the
Act is, to some extent, based on the rule of reason evolved by American courts
while interpreting a similar provision in the Sherman Act. The rule of reason
normally requires ascertainment of facts or features peculiar to the particular
business, its condition before and after the restraint was imposed, the nature
of the restraint and its effect, actual or probable, the history of the
restraint and the evil believed to exist, the reason for adopting the
particular restraint and the purpose sought to be attained.
It is only on a consideration of these
factors that it can be decided whether a particular act, contract or agreement
imposing the restraint is unduly restrictive of competition so as to constitute
restraint of trade. Certain restraint of trade are unreasonable per se because
of their pernicious effect on competition and lack of any redeeming virtue;
they are conclusively presumed to be unreasonable and, therefore, illegal
without elaborate enquiry as to the precise harm they have caused or the
business execuse for their use. In such cases illegality does not depend on a
showing of the unreasonableness of the practice and it is unnecessary to have a
trial to show the nature, extent and degree of its market effect. [1074 A, B;
1075 A-B] (c) It is now settled law that every trade practice which is in
restraint of trade is not necessarily restrictive trade practice. If a trade
practice merely regulates and thereby promotes competition it would not fall
within the definition even if it is to some extent in restraint of trade.
Therefore, the question whether a trade practice is a restrictive trade
practice or not has the decided not on any theoretical or a priori reasoning.
but by inquirie whether it has or may have the effect of preventing distorting
or restricting competition. The peculiar facts and features of the trade would
be very much relevant in determining this question. [1072 H] (d) In the Telco
case this Court laid down that an application by the Registrar under s. 10(a)
(iii) must contain facts which in his opinion constitute restrictive trade
practice and show or establish as to how the alleged clauses constitute
restrictive trade practice in the context of the facts. But even if the
application does not set out any facts or features showing how the trade
practices complained of by the Registrar are restrictive practices, the
Registrar can still, at the hearing of the enquiry, in the absence of any
demand for particulars being made by the opposite party produce material before
the Commission disclosing facts or features which go to establish the
restrictive nature of the trade practice complained of and if that is done, the
defect in the application would not be of much consequence. [1070 G-H] In the
instant case the burden of producing the necessary material that the impugned
trade practices had the actual or probable effect of diminishing or destroying
competition and were therefore restrictive trade practices was on the Registrar
who made on application before the Commission. No material 1044 beyond
reproducing the impugned clauses of the agreement and the words of the relevant
sections having been produced, the application of the Registrar was contrary to
the law laid down by this Court. Therefore, the Commission had no basis for
making its order dated 14th May 1976.
(e) The argument that the trade practices
referred to in the offending clauses were per se restrictive trade practices
and in any event, even if any supporting material was necessary, it was to be
found in the admission of the appellant contained in its letter submitting the
distributorship agreement for registration was without any force.
5(a). When the issue before the court is
whether a practice trade practice set out in an agreement has or may have the
effect of preventing, distorting or restricting competition so as to constitute
a restrictive trade practice, it is the actual or probable effect of the trade
practice which has to be judged and there is no question of contradicting,
varying, adding to or substracting from the terms of the agreement by admitting
extraneous evidence. The various factors stated earlier are required to be
taken into account only for the purpose of determining the actual or probable
effect of the trade practice referred to in the particular clause. In such a
case it is not right to shut out oral evidence to determine the actual or
probable effect of the trade practice. [1078 D-E] (b) It is not s. 33(1) which
invalidates a clause in an agreement relating to a trade practice but it is the
restrictive nature of the trade practice as set out in s.
2(o) which makes it void. [1079 E] (c) When a
question of restrictive trade practice arises in relation to a clause in an
agreement it is the trade practice in the clause that has to be examined for
determining its actual or probable effect on competition. A clause in an
agreement may proprio vigore impose a restraint. Where such restraint produces
or is reasonably likely to produce the prohibited statutory effect it would
clearly constitute a restrictive trade practice and the clause would be bad.
[1108 D-E] Tata Engineering & Locomotive Co. Ltd., Bombay,, v. The
Registrar of the Restrictive Trade Agreement New Delhi, [1977] 2 SCR 685,
applied.
Observations in Hindustan Lever Ltd. v.
M.R.T.P. [1977] 3 SCR 455; disapproved.
(d) In a case where a clause in agreement
does not by- itself impose any restraint but empowers the manufacturer or
supplier to take some action which may be restrictive of competition, the mere
possibility of action being taken, which may be restrictive of competition,
would not in all cases affect the legality of the clause. What is required to
be considered for determining the legality of the clause is whether there is a
real probability that the presence of the clause itself would be likely to
restrict competition. This is basically a question of market effect and cannot
be determined by adopting a doctrainaire approach. Each case would have to be
examined on its own facts from a business and commonsense point of view. It
cannot, therefore, be said that in every case where the clause is theoretically
capable of being so utilised as to unjustifiably restrict competition it would
constitute a restrictive trade practice. [1081 E-H] 1045 6(a). The order dated
14th May 1976 was clearly vitiated by an error of law apparent on the face of the
record inasmuch as it contained only the final and operative order without
giving any reasons in support of it. [1083 E] (b) The two conditions precedent
before the Commission can pass a cease and desist order are (i) it must be
found that the trade practice complained of is a restrictive trade practice and
(ii) where such a finding is reached the Commission must be satisfied that none
of the "gateways" pleaded in answer to the complaint exists. [1082
D-E] (c) In the instant case the appellant did not appear before the Commission
and no 'gateways" were pleaded and therefore the question of the
Commission arriving at a satisfaction in regard to "gateways" did not
arise.
Nonetheless the Commission was required to be
satisfied that the trade practices complained of were restrictive trade
practices. The order dated 14th May 1976 did not contain any discussion showing
that the Commission had reached the requisite satisfaction. It gave merely bald
directions without any reasons. The ex-parte character of the order did not
absolve the Commission from the obligation to give reasons in support of the
order because the appellant would have been entitled to prefer an appeal even
against on ex-parte order and in the absence of reasons, the appellant would
not be in a position to attack the order in appeal. It is well established that
every quasi-judicial order must be supported by reasons. [1082 E-H] N.M. Desai
v. Textiles Ltd., C.A. 245 of 1970, dec. On 17th Dec., 1975; Simons Engineering
Co. v. Union of India, [1976] Supp. SCR 489; followed.
& CIVIL APPELLATE JURISDICTION: Civil
Appeal No. 860 of 1978.
From the Judgment and Order dated 28-2-1978
of the Monopolies and Restrictive Trade Practices Commission in R.T.P. Enquiry
No. 91 of 1975.
Ashok H. Desai, B.H. Wani, Ravinder Narain,
Talat Ansari, A.N. Haksar and Shri Narain for the Appellant.
Soli J. Sorabjee, Addl. Sol. Genl., R.B.
Datar and Girish Chandra for Respondent No. 2.
The judgment of the Court was delivered by
BHAGWATI, J.-This appeal under section 55 of the Monopolies and Restrictive
Trade Practices Act, 1969 (hereinafter referred to as the Act) raises
interesting questions of law relating to the interpretation and application of
certain provisions of the Act. The facts giving rise to the appeal are for the
most part undisputed and they may be briefly stated as follows:
The appellant is a public limited company
engaged in manufacture and sale of jeep motor vehicles and their Spare parts
and accessories. Since 1947 the appellant was marketing and distributing jeep
motor vehicles and it had set up a large and complex net work of dealers, who
were described as distributors, for marketing and after sale service of such
vehicles. In or about 1956 the appellant started manufacturing its own jeep
motor vehicles and since then it has been manufacturing such vehicles and
distributing and marketing the same through its net work of distributors. The
appellant has appointed these distributors for marketing and sale of jeep motor
vehicles on certain terms and conditions contained in a standard
distributorship agreement. The material clauses of this agreement read as
follows:
"Section (3): TERRITORY OF
DISTRIBUTOR:-` The Company grants to Distributor the non-exclusive privilege
(except as hereinafter provided) of selling at re tail and the right (except
hereinafter provided) to appoint in writing by forms of agreements approved by
the Company, Dealers to sell at retail the products enumerated in Section 2 of
this agreement, within the following territory and also demarcated in the map
attached hereto and which forms a part of this agreement.
Distributor accepts the above retail setting
privileges and agrees to develop with diligence the sales of sale products in
said territory in accordance with this agreement and undertakes to achieve the
quantum of sales in the territory as may be fixed by the Company from time to
time.
Section (4): LIMITATIONS ON TERRITORIAL
RIGHTS:- (i) Distributor agrees not to solicit outside of the territory
described in Section 3-the purchase of any products.
* * * * Section (6): PRICE AND PAYMENT
:-Distributor will pay for products the Company's established Distributor net
prices in effect on date on dispatch. Price lists will be furnished to
Distributor by the Company, but the Company reserves the right to change prices
at any time without notice.
* * * * Section (11): PRICE CHANGES :-If the
Company reduces its published suggested retail list price, for any current
model of 'Jeep' motor vehicles, the company will 1047 make an allowance to Distributor
as hereinafter provided. The allowance shall be made in respect of new and
unused 'Jeep' Motor Vehicles of the then current model in respect of which the
price change has been made which `have been purchased by Distributor from the
Company within a period of 30 (thirty) days prior to the effective date of such
decrease in suggested list price, and which distributor shall have in his
unsold stock on such effective date. The allowance shall be equal to the
difference between the net amount paid to the Company for such 'Jeep' Motor
Vehicle (less all allowance thereto granted), and the net amount which would
have been paid had such 'Jeep' motor vehicles been purchased at the reduced
price. No allowance, however, shall be made unless there is a reduction in the
RETAIL list price and increases in discounts, bonuses and the like shall in no
event be considered as a reduction in price.
* * * * Section (17): CARE OF OWNER AND
CUSTOMER RELATIONS: - Distributor agrees- * * * * (a) To refrain from selling or
offering for sale any competing product. The Company shall be the sole judge as
to whether a product is competing or not" The appellant by its letter
dated 27th January, 1971 submitted to the Registrar of Restrictive Trade
Agreement (hereinafter referred to as the Registrar) certified copies of
agreements entered into by the appellant with the Distributors for
registration, since in the opinion of the appellant, they were registrable
under the provisions of Ch. V of the Act. The appellant also submitted to the
Registrar along with its letter dated 19th May, 1972 four copies of the
standard distributorship agreement for registration in terms of cl. (ii) of
Rule 12 of the Monopolies Restrictive Trade Practices Rules, 1970 (hereinafter
referred to as the Rules) and the standard distributorship agreement was
registered by the Registrar under section 35 of the Act.
On 17th December, 1975 the Registrar made an
application to 11 the Monopolies and Restrictive Trade Practices Commission
(hereinafter referred to as the Commission) under section 10(a) (iii) of 1048
the Act pointing out to the Commission that the standard distributorship
agreement entered into by the appellant with the distributors was filed by the
appellant for registration in the office of the Registrar and the same had been
duly registered under section 35 of the Act. The Registrar drew the attention
of the Commission to clauses (3), (4), (5), (6), (11), (13), (14), (17) and
(20) of the standard distributorship agreement and claimed that the provisions
contained in these clauses related "to restrictive trade practices
relating to imposing restrictions on persons and classes of persons to whom
goods are sold and from whom goods are bought tie-up sales/full-line forcing;
exclusive dealing; granting or allowing concessions; discounts, over- riding
commission, etc. in connection with or by reason of dealings; resale price
maintenance; and allocation of area/market for disposal of products covered
under the agreement, respectively attracting clauses (a), (b), (c), (e), (f)
and (g) of section 33(1) and/or section 2(o) of the Act" and that these
restrictive trade practices had and might have the effect of preventing,
distorting and restricting competition and tended to bring about monopolisation
of prices and conditions of delivery and to affect the flow of supplies in the
market relating to goods covered under the standard distributorship agreement
in such manner as to impose on the consumers unjustified costs and restrictions
and the same were prejudicial to public interest. The Registrar prayed on the
basis of these allegations that the Commission be pleased to inquire into the
restrictive trade practices indulged in by the appellant, under section 37 of
the Act and pass such orders as it might deem fit and proper. The Commission,
on receipt of this application, decided, in exercise of the powers conferred
upon it under sections 10(a) and 37 of the Act, to hold inquiry into the
restrictive trade practices complained of by the Registrar and issued notice dated
2nd January, 1976 under Regulation 53 of the Monopolies and Restrictive Trade
Practices Commission Regulations, 1974 (hereinafter referred to as the
Regulations) to the appellant that if the appellant wished to be heard in the
proceedings before the Commission, it should comply with the requirements of
Regulations 65 and 67 failing which the Commission would proceed with the
inquiry in the absence of respondent. The appellant, by its letter dated 3rd
February, 1976, acknowledged receipt of the notice and intimated to the
Commission that it did not wish to be heard in the proceedings before the
Commission but put forward its submissions in regard to the restrictive trade
practices alleged by the Registrar in his application. The appellant pointed
out that the clauses of the standard distribution ship agreement complained of
by the Registrar did not constitute restrictive trade practices for the reasons
explained in the letter 1049 and requested the Deputy Secretary to place their
submissions before the Commission at the enquiry to be held by it. The letter
was purported to be submitted in terms of Regulations 36(3), but the reference
to this Regulation was obviously under some misapprehension because this
Regulation occurred in Chapter V which provided the procedure for reference
under Chapter III and IV and it had no application in case of an inquiry under
section 37 of the Act. The Joint Secretary (Legal) of the Commission pointed
out to the appellant by his letter dated 11th February, 1976 that if the appellant
wished to be heard in the proceedings, the appellant should comply with the
requirements of Regulations 65 and 67 and it is only if the appellant did so,
that it could file a reply in answer to the application of the Registrar and
moreover, the reply had to be properly drawn and duly verified and declared as
provided in those Regulations. The Joint Secretary. (Legal) made it clear that
in view of this legal position obtaining under Regulations 65 and 67, it was
not possible to take note of contents of the letter addressed by the appellant
setting out the explanation for the various clauses impugned in the application
of the Registrar. Though this position, in law was specifically pointed out by
the Joint Secretary (Legal) on behalf of the Commission, the appellant did not
comply with the procedure set out in Regulations 65 and 67 with the result that
the Commission decided to proceed exparte against the appellant. The Registrar
filed an affidavit of the Assistant Registrar dated 10th May, 1976 in support of
the allegations contained in the application but this affidavit surprisingly
did not contain any further or other material than that set out in the
application. No other evidence, oral or documentary, was produced by the
Registrar and the Commission proceeded to decide the issues arising in the
enquiry on the basis of the application supported by the affidavit of the
Assistant Registrar. The Commission, after going through the application and
the affidavit of the Assistant Registrar and hearing the Registrar, made an
order dated 14th May, 1976, the operative part of which was in the following
terms:
"(1) The Respondent is hereby restrained
and prohibited by any agreement with any distributor to restrict by any method
the persons or classes or persons to whom the goods are sold whether such
person be retail purchaser or a dealer.
(2) The Respondent is hereby restrained and
prohibited from restricting in any manner, any purchaser whether a dealer or
otherwise in the course of its trade from acquiring or otherwise dealing in any
goods other than those of the Respondent or the goods of any other person.
(3) The Respondent is hereby restrained and
prohibited from selling any goods to any distributor, dealer or other wise on
the condition that the prices to be charged on resale by the purchaser shall be
the prices stipulated by the respondent unless it is clearly stated that prices
lower than those prices may be charged. The Respondent is hereby directed that
in all future price lists it must state on the cover or on the front page that
the prices if any indicated therein as resale prices are maximum prices and
that the prices lower than those price may be charged.
(4) The Respondent is hereby restrained and
prohibited from allocating any area or market to any distributor or dealer for
the disposal of the Respondent's goods. (5) The Respondent is hereby restrained
and prohibited from preventing any distributor from appointing any dealer of
its own choice on such terms and conditions as may be mutually agreed upon
between distributors and dealers in cases where the Respondent does not
undertake any obligation, liability or responsibility in respect of the
dealers.
(6) The clauses in the agreements relating to
the above restrictive trade practices are hereby declared to be void. The
practices arising therefore, shall be discontinued and shall not be repeated.
(7) The Respondent shall within 3 months from the date of service of this order
on it make and file an affidavit before the Commission setting out the manner
in which this order has been given effect to. A copy of the said affidavit
shall simultaneously be furnished to the Registrar.
(8) There will be no order as to costs."
Since the appellant was required to file an affidavit of compliance within
three months as directed by cl. (7) of the Order, the appellant filed an
affidavit dated 10th September, 1976 stating that the appellant had fully
implemented in practice the directions contained in Paragraphs (1) and (5) of
the Order and refrained from enforcing against the distributors any of the
clauses which had been declared void by the Commission. The appellant also
pointed out that a draft of a 1051 new distributorship agreement was being
finalised by the appellant with a view to giving effect to the "restrictions
and prohibitions" contained in the Order. The Registrar filed an affidavit
of the Deputy Registrar dated 27th September, 1976 seeking particulars from the
appellant showing how the appellant had implemented the directions contained in
the Order. The appellant by its reply dated 11th November, 1976 pointed out
that since the date of receipt of the Order, the appellant had not given effect
to the trade practices covered by paragraphs (1) to (5) of the Order nor
required any of the distributors to abide by the clauses of the standard
distributorship agreement relating to those trade practices and on the
contrary, intimated to the distributors that the old distributorship agreement
would have to be substituted by a new revised agreement. The appellant submitted
that since the clauses of the standard distributorship agreement declared void
by the Commission were not enforceable in law by the appellant, it did not make
any difference whether or not they were deleted from the existing
distributorship agreement and in view of the fact that a new revised agreement
was being prepared which would comply with the directions contained in the
Order, it was not necessary, to effect any amendments in the existing
distributorship agreement. It seems that there was a hearing before the
Commission on this issue as regards compliance with the directions contained in
the Order and the draft of the revised distributorship agreement prepared by
the appellant was considered and pursuant to the suggestion made by the Commission,
the appellant agreed to amend two clauses in the draft and the Commission by
its Order dated 7th December, 1976 directed that the revised distributorship
agreement should be filed by the appellant by 31st March, 1977.
Now, it appears that subsequent to the Order
of the Commission dated 7th December, 1976 an important decision was given by
this Court in Tata Engineering & Locomotive Co. Ltd., Bombay v. The
Registrar of the Restrictive Trade Agreement, New Delhi(') relating to the
interpretation of some of the relevant provisions of the Act bearing on
restrictive trade practices. This decision was given in all appeal preferred by
Tata Engineering Locomotive Co. Ltd.
(herein after referred to as the Telco
against an order made by the Commission in an enquiry under section 37 and it
reversed the view taken by the Commission in several important respects. Though
this decision was given on 21st January, 1977, it was not fully reported until
March 1977 and on reading it, the appellant felt that the order of the
Commission dated 14th May, 1976 required reconsideration, as it was 1052
contrary to the law laid down in this decision. The appellant accordingly made
an application to the Commission on 31st March. 1977 where, besides asking for
extension of time for filing a copy of the revised distributorship agreement on
the ground that the dealers were spread out all over India and it would take
considerable time for execution of the revised distributorship agreement by
them, the appellant pointed out that it had not contested the enquiry
proceedings under section 37 in the first instance because the decision given
by the Commission in the Telco case was directly applicable, but since that
decision of the Commission was reversed by this Court in appeal, the appellant
was advised to move a suitable application for amendment and/or modification of
the Order dated 14th May, 1976 and that was also an additional reason why the
time for filing the revised distributorship agreement should be extended, so
that the revised distributorship agreement could be in accordance with the
directions, if any which might be given by the Commission on the proposed
application. The Commission acceded to the request contained in this
application and extended the time for filing the revised distributorship
agreement up to 4th June, 1977.
The appellant thereafter made an application
dated 30th May, 1977 under section 13(2) of the Act read with Regulation 85 for
revocation, amendment or modification of the Order of the Commission dated 14th
May, 1976. The appellant set out in this application various facts and features
relating to its trade of manufacture and sale of Jeep motor vehicles and their
spare parts and accessories and enumerated a number of grounds on which the
order of the Commission dated 14th May, 1976 deserved to be revised, revoked,
amended or otherwise modified. The application was opposed by the Registrar by
filing a reply dated. 17th August, 1977. The parties were thereafter heard by
the Commission on 26th August, 1977 and pursuant to the directions given by the
Commission. affidavits of documents were filed and evidence was recorded on
both sides. It appears that in the course of the evidence the appellant came to
know that in November 1977 Hindustan Motors Ltd. had introduced in the 6 market
diesel trekker which was clearly a competing vehicle and the appellant
thereupon applied to the Commission on 30th January. 1978 for amendment of the
application by adding a plea that the fact that since November 1977 Hindustan
Motor Ltd. had started manufacturing and selling diesel trekker which was a
highly competitive product was another material change in the relevant
circumstances which justified the revocation, amendment or modification of the
Order dated 14th May, 1976. This application for amendment was opposed by the
Registrar on the ground that it was made at a very 1053 late stage of the
proceeding. The Commission did not pass any order on this application for
amendment and kept it pending and proceeded to dispose of the main application
by an Order dated 28th February, 1978 by which it rejected the main application
with costs and added a short order On the same day stating that in view of the
order on the main application, there would be no order on the application for
amendment. The appellant thereupon preferred the present appeal in this Court
under section 55 challenging the validity of the order made by the Commission
rejecting the application of the appellant.
Before we set out the rival contentions of
the parties in the appeal, it would be convenient at this state to refer to the
relevant provisions of the Act and the Regulations.
Section 2 is the definition section and
clause (u) of this section defines 'trade practice' to mean "any practice
relating to the carrying on of any trade, and includes-(i) anything done by any
person which controls or affects the price charged by, or the method of trading
of, any trader or any class of traders (ii) a single or isolated action of any
person in relation to any trade". 'Restrictive trade practice' is defiled
in section 2, clause (o) to mean "a grade practice which has, or may have,
the effect of preventing distorting or restricting, competition in any manner
and in particular,-(i) which tends to obstruct the flow of capital or resources
into the stream of production, or (ii) which tends to bring about manipulation
of prices, or conditions of delivery or to affect the flow of supplies in. the
market relating to goods or services in such manner as to impose on the
consumers unjustified costs or restrictions." Section 5, subsection (1)
provides for the establishment of the Commission which is to consist of a
Chairman and not less than two and not more than eight other members to be
appointed by the Central Government and sub- section (2) of section 5 lays down
that the Chairman shall be a person who is or has been or is qualified to be a
judge of the Supreme Court or of a High Court. It is obvious from these two
sub-sections of section 5 that the Legislature clearly contemplated that the Commission
must have a Chairman who would provide the judicial element and there must be
at least two other members who would provide expertise in subjects like
economics, law, commerce.
accountancy, industry, public affairs or
administration. so that there could be a really high-powered expert commission
competent and adequate to deal with the various problems which come before it.
It, however, appears that the Central Government paid scant regard to this`
legislative requirement and though the office of Chairman fell vacant as far
back as 9th August, 1976, it failed to make appointment of Chairman until 1054
24th February, 1978. Of the two other members of the Commission one had already
resigned earlier and his vacancy was also not filled with the result that the
Commission continued with only one member for a period of about 18 months. This
was a most unfortunate state of affairs, for it betrayed total lack of concern
for the proper constitution and functioning of the Commission and complete
neglect of its statutory obligation by the Central Government. We fail to see
any reason why the Central Government could not make the necessary appointments
and properly constitute the Commission in accordance with the requirements of
the Act.
It is difficult to believe that legal and
judicial talent in the country had become so impoverished that the Central
Government could not find a suitable person to fill the vacancy of Chairman for
a year and a half. Moreover it must be remembered that the appointments, after
all, have to be made from whatever legal and judicial talent is available and
the situation is not going to improve by waiting for a year or two: a new star
is not going to appear in the legal firmament within such a short time and the
appointments cannot be held up indefinitely. Indeed, it is highly undesirable
that important quasi-judicial or administrative posts should remain vacant for
long periods of time, because apart from impairing the efficiency of the
functioning of the statutory authority of the administration. In-explicable
delay may shake the confidence of the public in the integrity of the
appointments when made. Turning back to the provisions of the Act, we find that
section 10(a) (iii) empowers the Commission to inquire into any restrictive
trade practice upon an application made to it by the Registrar. The powers of
the Commission while holding an enquiry under the Act are enumerated in section
12 and section 13, sub-section (2) provides that "any order made by the
Commission may be amended or revoked at any time in the manner in which it was
made". Then follow sections 14 to 19 which deal inter alia with the
procedure to be followed by the Commission. We are not concerned with Sections
20 to 32 which occur in Chapters III and IV because they deal with topics other
than restrictive trade practices. Chapter V relates to registration of
agreements relating to restrictive trade practices and it consists of sections
33 to 36 of which only sections 33 and 35 are material. Sub- section (1) of
section 33 provides that any agreement relating to a restrictive trade practice
falling within one or more of the categories specified there shall be subject
to registration in accordance with the provisions of Ch. V and proceeds to
enumerate the categories of restrictive trade practices covered by that
provision and section 35 lays down the time within which an agreement falling
within section 33, sub-section (1) shall be registered and the procedure to be
followed for effectuating such registration.
Sections 37 1055 and 38 are the next
important sections and they occur in Ch. V headed A "control of certain
restrictive trade practices".
Sub-section (1) of section 37 provides that
"the Commission may inquire into any restrictive trade practice, whether
the agreement, if any, relating thereto has been registered under section 35 or
not, which may come before it for inquiry and, if after such inquiry it is of
opinion that the practice is prejudicial to the public interest, the Commission
may, by order, direct that-(a) the practice shall be discontinued or shall not
be repeated, (b) the agreement relating thereto shall be void in respect of
such restrictive trade practice or shall stand modified in respect thereof in
such manner as may be specified in the order". Section 38, sub-section (1)
enacts that for the purposes of any proceedings before the Commission under
section 37, a restrictive trade practice shall be deemed to be prejudicial to
the public interest unless the Commission is satisfied of any one or more of
the circumstances set out in that subsection and is further satisfied, after
balancing the competing considerations, that the restriction is not
unreasonable. These circumstances specified in sub-section (1) of section 38
render a trade practice permissible even though it is restrictive and provide
what have been picturesquely described in the English law as
"gateways" out of the prohibition of restrictive trade practices.
Section 55 is the next relevant section and it provides that any person aggrieved
by any order made by the Central Government under Ch. III or Ch. IV or as the
case may be, of the Commission under section 13 or section 37 may, within 60
days from the date of the order, prefer an appeal to the Supreme Court on
"one or more of the grounds specified in section 100 of the Code of Civil
Procedure 1908". This is the section under which the present appeal has
been preferred by the appellant. The last section to which we must refer is
section 66 which confers power on the Commission to make Regulations for the
efficient performance of its functions under the Act. The Commission has, in
exercise of the power conferred by this section, made the Regulations of which
three arc material. namely, Regulations 65, 67 and 85. These Regulations, in so
far as material, read as follows "Section 65: APPEARANCE OF PARTIES :
Every respondent who wishes to be heard in the proceedings shall within 14 days
of the service upon him of the copy of the notice of enquiry, enter an
appearance in the office of the Commission by delivering to the Secretary six
copies of a memorandum stating that the respondent wishes to be heard in the
proceedings and containing the name of his advocate having an office in Delhi
or New Delhi and duly authorised to accept service of processes and the
Secretary 1056 shall send one copy of the memorandum to the Registrar in case
where proceedings are initiated under sub- clause (iii) of clause (a) of
section 10, and in all other cases to the Director of Investigation."
"Section 67: REPLY TO THE NOTICE: Every respondent who has entered an
appearance shall within four weeks of his entering appearance deliver to the
Secretary a reply to the notice (5 copies) which shall include:- (a)
particulars of each of the provisions of section 38 of Act on which he intends
to rely; and (b) particulars of the facts and matters alleged by him to entitle
him to rely on such provisions." "Section 85: AMENDMENT OR REVOCATION
OF ORDER ETC.: An application under sub-section (2) of section 13 of the Act
for amendment-or revocation of any order made by the Commission in any
proceedings shall be supported by evidence on affidavit of the material change
in the relevant circumstances or any other fact or circumstances on which the
applicant relies. Unless the Commission otherwise directs notice of the
application together with copies of the affidavits in support thereof, shall be
served on every party who appeared at the hearing of the previous proceedings
and every such party shall be entitled to be heard on the application and the provisions
of section 114 and Order XLVII of the Code of Civil Procedure, '908 (5 of
1908), shall as far as may, be applied to these proceedings." It is
against the background of these provisions of the Act and the Regulations that
we have to determine the question arising for consideration in the appeal.
The contention of the appellant in support of
the appeal was that the Order dated 14th May, 1976 suffered from various
infirmities and was liable to be revoked or in any event modified under section
13(2) of the Act. It was said that the application of the Registrar on which
the Order dated 14th May, 1976 was made did not set out any facts or features
showing how the trade practices referred to in the application were restrictive
of competition so as to constitute restrictive trade practices and merely
contained a bald recital of the impugned clause and mechanical reproduction of
the language of the relevant 1057 sections without anything more. The
application of the Registrar was thus not in accordance with the law laid down
in the decision of this Court in the Telco case and no order could be made upon
it by the Commission. It was also urged that there was no material placed
before the Commission by the Registrar on the basis of which the Commission
could possibly come to the conclusion that the trade practices referred to in
the application were restrictive trade practices. Even if the Commission was
justified in proceeding exparte against the appellant, the highest that could
be assumed in favour of the Registrar was that the facts set out in the
application and the supporting affidavit of the Assistant Registrar would be
deemed to be admitted, but, apart from the impugned clauses, no other facts
were set out either in the application or in the affidavit of the Assistant
Registrar and there was accordingly no evidence on which the order dated 14th
May, 1976 could be made by the Commission. It was also contended that the Order
dated 14th May, 1976 did not set out any facts peculiar to the trade of the
appellant or the conditions before and after the imposition of the restraint or
the actual or probable effect of the restraint nor did it indicate as to how
the trade practices referred to in the impugned clauses constituted restrictive
trade practices; it was a non-speaking order which did not give any reasons at
all for holding that the trade practices complained of were restrictive trade
practices and hence it was vitiated by a legal infirmity. The appellant further
urged that the Order dated 14th May, 1976 was a continuing order as it required
the appellant not merely to cease but also to desist from the restrictive trade
practices set out in the order and it was, therefore, required to be
continually justifiable and since the facts and features of the trade set out
in the application of the appellant clearly established that the trade
practices referred to in the impugned clauses did not constitute restrictive
trade practices, the Order dated 14th May, 1976 was not justified and in any
event could not be continued and it was accordingly liable to be revoked or
amended under section 13(2). It was submitted that in any event the Order dated
14th May, l 976 was contrary to the law declared by this Court in the Telco
case and since the decision in the Telco case was a fact or circumstance
subsequent to the making of the Order, it justified the invocation of the power
under section 13(2) for revoking or modifying the Order. Lastly, it was
contended that in any view of the matter there was a material change in the relevant
circumstances subsequent to the making of the Order dated 14th May, 1976 in
that Hindustan Motor Ltd. started manufacturing and marketing competing utility
vehicles since June 1976 and this was sufficient to warrant reconsideration of
the Order under section 13 (2) . The respondents raised a preliminary 1058
objection against the maintainability of the appeal on the ground that under
section 55 read with the newly substituted section 100 of the Code of Civil
Procedure, 1908, an appeal could lie to this Court only on a substantial
question of law and since the contentions raised on behalf of the appellant did
not raise any substantial question of law, the appeal was not maintainable. The
respondents also urged that on a proper construction of section 13(2) read with
Regulation 85, the Commission could revoke or amend the Order dated 14th May,
1976 only if there was a material change in the relevant circumstances since
the making of the Order or any of the grounds specified in Order XLVlI rule 1
of the Code of Civil Procedure, 1908 was available to the appellant. The second
and third grounds specified in Order XLVII, rule 1 obviously did not exist in
the present case and the claim of the appellant for exercise of the power under
section 13(2) could, if at all, rest only on the first ground, namely error of
law apparent on the face of the record. But, said the respondents, there was no
error of law apparent on the face of the record so far as the Order dated 14th
May, 1976 was concerned, nor was there any material change in the relevant
circumstances subsequent to the making of the order and hence section 13(2) was
not attracted. The respondents contended that what the appellant was seeking to
achieve by the application under section 13(2) was reconsideration of the Order
dated 14th May, 1976 which was clearly impermissible, since section 13(2) could
not be used as a substitute, for section 55 and that too, without the
restrictive condition of that section. It was also urged on behalf of the
respondents that, in any event the appellant was precluded from challenging the
Order dated 14th May, 1976 by an application under Section 13(2) by reason of
its subsequent conduct in acquiescing in the Order and unconditionally
accepting the same. The appellant clearly waived the defects or infirmities if
any in the Order dated 14th May, 1976 and was precluded from raising any
contention against the validity of that Order. The respondents disputed
validity of the contentions raised on behalf of the appellant and urged that in
any event even if any of these defects or infirmities were present, they did
not render the Order void as being without jurisdiction and hence the validity
of the Order could not be challenged in the collateral proceedings under
section 13(2). The respondents also contended that in any view of the matter
the Order dated 14th May, 1976 was justified inasmuch as the trade practices
complained of by the Registrar were restrictive trade practices. These were the
rival contentions 1059 urged on behalf of the parties and we shall now proceed
to examine The first question that arises for consideration in the preliminary
objection of the respondents is as to what is the true scope and admit of an
appeal under section 55. That section provides inter alia that any person
aggrieved by an order made by the Commission under section 13 may prefer an
appeal to this Court on "one or more of the grounds specified in section
100 of the Code of Civil Procedure, 1908". Now at the date when section 55
was enacted, namely, 27th December, 1969, being the date of coming into force
of the Act, section 100 of the Code of Civil Procedure specified three grounds
on which a second appeal could be brought to the High Court and one of these
grounds was that the decision appealed against was contrary to law. It was
sufficient under section 100 as it stood then that there should be a question
of law in order to attract the jurisdiction of the High Court in second appeal
and, therefore, if the reference in section 55 were to the grounds set out in
the then existing section 100, there can be no doubt that an appeal would lie
to this Court under section 55 on a question of law. But subsequent to the
enactment of section 55 section 100 of the Code of Civil Procedure was
substituted by a new section by section 37 of the Code of Civil Procedure
(Amendment) Act, 1976 with effect from 1st February, 1977 and the new section
100 provided that a second appeal shall lie to the High Court only if the High
Court is satisfied that the case involves a substantial question of law. The
three grounds on which a second appeal could lie under the former section 100
were abrogated and in their place only one ground was substituted which was a
highly stringent ground, namely, that there should be a substantial question of
law. This was the new section 100 which was in force on the date when the
present appeal was preferred by the appellant and the argument of the
respondents was that the maintainability of the appeal was, therefore, required
to be judged by reference to the ground specified in the new section 100 and
the appeal could be entertained only if there was a substantial question of
law. The respondents leaned heavily on section 8(1) of the General Clauses Act,
1897 which provides:
"8(1) Where this Act, or any Central Act
or Regulation made after the commencement of this Act, repeals and re-enacts,
with or without modification, any provision of a former enactment, then
references in any other enactment or in any instrument to the provision so
repealed shall, un- 1060 less a different intention appears, be construed as
references to the provision so re-enacted." and contended that the
substitution of the new section 100 amounted to repeal and re-enactment of the
former section 100 and, therefore, on an application of the rule of
interpretation enacted in section 8(1), the reference in section 55 to section
100 must be construed as reference to the new section 100 and the appeal could
be maintained only on the ground specified in the new section 100, that is, on
a substantial question of law. We do not think this contention is well founded.
It ignores the distinction between a mere reference to or citation of one
statute in another and an incorporation which in effect means bodily lefting a
provision of one enactment and making it a part of another. Where there is mere
reference to or citation of one enactment in another without incorporation,
section 8(1) applies and the repeal and re-enactment of the provision referred
to or cited has the effect set out in that section and the reference to the
provision repealed is required to be construed as reference to the provision as
re-enacted.
Such was the case in the Collector of
Customs, Madras v. Nathella Sampathu Chetty & Anr. and the New Central Jute
Mills Co. Ltd. v. The Assistant Collector of Central Excise, Allahabad &
Ors. But where a provision of one statute is incorporated in another, the
repeal or amendment of the former does not affect the latter. The effect of
incorporation is as if the provision were written out in the incorporating
statute and were a part of it. Legislation by incorporation is a common
legislative device employed by the legislature, where the legislature for
convenience of drafting incorporates provisions from an existing statute by
reference to that statute instead of setting out for itself at length the
provisions which it desires to adopt. Once the incorporation is made, the
provision incorporated becomes an integral part of the statute in which it is
transposed and thereafter there is no need to refer to the statute from which
the incorporation is made and any subsequent amendment made in it has no effect
on the incorporating statute. Lord Esher, M.R., while dealing with legislation
in incorporation in In re. Wood's Estate (1886) 31 Ch.D. 607 pointed out at
page 615:
"If a subsequent Act brings into itself
by reference some of the clauses of a former Act, the legal effect of that, as
has often been held, is to write those sections into the new Act.
1061 just as if they had been actually
written in it with the pen, or printed in it, and, the moment you have those
clauses in the later Act, you have no occasion to refer to the former Act at
all." Lord Justice Brett, also observed to the same effect in Clark v.
Bradlaugh (1881) 8 Q.B.D. 63 at 69 :
"..... there is a rule of construction
that, where a statute is incorporated by reference into a second statute, the
repeal of the first statute by a third statute does no affect the second."
This was the rule applied by the Judicial Committee of the Privy Council in
Secretary of State for India in Council v.
Hindustan Cooperative Insurance Society Ltd.
The Judicial Committee pointed out in this case that the provisions of the Land
Acquisition Act, 1894 having been incorporated in the Calcutta Improvement
Trust Act, 1911 and become an integral part of it, the subsequent amendment of
the Land Acquisition Act, 1894 by the addition of sub-section (2) in section 26
had no effect on the Calcutta Land Improvement Trust Act, 1911 and could not be
read into it. Sir George Lowndes delivering the opinion of the Judicial
Committee observed at page 267 :
"In this country it is accepted that
where a statute is incorporated by reference into a second statute, the repeal
of the first statute does not affect the second: see the cases collected in
Craies on Statute Law, 3rd edn. pp. 349, 350.
x x x x x x x The independent existence of
the two Acts is, therefore, recognized; despite the death of the parent Act,
its offspring survives in the incorporating Act. x x x It seems to be no less
logical to hold that where certain provisions from an existing Act have been
incorporated into a subsequent Act, no addition to the former Act, which is not
expressly made applicable to the subsequent Act, can be deemed to be
incorporated in it, at all events if it is possible for the subsequent Act to
function effectually without the addition." So also in Ramswarup v. Munshi
& Ors., it was held by this Court that since the definition of
"agricultural land' in the Punjab Alienation of Land Act, 1900 was bodily
incorporated in the Punjab 1062 Pre-emption Act, 1913, the repeal of the former
Act had no effect on the continued operation of the latter. Rajagopala Ayyangar,
J., speaking for the Court observed at pages 868- 869 of the Report:
"Where the provisions of an Act are
incorporated by reference in a later Act the repeal of the earlier Act has, in
general, no effect upon the construction or effect of the Act in which its
provisions have been incorporated.
x x x x In the circumstances, therefore, the
repeal of the Punjab Alienation of Land Act of 1900 has no effect on the
continued operation of the Pre-emption Act and the expression 'agricultural
land' in the latter Act has to be read as if the definition in the Alienation
of Land Act had been bodily transposed into it." The decision of this
Court in Bolani Ores Ltd. v. State of Orissa also proceeded on the same
principle. There the question arose in regard to the interpretation of section
2(c) of the Bihar and Orissa Motor Vehicles Taxation Act, 1930 (hereinafter
referred to as the Taxation Act). This section when enacted adopted the
definition of 'motor vehicle' contained in section 2(18) of the Motor Vehicles Act,
1939. Subsequently, section 2(18) was amended by Act 100 of 1956 but no
corresponding amendment was made in the definition contained in section 2(c) Or
the Taxation Act.
The argument advanced before the Court was
that the definition in section 2(c) of the Taxation Act was not a definition by
incorporation but only a definition by reference and the meaning of 'motor
vehicle' in section 2(c) must, therefore, be taken to be the same as defined
from time to time in section 2(18) of the Motor Vehicles Act, 1939. This
argument was negatived by the Court and it was held that this was a case of
incorporation and not reference and the definition in section 2 (18) of the Motor
Vehicles Act, 1939 as then existing was incorporation in section 2(c) of the
Taxation Act and neither repeal of the Motor Vehicles Act, 1939 nor any
amendment in it would affect the definition of 'motor vehicle' in section 2(c)
of the Taxation Act. It is, therefore, clear that if there is mere reference to
a provision of one statute in another without incorporation, then, unless a
different intention clearly appears, section 8(1) would apply and the reference
would be construed as a reference to the provision as may be in force from time
to time in the former statute. But if a provision of one statute is
incorporated in another, any subsequent amendment in the former 1063 statute or
even its total repeal would not affect the provision as incorporated in the
latter statute. The question is to which category the present case belongs.
We have no doubt that section 55 is all instances
of legislation by incorporation and not legislation by reference. Section 55
provides for an appeal to this Court on "one or more or the grounds
specified in section 100". It is obvious that the legislature did not want
to confer an unlimited right of appeal, but wanted to restrict it and turning
to section 100, it found that the grounds there set out were appropriate for
restricting the right of appeal and hence it incorporated then in Section 55.
The right of appeal was clearly intended to be limited to the grounds set out
in the existing section 100. Those were the grounds which were before the
Legislature and to which the Legislature could have applied its mind and it is
reasonable to assume that it was with reference to those specific and known
grounds that the legislature intended to restrict the right of appeal. The
Legislature could never have intended to limit the right of appeal to any
ground or grounds which might from time to time find place in section 100
without knowing what those grounds were. The grounds specified in section 100
might be changed from time to time having regard to the legislative policy
relating to second appeals and it is difficult to see any valid reason why the
Legislature should have thought it necessary that these changes should also be
reflected in section 55 which deals with the right of appeal in a totally
different context. We fail to appreciate what relevance the legislative policy
in regard to second appeals has to the right of appeal under section 55 so that
section 55 should be inseparably linked or yoked to section 100 and whatever
changes take place in section 100 must be automatically read into section 55.
It must be remembered that the Act is a self-contained Code dealing with
monopolies and restrictive trade practices and it is not possible to believe
that the Legislature could have made the right of appeal under such a code
dependent on the vicissitudes through which a section in another statute might
pass from time to time. The scope and ambit of the appeal could not have been
intended to fluctuate or vary with every change in the grounds set out in
section 100.
Apart from the absence of any rational
justification for doing so, such an in-dissolubleing of section 55 with section
100 could conceivably lead to a rather absurd and starting result. Take for
example a situation where section 100 might be repealed altogether by the
Legislature a situation which cannot be regarded as wholly unthinkable. It the
construction contended for on behalf of the respondents were accepted.
1064 section 55 would in such a case be
reduced to futility and the right of appeal would be wholly gone, because then
there would be no grounds on which an appeal could lie. Could such a
consequence ever have been contemplated by the Legislature? The Legislature
clearly intended that there should be a right of appeal, though on limited
grounds, and it would be absurd to place on the language of section 55 an
interpretation which might, in a given situation, result in denial of the right
of appeal altogether and thus defeat the plain object and purpose of the
section. We must, therefore, hold that on a proper interpretation the grounds
specified in the then existing section 100 were incorporated in section 55 and
the substitution of the new section 100 did not affect or restrict the grounds
as incorporated and since the present appeal admittedly raises questions of
law, it is clearly maintainable under section 55. We may point out that even if
the right of appeal under section 55 were restricted to the ground specified in
the new section 100, the present appeal would still be maintainable, since it
involves a substantial question of law relating to the interpretation of section
13(2). What should be the test for determining whether a question of law raised
in an appeal is substantial has been laid down by this Court in Sir Chunilal V.
Mehta and Sons Ltd. v. The Century Spinning and Manufacturing Co. Ltd. and it
has been held that the proper test would be whether the "question of law
is of general public importance or whether it directly or substantially affects
the rights of the parties, and if so, whether it is either an open question in
the sense that it is not finally settled by this Court or by the Privy Council
or by the Federal Court or is not free from difficulty or calls for discussion
of alternative views". The question of interpretation of section 13(2)
which arises in the present appeal, directly and substantially affects the
rights of the parties and it is an open question in the sense that it is not
finally settled by this Court and it is, therefore, clearly a substantial
question of law within the meaning of this test.
We must, therefore, reject the preliminary
objection raised on behalf of the respondents against the maintainability of
the present appeal.
That takes us to a consideration of the
merits of the appeal and the first question that arises on the merits is as to
the true scope and magnitude of the curial power conferred on the Commission
under section 13(2). That section provides that "any order made by the
Commission may be amended or revoked at any time in the manner in which it was
made". The words "in the manner in which it was made" merely
indicate the procedure to be followed by the Commission 1065 in amending or
revoking an order. They have no bearing on the content of the power granted
under section 13(2) or on its scope and ambit. That has to be determined on an
interpretation of section 13(2) in the light of the context or setting in which
it occurs and having regard to the object and purpose of its enactment. Now,
one thing is clear that the power conferred under section 13(2) is a corrective
or rectificatory power and it is conferred in terms of widest amplitude. There
are no fetters placed by the Legislature to inhibit the width and amplitude of
the power and in this respect it is unlike section 22 of the English
Restrictive Trade Practices Act, 1956 which limits the power of the Court under
that section to discharge a previous order made by it by providing in terms
clear and explicit that leave to make an application for discharging the
previous order shall not be granted except on prima facie evidence of material
change in the relevant circumstances.
This provision is markedly absent in section
13(2) and not express limitation is placed on the power conferred under that
section. It is left to the discretion of the Commission whether the power
should be exercised in a given case and if so, to what extent. But it must be
remembered that this discretion being a judicial or in any event a quasi
judicial discretion, cannot be 'arbitrary, vague or fanciful', it must be
guided by relevant considerations. It is not possible to enumerate exhaustively,
the various relevant considerations which may legitimately weigh with the
Commission in exercising its discretion, nor would it be prudent or wise to do
so, since the teeming multiplicity of circumstances and situations which may
arise from time to time in this kalisdozoopic world cannot be cast in any
definite or rigid mould or be imprisoned in any straight jacket formula. Every
case of an application under section 13(2) would have to be decided on its own
distinctive facts and the Commission would have to find whether it is a proper
case in which, having regard to the relevant consideration, the order made by
it should be amended or revoked. The fact that an appeal lies against the order
under section 55 but has not been preferred, would be no ground for refusing to
exercise the power under section 13(2). The power conferred on the Commission
under section 13(2) is an independent power which has nothing to do with the
appellate power under section 55. It is not correct to say that the power under
section 13(2) cannot be exercised to correct an order which could have been set
right in appeal under section 55. The argument of the respondents that, if such
a view is taken, it would permit section 13(2) to be used as a substitute for
section 55 and that too, without its restrictive condition has no force and
does not appeal to us. There is no question of using section 13(2) as a
substitute for section 55.
1066 Both are distinct and independent powers
and one cannot be read as subject to the other. The scope and applicability of
section 13(2) is not cut down by the provision for appeal under section 55. It
is perhaps because the right of appeal given under section 55 is limited to a
question of law that a wide and unfettered power is conferred on the Commission
to amend or revoke an order in appropriate cases. An order under section 37 or
for the matter of that, under any other provision of the Act, is not an order
made in a mere interparties proceeding having effect limited only to the
parties to the proceeding. Not only in its radiating potencies, but also by its
express terms, it affects other parties such as the whole network of
distributors or dealers who are not before the Commission. It also affects the
entire trade in the product including consumers, dealers and manufacturers in
the same line. The provisions of the Act are infected with public interest and
considerations of public interest permeate every proceeding under the Act.
Hence it is necessary to ensure that if, by
reason of in attitude or negligence of a party to the proceeding or on account
of any other reason, an erroneous order has been made, it should be possible to
correct it, lest it may, instead of promoting competition, produce an anti-
competitive effect or may turn out to be prejudicial to public interest. It is
also possible that there may be some fact or circumstance which may not have
been brought to the attention of the Commission, though having a crucial
bearing on the determination of the inquiry, and which, if taken into account,
may result in a different order being made, or some fact or circumstance may
arise which may expose the invalidity of the order or render it bad and in such
cases too, some provision has to be made for correcting or rectifying the
order. So also, there may be a material change in the relevant circumstances
subsequent to the making of the order which may affect the essential reasoning
on which the order is based and this too may necessitate a reconsideration of
the order. After all, an order under section 37 is made in a given
constellation of economic facts and circumstances and if that constellation
undergoes material challenge, the order would have to be reviewed in the light
of the changed economic situation. No order under section 37 can be immutable.
It is by its very nature transient or pro-tempore and must be liable to be
altered or revoked according as there is material change in the relevant
economic facts and circumstances. It is obviously for this reason that such a
wide and unusual power is conferred on the Commission under section 13(2) to
mend or revoke an order at any time. It is a curial power intended to ensure
that the Order passed by the Commission is and continues to be in confirmity
with the requirements of the Act and the trade practice condemned by the order
is really and truly a restric- 1067 tive trade practice and it must, therefore,
be construed in a wide sense so as to effectuate to the object and purpose of
the grant of the power. But howsoever large may be the amplitude of this power,
it must be pointed out that it cannot be construed to be so wide as to permit
rehearing on the same material without anything more, with a view to sowing
that the order is wrong on facts. This is the only limitation we would read in
section 13(2). Outside of that, the power of the Commission is large and ample
and the Commission may, in the exercise of such power, amend or revoke an order
in an appropriate case.
The respondents relied strongly on Regulation
85 but we fail to see how that Regulation assists the respondents in limiting
the width and amplitude of the power under section 13(2). Regulation 85 does
not say that an application under section 13(2) shall be entertained only on
certain specific grounds. It is true that it is open to a statutory authority
to lay down broad parameters for the exercise of the power conferred upon it,
so long as those parameters are not based on arbitrary or irrational
considerations and do not exclude altogether scope for exercise of residuary
discretion in exceptional cases. But we do not think that even broad parameters
for exercise of the power under section 13(2) are laid down in Regulation 85.
That Regulation is in two parts.
The first part provides that an application
under section ]3(2) "shall be supported by evidence on affidavit of the
material change in the relevant circumstances or any other fact or
circumstances on which the applicant relies." This is a procedural
provision which prescribes that if the applicant relies on any material change
in the relevant circumstances or 011 any other facts or circumstances in
support of the application, he must produce the necessary evidence in proof of
the same by affidavits. This provision merely lays down a rule of procedure and
it has nothing to do with the grounds on which an application under section
13(2) may be maintained and it is difficult to see how it can be pressed into
service on behalf of the respondents.
The second part states that unless the
Commission otherwise directs "notice of the application together with
copies of the affidavits in support thereof shall be served on every party who
appeared at the hearing of the previous proceedings and every such party shall
be entitled to be heard on the application and the provisions of section 114
and Order XLVII rule 1 of the Code of Civil Procedure, 1908 shall as far as
may, be applied to these proceedings". This part first deals with the
question as to which parties shall be served with the notice of the application
and who shall be entitled to appear at the hearing of the application.
This is purely 1068 procedural in nature and
does not throw any light on the issue before us. But this part then proceeds to
add that the provisions of section 114 and Order XLVII rule 1 shall, as far as
may, be applied to the proceedings in the application. Can this provision be
read to mean that an application under section 13(2) can be maintained only on
the grounds set out in section 114 and Order XLVII, rule 1? The answer must
obviously be in the negative. The words "as far as may" occurring in
this provision are very significant. They indicate that the provisions of
section 114 and Order XLVII, rule 1 are to be invoked only to the extent they
are applicable and if, in a given case. they are not applicable, they may be
ignored but that does not mean that the power conferred under section 13(2)
would not be exercisable in such a case. The reference to the provisions of
section 114 and Order XLVII, rule 1 does not limit the grounds on which an
application may be made under section 13(2). In fact, the respondents
themselves conceded that the grounds set out in section 114 and Order XLVII,
rule 1 were not the only grounds available in an application under section
13(2) and that the application could be maintained on other grounds such as
material change in the relevant circumstances. It is, therefore, clear to our
mind that even if a case does not fall within section 114 and Order XLVII, rule
1, the Commission would have power, in an appropriate case, to amend or revoke
an order made by it. If, for example, a strong case is made out showing that an
order made under section 37 is plainly erroneous in law or that some vital fact
or feature which would tilt the decision the other way has escaped the
attention of the Commission in making the order or that the appellant was
prevented by sufficient cause from appearing at the hearing of the inquiry
resulting in the order being passed exparte, the Commission would be entitled
to interfere in the exercise of its power under section 13(2). These examples
given by us are merely illustrative and they serve to show that Regulation 85
does not in any manner limit the power under section 13(2).
Before we proceed to consider whether any
case has been made out by the appellant for the exercise of the power under
section 13(2), we may briefly dispose of the contention of the respondents
based on acquiescence and estoppel. The argument of the respondents was that
the appellant, by his subsequent conduct, acquiesced in the making of the Order
dated 14th May, 1976 and was, in any event, estopped from challenging the same.
We find it difficult to appreciate this argument. We do not see anything in the
conduct of the appellant which would amount to acquiescence or raise any
estoppel against it. It is obvious that the appellant did not wish to be heard
in the proceeding before 1069 the Commission because the decision of the
Commission in the Telco case held the field at that time and it was directly
against the appellant. Otherwise, there is no reason why the appellant should
not have entered an appearance under Regulation 65 and filed a proper reply as
provided in Regulation 67 and appeared at the hearing of the inquiry to oppose
the application of the Registrar. The appellant did make its submissions in writing
by its letter dated 3rd February, 1976, but since the appellant did not enter
an appearance as required by Regulation 65, it was precluded from filing a
reply under Regulation 67 and the Commission was legally justified in refusing
to look at the submissions contained in the letter of the appellant, though we
may observe that it would have been more consonant with justice if the
Commission had, instead of adopting a technical and legalistic approach,
considered the submissions of the appellant before making the Order dated 14th
May, '976. Be that as it may, the Commission declined to consider he
submissions of the appellant and proceeded to make the order dated 14th May,
1976 exparte in the absence of the appellant. Now, once the order dated 14th
May, 1976 was made, it was the bounden duty of the appellant to obey it, until
it might be set aside in an appropriate proceeding the appellant, therefore,
stated preparing a draft of the revised distributorship agreement in conformity
with the terms of the Order dated 14th May, 1976 and since the preparation of
the draft was likely to take some time, the appellant applied for extension of
time which was granted up to 31st March, 1977. However, before the extended
date was due to expiry, this Court reversed the decision of The Commission in
the Telco case and as soon as this new fact or circumstance came to its
knowledge, the appellant made an application dated 31st March, 1977 stating
that in view of the decision given by this Court in the Telco case, the applicant
was advised to move a suitable application for amendment and/or modification of
the Order dated 14th May, 1976 and the time for filing the revised
distributorship agreement should, therefore, be further extended and on this
application, the Commission granted further extension of time upto 4th June,
1977. It is difficult to see how any acquiescence or estoppel could be spelt
out from this conduct of the appellant. It is true that the appellant did not
prefer an appeal against the Order dated 14th May, 1976, but he application
under section 13(2) being an alternative and perhaps a more effective remedy
available to it, the failure of the appellant to prefer an appeal can not be
construed as acquiescence on its part. The appellant undoubtedly asked for extension
of time from the Commission for the purpose of implementing the Order dated
14th May, H;
1976 but that also cannot amount to
acquiescence, because until the decision of the Commission in the Telco case
was reversed in appeal 1070 by this Court, the appellant had no reason to
believe that the Order dated 14th May, 1976 was erroneous and as soon as the
appellant came to know about the decision of this Court reversing the view
taken by the Commission, the appellant immediately pointed out to the Commission
that it was moving an application for amendment or revocation of the Order
dated 14th May, 1976 under section 13(2). The appellant did not at any time
accept the Order dated 14th May, 1976 knowing that it was erroneous and it is
elementary that there can be no acquiescence without knowledge of the right to
repudiate or challenge. Moreover, it may be noted that the appellant did not,
right upto the time it made the application under section 13(2), implement the
Order dated 14th May, 1976 by entering into revised distributorship agreement
with the distributors. There was, therefore, no acquiescence on the part of the
appellant so far as the Order dated 14th May, 1976 is concerned. Nor could
there be any estoppel against the appellant precluding it from challenging the
Order by an application under section 13(2), for estoppel can arise only if a
party to a proceeding has altered his position on the faith of a representation
or promise made by another and here there is nothing to show that the Registrar
had altered his position on the basis of the application for extension of time
made by the appellant.
Both the contentions, one based on
acquiescence and the other on estoppel, must, therefore, be rejected.
That takes us straight to the consideration
of the question whether the appellant has made out any case for the exercise of
the power of the Commission under section 13(2).
The first ground canvassed by the appellant
was that the application on which the Order dated 14th May, 1976 was made was
not in accordance with law inasmuch as it did not set out any facts or features
which would show that the trade practices complained of by the Registrar were
restrictive trade practices. Now, it is true, as laid down by this Court in the
Telco case, that an application by the Registrar under section 10(a) (iii)
"must contain facts which, in the Registrar's opinion, constitute
restrictive trade practice" and it is not sufficient to make "mere
references to clauses of the agreement and bald allegations that the clauses constitute
restrictive trade practice". The application must set out facts or
features "to show or establish as to how the alleged clauses constitute
restrictive trade practice in the context of facts". The application of
the Registrar in the present case was, therefore, clearly contrary to the law
laid down by this Court in the Telco case. but on that account alone it cannot
be said that the Order dated 14th May, 1976 was vitiated by a legal infirmity.
Even if the application did 1071 not set out any facts or features showing how
the trade practices complained of by the Registrar were restrictive trade
practices, the Registrar could still at the hearing of the inquiry, in the
absence of any demand for particulars being made by the appellant, produce
material before the Commission disclosing facts or features which would go to
establish the restrictive nature of the trade practices com plained of by him
and if the Registrar did so, the defect in the application would not be of much
consequence. But unfortunately in the present case the only material produced
by the Registrar was the affidavit of the Assistant Registrar which did nothing
more than just reproduce the impugned clauses of the distributorship agreement
and the words of the relevant sections of the Act. There was no material at all
produced by the Registrar before the Commission which would show how, having
regard to the facts or features of the trade of the appellant, the trade
practices set out in the offending clauses of the distributorship agreement
were restrictive trade practices.
The Order dated 14th May, 1976 was,
therefore, in the submission of the appellant, based on no material at all and
was accordingly vitiated by an error of law. The respondents, however,
contended that it was not necessary to produce any material before the
Commission in support of the claim of the Registrar, because the trade
practices referred to in the offending clauses were per se restrictive trade
practices and in any event, even if any supporting material was necessary, it
was to be found in the admission of the appellant contained in its letter
submitting the distributorship agreement for registration under section 33.
We do not think there is any force in this
contention of the respondents and the Order dated 14th May, 1976 must be held
to be bad on the ground that it was based on no material and could not possibly
have been made by the Commission.
It is now settled law as a result of the
decision of this Court in the Telco case that every trade practice which is in
restraint of trade is not necessarily a restrictive trade practice. The
definition of restrictive trade practice given in section 2(o) is a pragmatic
and result oriented definition. It defines 'restrictive trade practice' to mean
a trade practice which has or may have the effected of preventing, distorting
or restricting competition in any manner and in clauses (i) and (ii)
particularises two specific instances of trade practices which fall within the
category of restrictive trade practice. It is clear from the definition that it
is only where a trade practice has the effect, actual or probable, of
restricting, lessening or destroying competition that it is liable to be
regarded as a restrictive trade practice. If a trade practice merely regulates
and thereby promotes competition, it would not fall 1072 within the definition
of restrictive trade practice, even though it may be, to some extent, in
restraint of trade.
Whenever, therefore, a question arises before
the Commission or the Court as to whether a certain trade practice is
restrictive or not, it has to be decided not on any theoretical or a priori
reasoning, but by inquiring whether the trade practice has or may have the
effect of preventing, distorting or restricting competition. This inquiry obviously
cannot be in vacuo but it must append on the existing constellation of economic
facts and circumstances relating to the particular trade. The peculiar facts
and features of the trade would, be very much relevant in determining whether a
particular trade practice has the actual or probable effect of diminishing or
preventing competition and in the absence of any material showing these facts
or features, it is difficult to see how a decision can be reached by the
Commission that the particular trade practice is a restrictive trade practice
It is true that on the subject of restrictive trade practices, the law in the
United States has to be approached with great caution, but it is interesting to
note that the definition of "restrictive trade practice" in our Act
echoes to some extent the 'rule of reason' evolved by the American Courts while
interpreting section 1 of the Sherman Act. That section provides that
"every contract, combination in the form of trust or otherwise, or
conspiracy, in restraint of trade or commerce is hereby declared to be
illegal" and literally applied,, it would outlaw every conceivable
contract which could be made concerning trade or commerce or the subjects of
such commerce. The Supreme Court of United States, therefore, read a 'rule of
reason' in this section in the leading decision in Standard Oil Company v.
United States. It was held by the Court as a 'rule of reason' that the term
"restraint of trade" means that it meant at common law and in the law
of the United States when the Sherman Act was passed and it covered only those
acts or contracts or agreements or combinations which prejudice public interest
by unduly restricting competition or unduly obstructing the due course of trade
or which injuriously restrain trade either because of their inherent nature of
effect or because of their evident purpose. Vide also United States v. American
Tobacco Co. It was pointed out that the 'rule of reason' does not freeze the
meaning of "restraint of trade" to what it meant at the date when the
Sherman Act was passed and it prohibits not only those acts deemed to be undue
restraints of trade at common law but also those acts which new times and
economic conditions make unreasonable. This 'rule 1073 of reason' evolved by
the Supreme Court in the Standard Oil Company's case and the American Tobacco
Co's case has governed the application of section 1 of the Sherman Act since
then and though it does not furnish an absolute and unvarying standard and has
been applied, sometimes more broadly and some times more narrowly, to the
different problems coming before the courts at different times, it has held the
field and, as pointed out by Mr. Justice Reed in the United States v. E.I. Du
Pont, the Supreme Court has not receded from its position on this rule. The
'rule of reason' has, to quote again the words of the same learned Judge
"given a workable content to anti-trust legislation". Mr. Justice
Brandeis applied the 'rule of reason' in Board of Trade v. United States for
holding that a rule prohibiting offers to purchase during the period between
the close of the call and the opening of the session on the next business day
for sales of wheat, corn, oats or rye at a price other than at the closing bid,
was not in "restraint of trade" within the meaning of section 1 of
the Sherman Act. The learned Judge pointed out in a passage which has become
classical:
"Every agreement concerning trade, every
regulation of trade, restrains. To bind, to restrain, is of their very essence.
The true test of legality is whether the restraint imposed is such as merely
regulates and perhaps thereby promotes competition, or whether it is such as
may suppress or even destroy competition. To determine that question the court
must ordinarily consider the facts peculiar to the business to which the,
restraint is applied; its condition before and after the restraint was imposed
the nature of the restraint, and its effect, actual or probable.
The history of the restraint the evil
believed to exist, the reason for adopting the particular remedy, the purpose
or end sought to be attained, are all relevant facts. This is not because a
good intention will save an otherwise objectionable regulation, or the reverse;
but because knowledge of intent may help the court to interpret facts and to
predict consequences." It will thus be seen that the 'rule of reason'
normally requires an ascertainment of the facts or features peculiar to the
particular business; its condition before and after the restraint was imposed;
the nature of the restraint and its effect, actual or probable; the history of
the restraint and the evil believed to exist, the reason for adopting the
particular restraint and the purpose or end sought to be attained and it is
only on a consideration of these factors that it can be decided whether a
particular act, contract or agreement, imposing the restraint is unduly
restrictive of competition so as to constitute 'restraint of trade'. The
language of the definition of "restrictive trade practice" in our Act
suggests, that in enacting the definition, our legislature drew upon the
concept and rationale underlying the 'rule of reason'. That is why this Court
pointed out in the Telco case in words almost bodily lifted from the judgment
of Mr. Justice Brandeis:
"The decision whether trade practice is
restrictive or not has to be arrived at by applying the rule of reason and not
on that doctrine that any restriction as to area or price will per se be a
restrictive trade practice. Every trade agreement restrains or binds persons or
places or prices. The question is whether the restraint is such as regulates
and thereby promotes competition or whether it is such as may suppress or even
destroy competition. To determine this question three matters are to be
considered. First, what facts are peculiar to the business to which the
restraint is applied. Second, what was the condition before and after the
restraint is imposed. Third, what is the nature of the restraint and what is
its actual and probable effect." These various facts and features set out
in the Judgment of Mr. Justice Brandeis and reiterated in the decision of this
Court in the Telco case would, therefore, have to be considered before a
decision can be reached whether a particular trade practice is restrictive or
not.
It is possible that a trade practice which
may prevent or diminish competition in a given constellation of economic facts
and circumstances may, in a different constellation of economic facts and
circumstances, be found to promote competition. It cannot be said that every
restraint imposed by a trade practice necessarily prevents, distorts or
restricts competition and is, therefore, a restrictive trade practice. Whether
it is so or not would depend upon the various considerations to which we have
just referred. Of course, it must be pointed out that there may be trade
practices which are such that by their inherent nature and inevitable effect
they necessarily impair competition and in case of such trade practices, it
would not be necessary to consider any other facts or circumstances, for they
would be per se restrictive trade practices. Such would be the position in case
of those trade practices which of necessity produce the prohibited effect in
such an overwhelming proportion of cases that minute inquiry in every instance
would be wasteful of judicial and administrative resources.
Even in the United States a similar doctrine
of per se illegality has been evolved in the interpretation of section 1 of the
Sherman Act and it has been held that certain restraints of trade are 1075
unreasonable per se and "because of their pernicious effect on competition
and lack of any redeeming virtue" they are "conclusively presumed to
be unreasonable, and, therefore;
illegal without elaborate inquiry as to the
precise harm they have caused or the business excuse for their use". In
such cases "illegality does not depend on a showing of the
unreasonableness of the practice and it is unnecessary to have a trial to show
the nature, extent and degree of its market effect." Vide American
Jurisprudence 2d. volume 54, p. 687, Art. 32. We are concerned in the present
appeal with clauses of the distributorship agreement imposing restriction as to
territory, area or market and providing for exclusive dealership and according
to the decision of this Court in the Telco case, such trade practices are not
per se restrictive trade practices. Whether such trade practices constitute
restrictive trade practices or not in a given case would depend on the
particular facts and features of the trade and other relevant considerations
discussed above which would show the actual or probable effect of such trade
practices on competition. It was, therefore, absolutely necessary to produce
the necessary material before tho Commission to show that the impugned trade
practices had the actual or probable effect of diminishing or destroying
competition and were therefore, restrictive trade practices. The burden was
clearly on the Registrar for it was the Registrar who wanted the Commission to
strike down these trade practices as restrictive. The Registrar, however, did Not
produce any material at all before the Commission and the Order dated 14th May,
1976 had no basis at all on which it could be sustained.
There is no doubt that the appellant by its
letter dated 19th May, 1972 submitted the distributorship agreement to the
Registrar for registration under section 33, but we do not see how this act of
the appellant or the letter forwarding the distributorship agreement for
registration can be construed as admission on the part of the appellant that
the trade practices referred to in the offending clauses of the distributorship
agreement constituted restrictive trade practices. In the first place, the
question whether a trade practices is restrictive trade practice or not is
essentially a question of law based on the application of the definition in
section 2(o) to the facts of a given case and no admission on a question of law
can ever be used in evidence against the maker of the admission. Therefore,
even if there was any admission involved in submitting the distributorship
agreement for registration, it could not be used as evidence against the
appellant in the inquiry under section 37. Moreover, we do not think that in
submitting the distributorship agreement for registration, the appellant 1076
made an admission that any particular clause of the distributorship agreement
constituted restrictive trade practices. There is nothing in the letter of the
appellant to show which were the particular clauses of the distributorship
agreement regarded by the appellant as restrictive trade practices on the basis
of which it made the application for registration. It is possible that the
appellant might have taken the same view which the Commission did in the Telco
case, namely, that the moment an agreement contains a trade practice falling
within any of the clauses of section 33(1), the trade practice must
irrespective of whether it falls within the definition in section 2(o) or not,
be regarded as a restrictive trade practice and the agreement must be
registered and on that view, the appellant might have submitted the
distributorship agreement for registration. The submission of the
distributorship agreement for registration cannot, therefore, possibly be
construed as admission on the part of the appellant that the particular clauses
of the distributorship agreement faulted by the Commission constituted
restrictive trade practices. There was, accordingly, no admission of the
appellant on which the Commission could rely for the purpose of making the
Order dated 14th May, 1976.
We must, in the circumstances, hold that,
since there was no material at all on the basis of which the Commission could
find that the grade practices referred in the offending clauses of the
distributorship agreement were restrictive trade practices, the Order dated
14th May, 1976 was contrary to law. This clearly attracted the exercise of the
power of the Commission under section 13(2). The decision of this Court in the
Telco case exposed the invalidity of the Order dated 14th May, 1976 and showed
that it was bad as being based on no material whatsoever. When the commission
passed the Order dated 14th May 1976, the decision of the Commission in the
Telco case held the field and according to that decision, any trade practice
which fall within one of the clauses of section 33(1) would be a restrictive
trade practice and that is perhaps the reason why the Registrar did not produce
any material before the Commission and even though there was no material before
it, the Commission proceeded to invalidate the trade practices referred to in
the offending clauses as restrictive trade practices, since they fell within
one or the other clauses of section 33(1). But this view was reversed in appeal
and it was held by this Court that a trade practice which does not fall within
the definition in section 2(o) cannot become restrictive trade practice merely
because it is covered by one or the other of the clauses of section 33(1):
what section 33(1) requires as the condition
for registration is that the agreement must 1077 relate to a trade practice
which is restrictive trade practice within the meaning of section 2(o) and such
restrictive trade practice must additionally fall within one or more of the
categories specified in that section. It was because of this decision in the
Telco case that the necessity for production of material to show that the trade
practices complained of were restrictive trade practices became evident and it
came to be realised that the Order dated 14th May, 1976 was bad. The conclusion
is, therefore, inescapable that the power of the Commission under section 13(2)
was exerciseable in the present case and the Order dated 14th May, 1976 was
liable to be revoked.
Before we part with this aspect of the case,
we must refer to other decision of this Court which was relied upon on behalf
of the respondents and that is the decision in Hindustan Lever Ltd. v. M.R.T.P.
The Judgment in this case was delivered by Beg, C.J., speaking on behalf of
himself and Gupta, J. and though Beg, C.J., was also a party to the judgment in
the Telco case, this judgment seem to strike a slightly different note and
hence it is necessary to examine it in some detail. Two clauses of the
Redistribution Stockists' Agreement were assailed in this case as constituting
restrictive trade practices. One was clause 5 which in its last portion
provided that the redistribution stockists shall purchase and accept from the
Company such stock as the Company shall at its discretion send to the redistribution
stockist for fulfilling its obligations under the agreement and the other was
Clause which imposed a restriction as to area or market by providing that the
redistribution stockist shall not rebook or in any way convey transport or
despatch parts of stocks of the products received by him outside the town for
which he was appointed redistribution stockist. The Commission held, following
the view taken by it earlier in the Telco case, that the last part of clause 5
as well as clause 9 constituted restrictive trade practices and declared them
void. This view was affirmed by Beg, C.J., in the appeal preferred by Hindustan
Lever Ltd. We are not concerned with the merits of the question whether the
last part of clause 5 and clause 9 were on the facts of that case rightly held
to be restrictive trade practices, but certain observations made by the learned
Chief Justice in that judgment call for consideration, since they seem to be
inconsistent with what was laid down by a Bench of three Judges of this Court in
the Telco Case.
In the first place, the learned Chief Justice
distinguished the judgment in the Telco case by observing that the agreement in
that case could not be understood without reference to the actual facts to
which 1078 it was sought to be applied and extraneous evidence in regard to
those facts for explaining "the nature of the special agreement for
restricting or distribution of areas" was, therefore, admissible under
section 92, clause 6 of the Evidence Act, but in the Hindustan Lever case the
meaning of the impugned clauses was plain and certain and the principle of
Section 92, clause 6 was clearly inapplicable to led in extraneous evidence and
hence no oral evidence could be led to deduce their meaning or vary it in view
of the provisions of sections 91 and 92. It was on this view that the learned
Chief Justice held that oral evidence for the purpose of showing that the trade
practices in the impugned clauses were not restrictive was shut out and all
that was necessary for the court to do was to interpret the impugned clauses.
Now, this view taken by the learned Chief
Justice does not and we say so with the utmost respect appear to be correct.
We do not see how sections 91 and 92 of the
Evidence Act come into the picture at all when we are considering whether a
particular trade practice set out in an agreement has or may have the effect of
preventing, distorting or restricting competition so as to constitute a
restrictive trade practice. It is the actual or probable effect of the trade
practice which has to be judged in the light of the various considerations
adverted to by us and there is no question of contradicting, varying, adding to
or subtracting from the terms of the agreement by admitting any extraneous
evidence.
The meaning of the particular clause of the
agreement is not sought to be altered or varied by reference to the various
factors which we have discussed above, but these factors are required to be
taken into account only for the purpose of determining the actual or probable effect
of the trade practice referred to in the particular clause. The reliance placed
by the learned Chief Justice on sections 91 and 92 was, therefore, quite
inappropriate and unjustified and we do not think that the learned Chief
Justice was right in shutting out oral evidence to determine the actual or
probable effect of the trade practices impugned in the case before him. It may
be pointed out that the decision in the Telco case did not proceed on an
application of the principle embodied in section 92, clause (6) of the Evidence
Act and with the greatest respect, the learned Chief Justice was in error in
distinguishing that decision on the ground that extraneous evidence was
considered in that case in view of the principle underlying section 92, clause
6, while in the case before him that principle was not applicable and hence
extraneous evidence was not admissible. The learned Chief Justice was bound by
the ratio of the decision in the Telco case Secondly, the learned Chief Justice
seemed to take the view in his judgment at page 465 of the Report that if a
clause in an agreement 1079 relates to a trade practice which infringes any of
the clauses of section 33(1), it would be bad and it would be unnecessary to
inquire whether the trade practice falls within the definition of 'restrictive
trade practice' in section 2(o). There were two places in the judgment where
the learned Chief Justice used expressions indicating this view. He said at one
place: "The last part of clause (5)- would be struck by section 33(1)
(b)", and at another place "inasmuch as clauses (5)-expressly gives
the stockist the discretion to sell at lower than maximum retail prices
stipulated, the agreement was not struck by section 33(1) (b)". This view
is plainly and again we say 60 with the greatest respect, contrary to the law
laid down by a Bench of three Judges of this Court in the Telco case. We have
already pointed out that, according to the decision in the Telco case, a trade
practice does not become a restrictive trade practice merely because it falls
within one or the other clause of section 33(1), but it must also satisfy the
definition of 'restrictive trade practice' contained in section 2(o) and it is
only then that the agreement relating to it would require to be registered
under section 33(1). It is with the greatest respect to the learned Chief
Justice, not correct to say that a particular clause in an agreement is struck
by one or the other clause of section 33(1). It is not section 33(1) which
invalidates a clause in an agreement relating to a trade practice, but it is
the restrictive nature of the trade practice as set out in section 2(o) which
makes it void The view taken by the learned Chief Justice on this point can-
not, therefore, be accepted.
Lastly, the learned Chief Justice held that
the introduction of a clause in an agreement itself constitutes a trade
practice and if such clause confers power which can be used so as to
unjustifiably restrict trade it would constitute a restrictive trade practice.
The learned Chief Justice pointed out that the definition of trade practice is
wide enough to include any practice relating to the carrying on of any trade
and observed that "it cannot be argued that the introduction of the
clauses complained of does not amount to an action which relates to the
carrying on of a trade. If the result of that action or what could reasonably
flow from it is to restrict trade in the manner indicated, it will,
undoubtedly, be struck by the provisions of the Act". The interpretation
placed by the learned Chief Justice was that if a clause in an agreement is
capable of being used to prevent, distort or restrict competition in any
manner, it would be liable to be struck down as a restrictive trade practice,
regardless of what is actually done under it, for it is not the action taken
under a clause, but the clause itself which permits action to be taken which is
unduly restrictive of competition, 1080 that is material for determining
whether there is a restrictive trade practice. The learned Chief Justice emphasised
that if a clause in an agreement confers power to act in a manner which would
unduly restrict trade, the clause would be illegal and it would be no answer to
say that the clause is in fact being implemented in a lawful manner. This view
taken by the learned Chief Justice cannot, with the utmost respect, be accepted
as wholly correct.
It is true that a clause in an agreement may
embody a trade practice and such trade practice may have the actual or probable
effect of restricting, lessening or destroying competition and hence it may
constitute a restrictive trade practice and the clause may be voided, but it is
difficult to see how the introduction of such a clause in the agreement, as
distinguished from the trade practice embodied in the clause itself, can be a
restrictive trade practice.
It is not the introduction of such a clause,
but the trade practice embodied in the clause, which has or is reasonably
likely to have the prescribed anti-competitive effect.
Therefore, whenever a question of restrictive
trade practice arises in relation to a clause in an agreement it is the trade
practice embodied in the clause that has to be examined for the purpose of
determining its actual or probable effect on competition. Now a clause in an
agreement may proprio vigore on its own terms, impose a restraint such as
allocating a territory, area or market to a dealer or prohibiting a dealer from
using machinery or selling goods of any other manufacturer or supplier or
requiring the dealer to purchase whatever machinery or goods in the particular
line of business are needed by him from the manufacturer or supplier entering
into the agreement. Where such restraint produces or is reasonably likely to
produce the prohibited statutory effect-and that would depend on the various
considerations referred to by us earlier-it would clearly constitute a
restrictive trade practice and the clause would be bad. In such a case it would
be no answer to say that the clause is not being enforced by the manufacturer
or supplier. The very presence of the clause would have a restraining influence
on the dealer, for the dealer would be expected to carry out his obligations
under the clause and he would not know that the clause is not going to be
enforced against him. This is precisely what was pointed out by Mr. Justice Day
in United Shoe Machinery Corporation v. United States where the question was
whether the restrictive-use, exclusive-use and additional-machinery clauses in
certain lease agreements of shoe-machinery were struck by the provisions of
section 3 of the Clayton Act:
"The power to enforce them", that
is, the impugned clauses "is omnipresent and their 1081 restraining
influence constantly operates upon competitors and lessees. The fact that the
lessor, in many instances, forbore to enforce these provisions, does not make
them any less agreements within the condemnation of the Clayton Act".
There would be no difficulty in such a case
in applying the definition of restrictive trade practice, in accordance with
the law laid down in the Telco case as explained by us in this judgment.
Then there may be a clause which may be
perfectly innocent and innocuous such as a clause providing that the dealer
will carry out all directions given by the manufacturer or supplier from time
to time. Such a broad and general clause cannot be faulted as restrictive of
competition, for it cannot he assumed that the manufacturer or supplier will
abuse the power conferred by the clause by giving directions unduly restricting
trade. So much indeed was conceded by the learned Additional Solicitor General
appearing on behalf of the respondents. But a genuine difficulty may arise
where a clause in an agreement does not by itself impose any restraint but
empowers the manufacturer or supplier to take some action which may be
restrictive of competition. Ordinarily, in such a case, it may not be possible
to say that the mere presence of such a clause, apart from any action which may
be taken under it, has or may have the prohibited anti-competitive effect. The
manufacturer or supplier may take action under the clause or he may not, and
even if he takes action, it may be in conformity with the provisions of the Act
and may not be restrictive of competition. The mere possibilities of action
being taken which may be restrictive of competition would not in all cases
effect the legality on the clause. In fact, a consistent course of conduct
adopted by the manufacturer or supplier in acting under the clause in a lawful
manner may tend to show that The clause is not reasonably likely to produce the
prohibited statutory effect. What is required to be considered for determining the
legality of the clause is hot mere theoretical possibility that the clause may
be utilised for taking action which is restrictive of competition, for it does
not necessarily follow from the existence of such possibility that actual or
probable effect of the clause would be anti-competitive. The material question
to consider is whether there is a real probability that the presence of the
clause itself would be likely to restrict competition. This is basically a
question of market effect and it cannot be determined by adopting a doctrinaire
approach. There can be no hard and fast rule and each case would have to be
examined on its own facts from a business and commonsense point of view for the
purpose Or determining whether the clause has the actual or probable effect of
unduly, restricting come petition. We cannot accept the proposition that in
every case where 1082 the clause is theoretically capable of being so utilised
as to unjustifiably restrict competition, it would constitute a restrictive
trade practice.
There is also another infirmity invalidating
the Order dated 14th May, 1976. We have already pointed out and that is clear
from the n decision of this Court in the Telco case that in an inquiry under s.
37 the Commission has first to be satisfied that the trade practice com plained
of in the application is a restrictive trade practice within the meaning of
that expression as defined in section 2(o) and it is by after the Commission is
so satisfied, that it can proceed to consider whether any of the 'gateways'
provided in section 38(1) exists so that the trade practice, though found
restrictive, is deemed not to be prejudicial to the public interest and if no
such 'gateways' are established, then only it can proceed to make an order
directing that the trade practice complained of shall be discontinued or shall
not be repeated There are thus two conditions precedent which must be satisfied
before a cease and desist order can be made by the Commission in regard to any
trade practice complained of before it. One is that the Commission must find
that the trade practice complained of is a restrictive trade practice and the
other is that where such finding is reached, the Commission must further be
satisfied that none of the gateways pleaded in answer to the complaint exists.
Here in the present case the appellant did
not appear at the hearing of the inquiry and no 'gateways? were pleaded by it
in the manner provided in the Regulations and hence the question of the
Commission arriving at a satisfaction in regard to the 'gateways' did not
arise. But the Commission was certainly required to be satisfied that the trade
practices complained of by the Registrar were restrictive trade practices
before it could validity make a cease and desist order. The Order dated 14th
May, 1976 did not contain any discussion or recital showing that the Commission
had reached the requisite satisfaction in regard to the offending trade
practices. But we can legitimately presume that the Commission must have
applied its mind to the offending causes of the distributorship agreement and
come to the conclusion that the trade practices refereed to in those clauses
were restrictive trade practices before it made the Order dated 14th May, 1976.
There is in fact inherent evidence to show that the Commission did apply its
mind to the clauses impugned in the application of the Registrar, because it
struck down only a few out of those clauses and did not invalidate the rest.
This circumstance clearly shows that the Commission considered with reference
to each impugned clause whether it related to restrictive trade practice and
made the Order dated 14th May, 1976 only in respect of those 1083 clauses where
it was satisfied that the trade practices were restrictive. The charge that the
Order dated 14th May, 1976 suffered from non-application of mind on the part of
the Commission cannot, therefore, be sustained. But the Order dated 14th May, 1976
was clearly bad inasmuch as it did not disclose the reasons which weighed with
the Commission in directing the appellant to cease and desist from the trade
practices set out in the order. The Order dated 14th May, 1976 was a
non-speaking order. It consisted merely of bald directions given by the
Commission and did not set out any reasons whatsoever why the Commission had
decided to issue those directions. It had a sphynx-like face, which goes ill
with the judicial process. It is true that the Order dated 14th May, 1976 was
an exparte order, but the exparte character of the order did not absolve the
Commission from the obligation to give reasons in support of the order. Even
though the Order dated 14th May, 1976 was exparte, the appellant would have
been entitled to prefer an appeal against it under section 55 and it is
difficult to see how the appellant could have possibly attacked the order in
the appeal when the order did not disclose the reasons on 1 which it was based.
It is now settled law that where an authority makes an order in exercise of a
quasi judicial function, it must record its reasons in support of the order it
makes. Every quasi judicial order must be supported by reasons. That is the
minimal requirement of law laid down by a long line of decisions of this Court
ending with N. M. Desai v. Textiles Ltd. and Simens Engineering Co. v. Union of
India. The Order dated 14th May, 1976 was, therefore, clearly vitiated by an
error of law apparent on the face of the record inasmuch as it contained only
the final and operative order made by the Commission and did not record any
reasons whatsoever in support of is and the appellant was, in the
circumstances, entitled to claim what the Order should be revoked by the
Commission This view taken by us renders it unnecessary to consider whether
there was any material change in the relevant circumstances justifying
invocation of the power under section 13(2) and hence we do not purpose to deal
with the same. The Commission has devoted a part of the order impugned in the
present appeal to a consideration of this question and taken the view that
there was no material change in the relevant circumstances subsequent to the
making of the Order dated 14th May, 1976. We do not wish to express any opinion
on the correctness of this view taken by the Commission, since we are setting
aside the impugned order made by the Commission and also revoking 1084 the
Order dated 14th May, 1976 and sending the matter back so that the application
of the Registrar under section 10(a) (iii) may be disposed of afresh.
We accordingly allow the appeal, set aside
the order of the Commission rejecting the application of the appellant under
section 13(2), revoke the Order dated 14th May, 1976 and remit the case to the
Commission so that the Commission may dispose of the application of the
Registrar under section 10(a) (iii) in the light of the observations contained
in this judgment. The Commission will give an opportunity to the appellant to
file a proper reply in conformity with the requirements of the Regulations and
after taking such relevant evidence as may be produced by both parties, proceed
to dispose of the application of the Registrar on merits in accordance with
law. There will be no order as to costs of the appeal.
P.B.R. Appeal allowed.
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