Exchange (India) Ltd. Vs. Union of India & Ors  INSC 513 (6 November 1998)
K.Venkataswami, A.P.Misra, Bharucha. J.
appellant manufactures water purifiers. It issued advertisements staling that
these water purifiers provided lOO% safe drinking water instantly and that the
water stayed bacteria free in storage. An enquiry was instituted by the
Monopolies and Restrictive Trade Practices Commission at the behest of its
Director General of Investigation and Registration. A Notice of Enquiry- was
issued to the appellant. At the hearing thereof the appellant did not contest
the allegation made in the Notice of Enquiry and expressed willingness on the
very first date of hearing before the Commission to submit tea Cease and Desist
Order, which was passed. What is objected to on behalf of the appellant is this
further direction of the Commission : "If the respondent wants to issue an
advertisement in future about its product, it will get a draft of its advertisement
approved by the Commission. " Impugning the power of the Commission to
issue such further direction, the appellant filed a writ petition in the High
Court at Bombay. The High Court considered the
provisions of Section 36-B of the Monopolies & Restrictive Trade Practices
Act as amended, and observed that the impugned direction was given to subserve
the object of effectively checking repetition of the unfair trade practice
affecting a large number of people. The High Court modified the impugned
Petitioner - manufacturer shall submit the proposed draft advertisement to the
Director General along with the necessary documents supporting or
substantiating the contents of the advertisement. If they do not receive any
objection from the Director General within four weeks, the Petitioner
manufacturer shall be at liberty to publish the said advertisement." The
appellant is in appeal by special leave. It is submitted by learned counsel for
the appellant that Section 36-B. as it read at the relevant time, clearly
conferred no power on the Commission to issue the impugned direction.
the amended Section 36-B, which really had no application to the particular
case, did not confer on the Commission the power to give such direction.
Emphasis was laid on the tact that the direction, whether as issued by the
Commission or as amended by the High Court, would operate for all time to come.
It was also submitted that the Commission had ample powers to deal with any
infraction of its Cease and Desist Orders. The learned Additional Solicitor
General, appearing for the respondents.
the amended provision upon which the High Court had relied and submitted that
there was power in the Commission to Issue the impugned direction.
36-D, as it originally stood, read as follows :
The Commission may inquire into any unfair trade practice 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, or to the interest of the consumer or
consumers generally, it may, by order direct that –
the practice shall be discontinued or shall not be repeated; and
agreement relating to such unfair trade practice shall be void or shall stand
modified in respect thereof in such manner as may be specified in the Order.
The Commission may, instead of making any order under this section, permit any
party to carry on any trade practice, if it so applies and take such steps
within the time specified by the Commission as may be necessary to ensure that
the trade practice is no longer prejudicial to the public interest or to the
interest of any consumer or consumers generally, and, in any such case, if the
Commission is satisfied that necessary steps have been taken within the time so
specified, it may decide not to make any order under this section in respect of
that trade practice, (3) No order shall be made under sub-section (1) in
respect of any trade practice which is expressly authorised by any law for the
time being in force." This is the provision which ruled at the relevant
is, very clearly, no empowerment of the Commission thereunder to issue a
direction of the kind which is impugned.
amended provision, upon which the High Court rested its order reads thus:
any information, statement or advertisement relating to such unfair trade
practice, shall be disclosed , issued or published, as the case may be, in such
manner as may be specified in the order." The amended provision cannot be
so read as enabling the Commission to require all advertisements that the
appellant might issue in the future to be approved by the Commission in
advance. The requirement to disclose information relates only to the unfair
trade practice then under inquiry. As to public interest, the Commission is
sufficiently armed under the Act with powers to take action against those who
breach its Cease and Desist Orders. We do not think that it requires the
additional power of supervision of the kind indicated either in the impugned
direction of the Commission or in the order under challenge to effectively
carry out its obligations. The Commission cannot incorporate such direction in
its final Cease and Desist Orders.
the appeal is allowed. The judgment and order of the High Court under appeal is
set aside. The writ petition filed by the appellants before the High Court is
allowed to the extent aforestated. No order as to costs.