Rajasthan
Housing Board Vs. Smt. Parvati Devi [2000] INSC 286 (3 May 2000)
M.B.
Shah & R.P. Sethi. WITH CIVIL APPEAL NO.15096 OF 1996 RAJASTHAN HOUSING
BOARD VERSUS SHRI DILSUKH CHAND BHANDARI Shah, J.
L.I.T.J
These appeals are filed under Section 55 of the Monopolies And Restrictive
Trade Practices Act, 1969 (hereinafter referred to as the MRTP Act) against the
judgment and order dated 30.05.1996 of the Monopolies And Restrictive Trade
Practices Commission, New Delhi (hereinafter referred to as the MRTP
Commission) passed in RTPE No.100 of 1994 and UTPE/RTPE No.15 of 1994, whereby
the Commission has held that appellant Rajasthan Housing Board has indulged in
restrictive trade practices attracting Section 2(o)(ii) of the Act and in
unfair trade practices covered by Section 36-A(1)(i) and (vi) of the MRTP Act.
Admittedly,
the Central Government has issued Notification under Section 3 of the MRTP Act
on 27.9.1991 applying the provisions of the MRTP Act, to the appellant Board.
Before
deciding the question involved, we would narrate few facts of each appeal. CIVIL APPEAL NO.14994 OF 1996.
(Arising
out of RTPE No.100 of 1994) It is admitted that the Rajasthan Housing Board is
established under the provisions of Rajasthan Housing Board Act, 1970 and it
builds houses and allots the same to persons who are registered with the Board
under various schemes framed by it from time to time. The land is placed at the
disposal of the Board by the State Government on payment being made by it and
houses of different categories are constructed after securing loans from HUDCO
and other agencies under the schemes known as Self Financing Schemes.
It is
stated that respondent got herself registered for the house being allotted to
her in low income group category on 12.05.1983 and paid a sum of Rs.1800/- as
registration fee.
It is
also stated that the Board has issued a brochure for general registration,
wherein certain conditions for registration, the amount of advance which was to
be deposited by the applicant, the estimated cost of different categories of
the house to be constructed and the amount of instalment money which was to be
paid etc. were mentioned.
It is
also stated therein that the Board would try its best to make the house
available within a period of four years from the date of registration and the
applicant would be entitled to payment of interest on the amount deposited and
also to refund of money with interest if the house was not allotted within stipulated
period. It is further stated that by letter dated 27.4.1988 respondent was
intimated that house had been reserved for her as a result of lottery drawn in
that year and she was required to pay advance money in three instalments and if
there was delay in payment of the said instalments, respondent was further
required to pay interest @ 18% p.a. by way of penalty. Thereafter by letter
dated 29.2.1992 the respondent was intimated by the Board that total cost of
house allotted to her had been worked out at Rs.57,500/- and she should start
making payment of the remaining amount by instalments @ Rs.715/- per month from
15.4.1992.
After
receipt of the said letter respondent filed complaint before the District
Consumer Protection Forum, Jodhpur, which
was withdrawn. Thereafter, in the year 1993, respondent filed complaint under
Section 36-A and 36-B of the MRTP Act before the MRTP Commission at New Delhi. In the said complaint, it was
mentioned that action of the Board amounted to unfair trade practice under Section
36-A(1) of the Act; even though the house was allotted to the respondent on
29.11.1988 yet on account of unfair trade practice, the possession of the house
had not been given to her till 31.03.1993 and that as a result of the alleged
unfair trade practice, respondent has suffered a monetary loss of Rs.26000/-.
It was prayed that demand of Rs.57000/- as the cost of the house and monthly instalment
of Rs.715/- with interest @ 14% be set aside and it be declared that Board has
indulged in unfair trade practice and it may be restrained from indulging in
such practice.
On
show-cause notice being issued by the Commission, the Board filed a reply
raising a preliminary objection to the maintainability of the complaint and
also giving reply on merits. As the Commission was not satisfied with the
contentions raised by the Board, it started enquiry. The Commission by its
order dated 30.5.1996 held that the Board has indulged in restrictive trade
practice as defined in Section 2(o)(ii) of the MRTP Act and directed the Board
to file an affidavit to the effect that it would not repeat the same. Against
that judgment, this appeal is filed.
CIVIL
APPEAL NO.15096 OF 1996.
(Arising
out of UTPE/RTPE No.15 of 1994) In this appeal, it is the case of respondent
that the Board registered him as applicant under Self-Financing Scheme and he
deposited a sum of Rs.10,000/- at the time of initial registration with the
Board. By letter dated 06.02.1988 the Board informed the respondent that a
house, as opted by him, had been reserved and he was asked to deposit the
various instalments indicating amount and due dates. On 05.02.1992 the Board
informed the respondent that he should deposit a sum of Rs.1,10,714/- as the
remaining amount towards the cost of house (measuring 12x18 mt.) that had been
allotted to him. The respondent was given three months time to deposit the
amount and take the possession of the house by 09.05.1992. It is stated that
instead of depositing the amount he filed writ petition No.2682 of 1992 in the
High Court of Rajasthan at Jodhpur
challenging the demand for the balance amount as alleged. During the pendency
of the writ petition, respondent filed a complaint under Sections 36 and 37 of
MRTP Act, 1969 stating therein that appellant Board had indulged in unfair trade
practice by delaying the construction of the house and demanding additional
cost of construction than the agreed amount of Rs.1,85,000/-. After receipt of
the show-cause notice from the Commission, the Board filed a reply raising a
preliminary objection as to the maintainability of the complaint and also
denied allegations that Board had indulged in unfair trade practice. By the
impugned order dated 30.5.1996, the Commission held that the Board has indulged
in unfair trade practice and directed that applications filed by the respondent
under Section 12-B of the MRTP Act would be heard by the Commission at a later
stage. Aggrieved by the said order, the Board has preferred this appeal.
CONTENTIONS
FOR DETERMINATION:- (A) Whether the order passed by the Commission that
appellant has indulged in restrictive trade practice and further directions to
file affidavit not to repeat such practices in future are at all justifiable?
(B) Whether the decision rendered by the Commission in UTPE/ RTPE No.15 of 1994
holding that appellant has indulged in restrictive and unfair trade practice
attracting Section 2(o)(ii) and Section 36-A(1)(i) and (vi) of the MRTP Act is
at all justifiable? CONTENTION A The learned counsel for the appellant
submitted that the finding given by the Commission that the Board indulged in
restrictive trade practice as defined under Section 2(o)(ii) of the MRTP Act
is, on the face of it, illegal and erroneous. It is apparent that the act of
the respondent cannot be termed as restrictive trade practice which has or may
have the effect of preventing, distorting or restrictive competition in any
manner. Section 2(o) reads thus:- S.2(o) restrictive trade practice means a
trade 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 effect 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.
It
appears that Commission has considered that the acts of the Board would be
covered by clause (ii) particularly last portion of the said clause namely,
services in such manner as to impose on the consumers unjustified costs. In our
view, the Commission ought to have read the said part along with the main
ingredient which requires that a trade practice which has or may have the effect
of preventing, distorting or restricting competition in any manner would be
restrictive trade practice and in particular which inter alia, tends to bring
about manipulation of services in such manner as to impose on the consumers
unjustified costs.
For
this purpose no case is made out by the respondents that the Board has
prevented or restricted competition in any manner which affects the services in
such a manner as to impose on consumers unjustified costs or restrictions.
Section
2(o) will not be applicable in case where a trade practice has no effect,
actual or probable of preventing, distorting or restricting competition in any
manner.
This
question is considered in detail by this Court in Mahindra and Mahindra Ltd. v.
Union of India [(1979) 2 SCC 529]. In this case the Court observed (in para 14)
that:
It is
now settled law as a result of the decision of this Court in the Telco case {Tata
Engineering & Locomotive Co. Ltd., Bombay v. Registrar of the Restrictive
Trade Agreement, New Delhi [(1977) 2 SCC 55] (Sic)} 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 effect 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 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 depend 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.
The
Court further observed (in para 15) that:
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
restrict trade practice 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 practice, 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...
(Emphasis
supplied) In the present case, there is no allegation or evidence to hold that
the appellant has indulged in restrictive trade practice. In this view of the
matter learned counsel for the respondents were not in a position to support
the said finding. Hence, the direction given by the Commission that the
appellant shall discontinue alleged restrictive trade practices and not repeat
the same in future and shall file an affidavit in compliance within six weeks
from the date of the order passed in both the matters requires to be set aside.
CONTENTION
B The learned counsel for the appellant next contended that without considering
the terms and conditions agreed@@ JJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJJ
between the parties the Commission has given a finding that@@
JJJJJJJJJJJJJJJJJJJJJJJJ because of delay in constructing the building or
handing over its possession or because of increase in the cost, it would amount
to unfair trade practice. He further submitted that there is no evidence on
record to justify the said finding and, therefore, the order passed by the
Commission may be set aside. As against this, learned counsel for the
respondent relied upon the provisions of Section 36-A(1)(ii) and (ix) of the
MRTP Act for contending that respondent has made out a case for proceeding
under the said provisions and, therefore, the Commission has rightly proceeded
in the matter.
We
would refer to Section 36-A (1)(ii) and (ix) of the MRTP Act, which reads as
under:
S.36-A.
Definition of unfair trade practice.In this Part, unless the context otherwise
requires, unfair trade practice means a trade practice which, for the purpose
of promoting the sale, use or supply of any goods or for the provisions of any
services, adopts any unfair method or unfair or deceptive practice including
any of the following practices, namely:
(1)
The practice of making any statement, whether orally or in writing or by
visible representation which, (ii) falsely represents that the services are of
a particular standard, quality or grade;
(ix)
materially misleads the public concerning the price at which a product or like
products or goods or services, have been, or are, ordinarily sold or provided,
and, for this purpose, a representation as to price shall be deemed to refer to
the price at which the product or goods or services has or has been sold by
sellers or provided by suppliers generally in the relevant market unless it is
clearly specified to be the price at which the product has been sold or
services have been provided by the person by whom or on whose behalf the
representation is made.
Considering
the aforesaid provisions and allegations made against the Board, it appears
that Commission was justified in proceeding with the matter. However, with
regard to the claim made by the respondent in each case, the matter is still
not decided by the Commission by considering the relevant documents. At the
time of deciding the said matters, the Commission is required to go into the terms
and conditions agreed between the parties and to find out whether the appellant
has indulged in unfair trade practices so as to take any further action against
the Board on the basis of the applications filed by the respondents in each
case. For deciding such question, the Commission has to find out whether a
particular act can be condemned as an unfair trade practice; whether
representation contained a false statement and was misleading and what was the
effect of such a representation made to the common man. The issue cannot be
resolved by merely holding that representation was made to hand over the
possession within stipulated period and the same is not complied with or some
lesser constructed area is given after the construction of the building. The
Commission has to find out whether the representation, complained of, contains
the element of misleading the buyer and whether buyers are mislead or they are
informed in advance that there is likelihood of delay in delivering the
possession of constructed building and also increase in the cost. For this
purpose, terms and conditions of the agreement are required to be examined by
the Commission.
Not
only this, the Commission is required to consider whether the Board has adopted
unfair method or deceptive practice for the purpose of promoting the sale, use
or supply of any goods or for the provisions of any services.
Unless
there is finding on this issue, appellant Board cannot be penalized for unfair
trade practice.
This
aspect is also considered by this Court in Nirma Industries Ltd. v. Director
General of Investigation & Registration, [(1997) 5 SCC 279] and the Court
has held (in para 14) as under:- On careful analysis of unfair trade practice
defined in Section 36-A, it is quite clear that the trade practice which is
undertaken by the company for the purpose of promoting the sale, use or supply
of any goods or for the provision of any service/services adopts one or more
following practices and thereby causes loss or adopts one or more of the
following practices and thereby causes loss or injury to the consumers of such
goods or service whether by eliminating or restricting competition or otherwise
would amount to unfair trade practice. The above key words used in Section 36-A
while defining the unfair trade practices have laid emphasis on thereby causes
loss or injury to the consumers of such goods or services whether by
eliminating or restricting competition or otherwise. It must, therefore, follow
that any such unfair trade practice which causes loss or injury to the
consumers of such goods or service either by eliminating or restricting
competition or otherwise would attract the penal consequences as provided under
this Chapter. Each of the clauses employed in Section 36-A is interwoven by use
of the conjunction and would indicate that before determining a trade practice
being unfair trade practice, the Commission has to be satisfied as to whether
the necessary ingredients contained therein are satisfied or not. The words or
otherwise in Section 36-A assuming are of wider import and would signify not
only actual loss or injury suffered by consumers but also would include
probable or likelihood of consumers suffering loss or injury in any form. But
for that purpose also, there has to be some cogent material before the
Commission to support a finding of unfair trade practice and any inferential
finding would be contrary to Section 36-A of the Act. It is necessary for the
Commission to call upon the parties to substantiate the allegations. The burden
of proof, the nature of proof and adequacy thereof would depend upon the facts
and circumstances of each case.
In the
present case, the Commission has not considered the necessary evidence and has
accepted the plea of the respondent in arriving at the conclusion that the
appellant Board has indulged in unfair trade practice. We would again note that
the Commission was not very clear about the application of the provisions of
Section 2(o)(ii) of the MRTP Act and it proceeded on the basis that the said
Section is also applicable. Further, as there is no proper finding of fact
based on necessary evidence, we are of the opinion that the impugned order
dated 30th May, 1996 passed by the Commission in UTPE/RTPE No.15 of 1994
holding that the appellant Board has indulged in unfair trade practices under
Section 36-A (1)(i) and (vi) of the MRTP Act is unsustainable.
In the
result, the impugned order passed by the Commission in RTPE No.100 of 1994
holding that the appellant Board has indulged in restrictive trade practices
attracting Section 2(o)(ii) of the MRTP Act and further direction is quashed
and set aside. Similarly, the order passed by the Commission in UTPE/RTPE No.15
of 1994 holding that the appellant Board has indulged in restrictive and unfair
trade practices as alleged attracting Sections 2(o)(ii) and 36-A (1)(i) and
(vi) of the MRTP Act is quashed and set aside.
The
matters are remitted back to the Commission for disposal afresh in accordance
with law after giving opportunity to both the parties to lead such evidence as
they deem fit.
The
appeals are accordingly disposed of. In the circumstances of the case, parties
are directed to bear their own costs.
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