INDEX

TOPIC
CERTIFICATE ACKNOWLEDGEMENT PROLOGUE INTRODUCTION TO UNFAIR TRADE PRACTICES CASE LAW INDEX PRIME TIME MATTER SELECT BIBLIOGRAPHY EPILOGUE CROSS REFERENCE INDEX

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CERTIFICATE

I, Nadirshaw K. Dhondy, Advocate Supreme Court, have examined the thesis of Anil S. Anayath, who is enrolled in Mumbai Institute of Management and Research at unique Roll No. 1005 for the academic year 2010 2011 in the course content - (Unfair Trade Practices Destroy Business) He has submitted this thesis in part fulfillment of final exams evaluation. He has been rated to receive marks out of .

Dated this 4th day of March, 2011

Signature of the candidate

Signature

Anil S. Anayath

Nadirshaw K. Dhondy (Advocate Supreme Court)

ACKNOWLEDGEMENT

I sincerely thank Prof. Nadirshaw K. Dhondy for giving me an opportunity to compile this project and also for providing necessary information which helped me in completing this project in a better manner. I would like to acknowledge and extend my heartfelt gratitude to Hezal Upadhyay (Pursuing L.L.B from Government Law College) for her support and encouragement that has made the completion of this Project possible.

I would also like to thank the library staff of Mumbai Institute of Management and Research for the use of their collections without which this thesis would have been most difficult.

Finally, I would like to thank my family for providing with guidance and support that made me complete this thesis efficiently.

PROLOGUE

This Thesis traces the evolution of law and practices in the past 20 years focusing on one aspect of unfair trade practices -- unfairness in holding of games, contests, lotteries, and similar schemes for promoting sales and services in the context of India transitioning from a state controlled to a liberalized economy. With growing competition, firms have got into aggressive and competitive trade practices to entice the customers. These practices raise questions about the truthfulness and fairness of representation of products, services, advertisements, and schemes for promotion of products and services. There is a need for adequate law against unfair trade practices and a justice delivery system to have some 'rules of the game' to compete among themselves. The thesis deals with a case law referring to unfair trade practices with a detailed explanation about the case law including actions, justifications and judgments of the commission.

Introduction to Unfair Trade Practice

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, (i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model; (ii) falsely represents that the services are of a particular standard, quality or grade; (iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods; (iv) represents that the goods or services have sponsorships, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have; (v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have; (vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services; (vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof : Provided that where a defence is raised to the effect that such warranty or guarantee is based on adequate or proper test, the burden of proof of such defence shall lie on the person raising such defence;

(viii) makes to the public a representation in a form that purports to be (i) a warranty or guarantee of a product or of any goods or services; or (ii) a promise to replace, maintain or repair an article or any part thereof or to repeat or continue a service until it has achieved a specified result. if such purported warranty or guarantee or promise is materially misleading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out; (ix) materially misleading 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 have 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; (x) gives false or misleading facts disparaging the goods, services or trade of another person. Explanation: For the purposes of clause (1), a statement that is (a) expressed on an article offered or displayed for sale, or on its wrapper or container; or (b) expressed on anything attached to, inserted in, or accompanying, an article offered or displayed for sale, or on anything on which the article is mounted for display or sale; or (c) contained in or on anything that is sold, sent, delivered, transmitted or in any other manner whatsoever made available to a member of the public, shall be deemed to be a statement made to the public by, and only by, the person who had caused the statement to be so expressed, made or contained; (2) permits the publication of any advertisement whether in any newspaper or otherwise, for the sale or supply at a bargain price, of goods or services that are not intended to be offered for sale or supply at the bargain price, or for a period that is, and in quantities that are, reasonable, having regard to the nature of the market in which the business is carried on, the nature and size of business, and the nature of the advertisement. Explanation: For the purpose of clause (2), "bargain price" means

(a) a price that is stated in any advertisement to be a bargain price, by reference to an ordinary price or otherwise, or (b) a price that a person who reads, hears, or sees the advertisement, would reasonably understand to be a bargain price having regard to the prices at which the product advertised or like products are ordinarily sold; (3) permits (a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating the impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole. (b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest; (4) permits the sale or supply of goods intended to be used, or are of a kind likely to be used by consumers, knowing or having reason to believe that the goods do not comply with the standards prescribed by competent authority relating to performance, composition, contents, design, constructions, finishing or packaging as are necessary to prevent or reduce the risk of injury to the person using the goods; (5) permits the hoarding or destruction of goods, or refuses to sell the goods or to make them available for sale, or to provide any service, if such hoarding or destruction or refusal raises or tends to raise or is intended to raise, the cost of those or other similar goods or services.

Examples of Restrictive Trade Practices

1. Coca Cola stopping its vendors from keeping the soft drinks of its rival brands. 2. M/s TELCO ordering vehicle maintenance firm near Lonavla Ghats to refuse service of vehicles other than TATA. TELCO won the case on the ground that the technicians had only been trained for maintenance of TATA vehicles.

Agreements in restriction of the trade are void.

A bond indicating payment of penalty in case of employee quitting the job where in there is no training involved is void. However, if there is training imported to the employee, and then the bond is fully valid.

If a bond states a time frame against joining a rival company within specified period of leaving the job by the employee, it is valid only if the next location is within 5 KM radius by crow flight. If a person joins another rival company which is more than 5 Km from his previous job location, the bond does not apply on him.

There are 3 types of notices

1. Simple Notice Could be verbal or written 2. Constructive Notice Like No thorough fare, Tress passers will be prosecuted 3. Legal Notice Has to be replied within 21 days mandatorily else it is deemed that the facts stated in the notice have been accepted by the person.

Following is the list of restricted trade practices (Not comprehensive).

1. Vertical Integration 2. Horizontal Integration 3. Territorial Restrictions 4. Max Retail Pricing 5. Market Survey 6. Price Fixation (Cartel Formation) 7. Tying Arrangements 8. Requirement Contracts 9. Collective Market Sharing 10. Advertisements 11. Trade Tariffs A business practice developed and regularized by the people and the govt is legal practice. As per the law, the consumer is to be serviced at minimum cost and while profits are the soul of the businesses, it should not turn into profiteering.

Mahatma Gandhi had said, There is enough in this world to meet every mans need but not enough to satisfy one mans greed.
Display of Wealth is a necessity for a mans ego. But it is wrong to convert that ego into class struggle.

Profit is not a dirty word, but Profiteering is.

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Profits as defined by the law

Profit %
01 - 50 51 - 100 101 - 400 401- 800 > 800

Type
Normal Good Very Good High Obscene (Restrictive Trade Practice)

As on date there are 6 companies in India who are raking obscene profits.

Explanations Vertical Integration

Vertical Integration is defined as usurping of peripheral activities of a core business which are normally done by smaller businesses. Eg. A car manufacturer is expected to produce Chassis, Engine, Gear Box and other critical car components. But as a practice, tyres, shock absorbers, lights, upholstery, Wind Screen, etc are outsourced to smaller manufacturer. If a car company starts to manufacturer even these ancillaries, the ancillary units will go out of production. There, such vertical integration is not allowed by law.

Horizontal Integration
When a company tries to enter businesses not directly related to its core business, it is called as Horizontal Integration. For eg. A petrol pump starting to provide services like Lub Oils, servicing of vehicles, air, and puncture repair, etc are legal form of activities which are direct offshoots of his core business that is fuelling of vehicles. But services such as running of One stop shop, Insurance shop, ATM, RTO Agent Shop, Fast Food, Medical Store owned by the same business is not allowed, however, these facilities can still exist under his roof as businesses being operated by people having hired the premises.

Territorial Restrictions
This prohibition actually bars manufacturers from stopping their distributors from selling their product in any area. While the companies are allowed to market their products in the area of their choice but there after if the dealer chooses to send the product to other reasons, he can not be restricted by the company.

Case Study
A celebrated case in this regard is of Kissan Vs Dipys products. Kissed brand was then owned by Mr Vitthal Mallya under the name of company as Herbertsons. Kissan was being sold all over India with manufacturing base located at Mumbai. The company was making good profits, but suddenly it experienced a plato in profits. Then Mr Mallya, bought out Dipys brand which was very popular in south India, to kill competition. But profits platoed again after temporary rise. Mr Vithal Mallya, owner of Herbertson Co, manufacturer of Kissan brand was manufacturing the sauce in Mumbai and marketing in North India. When the sales growth stalled, Mr Mallya got the taste of Dipys brand modified gradually to Kissans taste over a period of 18 months. Thereafter, he started marketing the sauce sourced from the same factory on two brand names. Thereby, he started saving on transportation and octroi etc and profits grew. This practice was observed by Kalvert and complaint was made. However, Dipys won the case narrowly. Jute, Cement and Iron & Steel are exempted from this law due to bulkiness and weight and cost involvement in transportation.

Trade Tariffs
Trade tariffs are fixed in conjunction with Trade associations and Govt. Govt trade tariffs are legal. Simla Apples Farming and Merchandising Association had imposed trade tariffs (reduced the price of apples) to counter the cheap imports from New Zealand. It was considered illegal. Regional trading blocks apply this tactic to deny market to other countries, like European Economic Community, USA and Mexico.

Max Retail Pricing

Differential Retail Pricing within the same city (Say Colaba and Govandi) is not permitted. However, MRP can vary between Mumbai and Pune or Delhi. This is done to avoid differentiation as per economic segregation in areas. In pharmaceutical industry, there is drug price control order. It means that drug prices are controlled by the Govt. Any other price which is not regulated is at option of manufacturer and the market forces. Essential Commodities Act provides for regulation of price and this is critically important because it has also concept of MRP.

Market Survey
Market survey for fixing differential MRP is illegal.

Price Fixation (Cartel Formation)

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Price fixation i.e. Dropping of prices by the existing manufacturer to the disadvantages of the new entrant is constituted to be illegal. WTO has no clause regarding Cartel formation. No international law exists against Cartel formation. That is how OPEC is existing. There are Gold and Silver trading cartels.

Tying Arrangements
Two parties can not have a tie-up to the disadvantage of a third party. Case Study. Great Eastern Railways Vs Fingoll (Lawyer for Truckers). Great Eastern Railways operated for 7 years with loss and decided to close operations. However they were persuaded to continued by a gentleman who promised a turn around in one year. He then offered the spare railway land on sides of the railway line to farmers with a understanding that they would transport the excess produce (approx 40% of the total) through the railways. Farmers were delighted at the proposal and ended up transporting whole produce by railways only. Truckers suffered loss and therefore complained. Case was lost by the railways.

Requirement Contract
A contract which mandates a party to the contract to divulge information which is more than pure data is illegal. For example, Indian merchants Chamber asking its members to divulge companys future plans.

Collective Market Sharing

A company can not usurp a part of the market for its exclusive use. Case Study. BMW had entered into an exclusivity contract with a service station for service of BMW vehicles in a Germany town. BMW had lost the case. TELCO Vs Registrar of Restrictive Trade Practices. In this particular case TATA had tied up with a service station near Lonavla Ghats for repair of only TATA vehicles. The case was won by TATAs.

Advertisements
Surrogate advertisements are illegal.

Case Study-1
Mr Ahuja, who was manufacturing wines wanted advertisement of his product. He was told by the Ad Agencies that advertisement of alcoholic beverages is not permitted by the law. However, one Mr Spark agreed to place the Ad. He made arrangements with BEST for painting of buses with four houses and 4 glasses along with a statement Stallion comes to town. No mention was made of the company, of product. Sales went up. This kind 11

of Ad is called surrogate Ad. Ads placed by organisations like SAHMAT against certain political parties and in favour of other parties, falls in this category. Ads which are violative of moral standards of the

society are also illegal. Case Study-2

Hindustan Lever Ltd advertised its toothpaste, New Pepsodent, in print, visual and hoarding media, claiming that its toothpaste New Pepsodent was 102% better than the leading toothpaste. In the TV ad, samples of saliva were shown as being taken for testing, from 2 boys, hours after brushing. 1 boy was supposed to have brushed with the New Pepsodent, while the other had brushed with a leading toothpaste, according to the commentary. The test of the 2 samples were visually depicted, side by side. The saliva of the boy who had brushed with the leading toothpaste was shown as containing a large number of germs, while the slide of the saliva of the other boy, who had brushed with the New Pepsodent, showed a negligible quantity of germs. While the sample was being taken from the boys, they were asked to name the toothpaste with which they had brushed in the morning. One boy had said Pepsodent. The response of the second boy was muted. However, the lip movement of the boy indicated that he was saying Colgate. Also, while the muting was being done, there was a sound in the background of the jingle used in the Colgate advertisements. The market shares of toothpaste, of Colgate and Hindustan Lever, were 59% and 27% respectively. The Commission, thus, was of the view that, a reference to the leading brand and famous brand was in effect, a reference to Colgate. A doubt, however, was raised that the statistics on market shares are produced by market research agencies. The Consumers, are not generally aware of these. Thus, a viewer need not necessarily interpret the leading brand as Colgate. The Commission, however, observed that Colgate has been in the business of manufacturing and selling toothpaste in India, for more than 50 years. According to the Commission, the word toothpaste has become synonymous with Colgate over the years. The Commission, in addition, noted that the jingle in the background was a familiar one and was associated with Colgate. The comparative product in the TV commercials could, thus, be identified as the Colgate dental cream. Thus, it became a case of Comparative Advertisement and a claim could be made of disparagement of Colgate products.

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CASE LAW INDEX

2008 CTJ 211 (MRTP)

MONOPOLIES AND RESTRICTIVE TRADE PRACTICES COMMISION, NEW DELHI BERRY INSULATING TAPE COMPANY VERSUS R.P COATING PVT LTD HONBLE MR. JUSTICE O.P DWIVEDI, CHAIRMAN; MR. M.M.K SARDANA, MEMBER. COMPENSATION APPLICATION NO.317 OF 2000 8TH SEPTEMBER, 2008

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PRIME TIME MATTER

Compensation-P.V.C Coating plant-MRTP Act, 1969-Section 12B-Unfair trade practiceApplicant purchased coating machine from the respondent and paid Rs731200- On making recalculation, the applicant discovered that it had paid Rs25000 in excess Applicant also alleged that some accessories costing Rs8500 not supplied-Held, by withholding the amount of Rs 25000 and not supplying the accessories that mounted to unfair trade practiceRespondent directed to refund Rs 33000 with 12% interest to the applicant. FACTS The applicant had claimed compensation of Rs525000 from the respondent on the ground that they had indulged in unfair trade practice. HELD The respondent is directed to refund Rs33000 to the applicant along with 12% interest per annum. COUNSEL Mr. Thomas Joseph, Advocate for the respondent. Making supply of a machine without its accessories would amount to an unfair trade practice under Section 36A of the MRTP Act as the machine cannot be put into operation. Similarly charging excess amount towards its cost and not refunding the same also amounts to indulgence in unfair trade practice.

ORDER
M.R M.M.K Sardana, MemberThis order is to dispose of an application dated 27th October, 2000 filed by the applicant under Section 12B and 36A of the Monopolies and Restrictive Trade Practices Commission Act (hereinafter referred to as MRTP Act) alleging unfair trade practices against the respondent and hereby seeking compensation of Rs25000 alleged to have been paid in excess and Rs5lakhs as compensation for supplying a deficient machine. Further an interest of 24% per annum on the above amounts has been prayed for. 1. The facts as stated by the applicant, in brief are that in July 1996, the applicant wanted to procure a P.V.C Coating Plant to procure P.V.C. Electrical Tape and was also desirous of obtaining consultancy and services related thereto. Respondent, claiming an international collaboration, offered to sell the plant which would consist of:

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i. ii. iii. iv.

Double Coating Drying Chambers Automatic Winders Two number slicing machines

2. Besides, the respondent offered to provide consultancy and related services. A number of meetings followed between the applicant and the respondent company. Respondent through its communication dated 4th November 1996 conveyed its quotations, terms and conditions, proforma invoice and detailed specifications etc. The price quoted for the entire deal was kept at Rs6lakhs Payment terms in the letter as quoted by the respondent were as follows: 30% to be paid at the time of placing the order and one lakh was to be paid on trial. Delivery was to be completed within a period of four months from the date of letter of intent. Further respondent were to provide technical know-how/consultancy towards coating formulations, layout planning and other engineering free of cost. The price quoted was exclusive of sales tax and excise etc. Warranty period was six months after the date of commissioning. 3. Applicant paid in advance of Rs2.25lakhs to the respondent as follows: Date 13.11.1996 07.12.1996 24.04.1997 01.05.1998 Amount (in Rs.) 100000/50000/50000/25000/-

Further amounts were paid at the time of delivery of the machine and thereabout as follows: 10.06.1998 27.08.1998 481500/-(through Oriental Bank of Commerce) 24700/-

Thus, a total sum of Rs 731200/- was paid to the respondent on the different dates mentioned above. The amount paid, as above, would include sales tax and excise duty also.

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4. Respondent signed an undertaking dated 10th June, 1999 to the following effect: The coating machine would be complete in all respects. It would be fitted with all necessary rollers and electrical accessories so as to do coating to make the following products: i. ii. iii. BOPP Packing tape P.V.C Electrical tape Paper to paper or paper to film coating.

5. Before the delivery of the coating machine, respondent advised the applicant to obtain one Duplex Slitting machine 32 working width complete accessories for slitting and rewinding to suit its requirements of producing the required products. The price of the same was quoted at Rs60000/- plus sales tax and excise duty. 6. For procuring the coating machine and Duplex Slitting Machine, the total cost according to the applicant should have been Rs706200/against the total payment made up to the respondent which was Rs 731200/-. Therefore, a surplus amount of Rs 25000/- got lodged with the respondent which the respondent have avoided refunding the same despite many requests. 7. It has also been stated that the respondent did not supply to the applicant necessary accessories along with the machine to enable the applicant to utilize the machine for manufacturing P.V.C. Insulating Tape. 8. The machine was supplied to the applicant on 3rdJuly, 1998 at the applicants premises in New Delhi. The said machine was installed in a couple of days after which the coating machine was put to rest by the respondent for coating only BOPP film (packing tape). The output was noticed far from satisfactory. The coating machine was neither suitable for P.V.C. coating (Electrical Tape) nor for BOPP packing type. Adhesive coating on BOPP film was found with uneven coating and that too at a very low speed. The resultant unevenly quoted product was non-competitive from cost price as well as on quality parameters. The machine was found incapable of producing P.V.C. Electrical Tape in the absence of accessories that were required to be supplied by the respondent. The conveyor system and four numbers of turrets with winder station surface with chilled roller were not supplied. Respondent thus, deliberately kept away from the supply of ancillary equipment and deliberately providing a machine that was not conducive to producing the products in terms of their proforma invoice and also their undertaking. According to the applicant, respondent have indulged in unfair trade practices by supplying it 16

sub-standard machine and not upto the specifications and denying him the necessary accessories. Therefore the applicant has claimed compensation as prayed for. 9. Respondent has denied the allegation of unfair trade practices brought on it by the applicant. Its reply, in brief, is as follows: The applicant desired to purchase the machine in 1996 and settled the terms and conditions for supply. The following were the terms and conditions agreed between the parties: a. 30% payment to be made at the time of placing the orders: b. One lakh was to be paid within four weeks of placing the order 10. Delivery was to be made within four months from the date of receiving the advance payment. The price was Rs 6 lakhs plus sales tax and excise duty. The applicant paid postdated cheques for Rs100000/- dated 13th November 1996 and Rs 50000/- dated 7th September 1996 i.e. for 25% payment only instead of 30%. The respondent relied on the assurance that the applicant would make the payment of balance 5% and Rs 100000 payable after four weeks together, the respondent took up the manufacture of the machine on receipt of 25% advance. It completed whole of the plant and was ready for trial in March 1997. But the applicant neither paid the balance advance amount of 5% nor Rs 100000 which were payable within four weeks of placing the order and expressed its difficulty in lifting the machine as they were negotiating a loan with their bankers. The finished plant thus remained idle lying in the premises of the respondent and the applicant assured orally to he respondent that they would be compensated in this regard by paying interest on the amount invested by them. But the applicant could not arrange the fund for supply of the machinery for more than a year and though in between the applicant paid Rs 50000/- by a cheque on 24 th April 1997 and further Rs 25000/-on 1st May 1998. Thus, a sum of Rs 2.25 lakhs was received upto 1stMay, 1998 against the proforma invoice of November 1996. The applicant was making promises to pay the balance amount, though not fulfilling the same. 11. In April 1998, applicant desired of the respondent to give an acknowledgement to the fact of respondent having received an advance of Rs 2 lakhs so that the applicant could justify its bankers to enable it to borrow the remaining money from its bank. It was assured by the applicant that the 3entire amount available from the bank would be paid to the respondent and the account could be settled between the applicant and the respondent which would also include the interest payable by the applicant to the respondent for keeping the machine with the respondent idle for so long. Respondent did receive a payment of Rs 482500/- and Rs 24700/towards the machine from the bankers of the applicant. Thus, a total 17

amount of Rs 731200/- was received against the total dues of Rs 796200/- leaving balance of Rs 65000 to be recovered from the applicant. Respondent calculated the amount of Rs 796200 payable to it taking into account the interest liabilities @18% per annum on the applicant for keeping the machine idle which was ready from March 1997. Thus, the allegation that the applicant has paid an excess amount of Rs 25000/- according to the respondent is baseless. 12. The very fact that the applicant did not make any request for refund of so called excess payment made by it for more than a year would establish, according to the respondent, that the applicant knew that the excess amount paid by it would not be available to it because of interest liabilities it had incurred for keeping the machine idle. Further, no complaint was made by the applicant regarding malfunctioning of the machine upto late 1999 and thus the entire complaint is motivated and false. Therefore respondent has sought dismissal of the complaint. 13. Applicant filed its rejoinder to the reply made by the respondent reiterating its allegations as brought out on its complaint. Following issues were framed: a. Whether the respondent has been indulging in unfair trade practices alleged in the Compensation application? b. Whether the applicant has suffered any loss or damage as a consequence of the alleged unfair trade practices? c. Relief, if any. 14. Applicant filed affidavits of evidence of three of its witnesses who were duly cross-examined by the respondent. Respondent also filed affidavits of evidence of two of its witnesses who were crossexamined by the applicant. 15. Issues framed are inter-connected and are being dealt together. 16. Facts of the case as stated by respective parties have been summarized in the earlier paragraphs. In the paragraph below, we will assess the evidence tendered by the respective parties. 17. Affidavits of evidence which have been filed by the applicant are all partners of the applicants firm and one of the partners i.e. Shri Anil Sethi is an engineer. He deposed on 2nd December 2002 and has stated in his statement that the business of the applicant started after the installation of the machine in July 1998. The witness confirms that 18

the respondent had demonstrated the production of BOPP tape at the time of installation and states that it did not demonstrate the manufacturing P.V.C. tapes. It further states that no letter was written to the respondent prior to 1999 about the lack of facility of manufacturing P.V.C. tapes. Questions were asked of this witness about the production figure and the sourcing of raw material, the witness denied any knowledge about the accounts of the applicants firm. 18. Shri S.C. Singhal also tendered his evidence on 2nd December, 2002. He admits that the machine was installed in July 1998 and the production started in September 1998 of BOPP films and it could manufacture 1-2 tons of BOPP film in two and a half months. He also states that the machine had ceased functioning for the past six months only. He makes a statement that the machine had to be stopped because the goods manufactured with it were not found to be upto the required standard by the buyers and the applicant were making loses. However, he could not produce complaint of any of the customers in writing. He would not state as to how many rolls were sold by the applicant during the year 1998-99 and 2000-01. He admitted that they were not maintaining any accounts of salaries, wages being paid to workers. The witness admits an invoice at Exhibit-AW 1/9 about the supply of the machine but does not confirm that it was in running condition. Cross-examination of the other applicants witness, Shri Jugal Kishore, was limited to a communication dated 14th October, 1999 at Exhibit-AW 1/10 regarding a letter purporting to have been sent by the applicant to the respondent seeking refund of Rs 64500/- from the respondent alleged to have been paid to the respondent in excess and also urging the respondent to supply certain accessories. This letter was denied by the respondent and during the cross-examination the witness insisted that the letter was sent by him to the respondent. 19. From the deposition made by the applicants witnesses, it is evident that the machine was delivered on 3rd July 1998 and was in operation till atleast June, 2002. There was production of BOPP tapes and there was a sale of these tapes as well. Raw materials were also being procured for producing such tapes. Evidence let by the applicant has not been of much help which would attribute losses caused to it because of the alleged under-performance of the machine. The complaint regarding deficiency of the machine of producing the P.V.C. tapes was also not lodged prior to 1999; which would be much beyond the stipulated warranty period for the machine. 20. Witness, Shri Paresh Ahluwalia, who was a director in the respondent company, clarified that it is the practice with the respondent company that though they do not always receive the full amount of advance as 19

required by them, they start manufacturing the machine on assurances. It also elaborates in his statement that the machine supplied by them is capable of producing as many as hundred odd products but the applicant had communicated their requirement of production of BOPP tapes, P.V.C. tapes and label tapes of papers only. The machine was capable of meeting all the three requirements of the applicant. The machine was capable of producing P.V.C. tapes by maintaining the distance between the rollers as 20. Certain items as mentioned in Annexure-A, page 15 of his affidavit were not necessary with the final modified machine and were not supplied. The running of the machine was demonstrated at the time of installation and the demonstration was made for all the intended products. It has been stated by the witness that it is not their practice to draw a service report after the machine is supplied. Respondent just satisfies the buyers with the trial running and there is no exchange of report. To a specific query about the non-supply of the items at 2c), d) & e) of proforma invoice dated 4th November, 1996, witness stated that these items were not supplied to the applicant finally on the ground that when the applicant expressed his desire to manufacture BOPP tapes, paper labels and P.V.C. tapes only the machine was accordingly modified and redesigned to the extent of meeting the requirements of producing these three items. At para 14 of his affidavit of evidence, this witness avers that the manufacture of both P.V.C. Insulation Tapes and BOPP packing tapes was satisfactorily demonstrated by the respondent in the presence of the applicant at the stage of trial of the machine. No complaints were raised by the applicant at the stage of trial of the machine or at any stage during the warranty period. It also states further in the same paragraph that the applicants witness Shri Jagdish Berry, had stated that out of 80 kgs of raw material (BOPP) purchased by the applicant from M/S Flex Industries Ltd. Applicant was able to obtain a total of 75 rolls of 65 meters length and 48 mm width, at the finished products. This according to the witness would prove that the performance of machine was normal and satisfactory in every respect as the output claimed by the applicants witness is consistent with accepted production norms. This witness was not cross-examined by the applicant on this paragraph of the affidavit of evidence of the witness. From an analysis of the evidence of both the parties and the facts stated by them, following conclusions are inevitable: a) Respondent had received full payment of its basic prices plus tax thereof of the machines the supplied by them; b) Applicant had not adhered to time limits for making advance payments while placing the order

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in terms of the offer made by the respondent in their communication dated 4th November, 1999. c) The machine along with its accessories reached the premises of the applicant on 3rd July 1998. the delay in delivery, if any, is not attributable to respondent. d) The machine was installed and demonstrated to be capable of producing all the products intended by the applicant. e) The machine definitely was in operation atleast upto June 2002. f) No complaint about the machine was lodge within warranty period. g) There was an excess payment of Rs 25000/- by the applicant over the basic price. Respondent has sought it to be adjusted against the interest liabilities accruing to the applicant for the period the machine kept ready and idle at the premises of the respondent since 1997. However, respondent has not been able to place any documentary evidence or otherwise to prove that such a liability would accrue upon the applicant. In such a situation excess payment of Rs 25000/- stood withheld by the respondent. Respondent has not placed on record any communication which it might have sent to the applicant advising him that it was appropriating Rs 25000/- towards the so called interest liability calculated by the respondent on account of the machine lying idle. h) Certain equipments which were part of the invoice dated 4th November 1999 and the cost of these were included in the final price quoted in that invoice were not supplied by the respondent to the applicant. If these items were not necessary as the applicant had limited its requirements, respondent should have excluded costs involved for these items from the price quoted in the final invoice. Respondent have placed the value of these items that have not been supplied at Rs 8500/- vide their affidavit dated 27th February 2007. The applicant, on the other hand, have in their reply affidavit 21

alleged that the non-supply of these items forced them to secure a splitter machine and chilled water plant. We find from the comparison with the invoice dated November, 1996 provided by the respondent that the respondent had not committed to supply chilled water plant and it has not been proved by the applicant that they were advised to buy a cutter only for non-supply of the item at para-2c), d) & e) of the invoice. 21. During the course of the arguments, the applicant stated that it has since sold the machine at a price of Rs 1.80 lakhs. The applicant had not brought this fact to the notice of the commission or the other party at any stage. 22. From the overall findings arrived at as above, we hold that the respondent have indulged in unfair trade practices in withholding Rs 25000/- of excess payment by them without tendering any explanation to the applicant. Further practice of not excluding the cost for the items not supplied would also tantamount to unfair trade practices. Both these conducts would fall within the meaning of Section 36A of the Act. The cost of the items that have not been supplied amounts to Rs 8500/- according to the respondent itself. 23. Thus, respondent are directed to refund to the applicant Rs 33000/along with an interest of 12% per annum w.e.f. 3rd July 1998 i.e. the date, on which the machine reached the premises of the applicant till the refund is made, which would be within four weeks of this order. 24. There is no order as to costs. 25. Pronounced in open court on the 8th day of September, 2008

BIBLIOGRAPHY

Primary Source CTJ-Consumer Protection and Trade Practices Journal 16th Edition-October 2008

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Law Library Bibliography Collection Dealing with Unfair Trade Practices - Carl Buik - Addis Ababa CHAPTER IV THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES ACT,1969 : Secondary Sources Websites - www.vakilno1.com - www.helplinelaw.com Other Sources Book-Business Laws One Should Know-Nabhi Publication 2008 Edition Pg-221 to Pg 226 Business Standard Business Law for Management - K.R.Bulchandani

EPILOGUE

The main findings about the subject are astounding. After evaluating the above case it has been derived that there are special remedies against unfair trade practices.

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The following are the remedies: Where after an inquiry into an unfair trade practice, the commission is of opinion that the practice is prejudicial to the public interest, or to the interest of any consumer or consumers generally, it may order that a) the practice shall be discontinued or shall not be repeated; b) any agreement relating to such practices shall be void or shall stand modified in the specified manner; c) any information, statement or advertisement relating to such practice shall be disclosed, issued or published, in the specified manner. However, the Commission may permit, on an application by the concerned party, to carry on any trade practice after taking such steps, within the specified time, 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, if the concerned party takes the necessary steps within the specified time, not to make any of the aforesaid prohibitory orders.

CROSS REFERENCE INDEX

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CASE LAW 16th Edition-October 2008 CTJ - Consumer Protection and Trade Practices Journal 2008 CTJ 211 (MRTP) Page-161-166

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