Case Brief
Hindustan Lever Limited v. Director General (Investigation and Registration), New Delhi and Anr. – 2001 (1) SCR 318
Deciding Authority
Supreme Court
Name of the Judges
B.N. Kirpal & Ruma Pal & Brijesh Kumar
Date of Judgment
10th January 2001
Facts of the Case
The challenge in this appeal is to a cease and desist order passed by the Monopolies and Restrictive Trade Practices Commission (for short “the Commission”) against the appellant herein. Certain complaints by erstwhile stockists of the appellant were received by the Commission. These stockists used to sell detergents, soaps, chemicals, etc., manufactured by the appellant and their grievance had arisen by reason of their agreements having been terminated by the appellant.
A preliminary inquiry was conducted by the Director General of Investigation & Registration whereupon a Restrictive Trade Practices Inquiry Notice No. 48/1983 dated 28th December, 1983 was issued to the appellant. This notice was issued by the Commission acting suo moto and in exercise of the powers conferred on it under Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 read with Regulation 58 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974.
On the receipt of the particulars, reply was filed by the appellant to the show cause notice denying the allegations and the charge levelled against it. In particular, it stated in the said reply that there had been a denial of principles of natural justice because all information and material which was available with the Commission on the basis of
which the notice had been issued had not been furnished to the appellant. Evidence was led, both oral and documentary, before the Commission.
By order dated 4th August, 1987, the Commission held as follows:
“Having held that the respondent has been indulging in the restrictive trade practices of (1) tying up sales of its slow-moving with fast-moving products and dictating its RSs to purchase such goods and in such combination as the respondent may decide, and (2) terminating the Stockist- ship of its stockists resulting in refusal to deal with him, and having held that the presumption in regard to such restrictive trade practices being prejudicial to public interest has not been rebutted, we now proceed under Section 37(1) and direct the respondent that the aforesaid restrictive trade practices shall be discontinued and shall not be repeated. It logically follows that the respondent shall restore the stockists ship of M/s. Jain General Stores, Pulsudhar, the affected R.S. and resume dealings with him.”
Judgment
As indicated, there were two reasons given by the Commission for passing the order against the appellant. The show cause notice mentions the trade practices which were alleged to have been followed by the appellant like tie-up sales of soaps and detergents, refusal to deal or supply, etc., and then alleges that these trade practices appeared to the Commission to have or may have the effect of preventing, distorting or restricting competition amongst the dealers and may have the effect of imposing unjustified costs or restrictions on the consumers.
The charge which the appellant was called upon to meet was that its trade practices resulted in preventing, distorting or restricting competition amongst the dealers and may have the effect of imposing unjustified costs or restrictions on the consumers. Even though oral evidence had been led, the order of the Commission does not record any categorical finding to the effect that the trade practices alleged to have been carried on by the appellant had resulted in preventing, distorting or restricting competition amongst the dealers. In the absence of such a finding and there not being even a whisper in the order that any action of the appellant had the effect of imposing unjustified costs or restrictions on the consumers, the Commission fell in error in passing the order against the appellant.
Furthermore, neither in the show cause notice nor in the additional particulars which were supplied to the appellant was there any mention of termination by the appellant of its stockist’s agreement with Jain General Stores. The appellant was not, therefore, called upon to meet any allegation in Connection therewith.
Principles of natural justice would require that the appellant against whom an order of cease and desist could be passed under the provisions of the M.R.T.P. Act is entitled to know the case which it has to meet. Passing of an order like the present one results in civil consequences and it is now well settled that in such an event principles of natural justice have to be followed. It is for this reason that the Act arid the Regulations required a notice to show cause to be issued. One would expect that the notice which is issued either itself must provide or an accompanying or subsequent document must indicate to the person to whom notice is served the case which is required to be met. It did not appear that there was a complaint by Jain General Stores which had been filed with the Commission and if the Commission wanted to take that allegation/complaint into consideration, then the least which could have been expected was that the appellant should have been put to notice thereof. This was not done. On this ground alone, therefore, no order could be passed against the appellant in relation to the termination of its agreement with Jain General Stores.
Decision
The Hon’ble Supreme Court was of the opinion that the order of the Commission is contrary to law. Accordingly, the appeal was allowed and the order set aside. Parties were directed to bear their own costs.
Shubham Shandilya, 4th Year, B.B.A. LL.B., Symbiosis Law School, Pune
A COMPREHENSIVE WEBSITE FOR ALL LEGAL DEVELOPMENTS