IN THE HIGH COURT OF JUDICATURE AT MADRAS Date : 13-04-2010 Coram THE HONOURABLE Mrs. JUSTICE R.BANUMATHI AND THE HONOURABLE Mr. JUSTICE M.VENUGOPAL W.A.Nos.204 to 206 of 2000 and C.M.P.NOS.1823 TO 1827 OF 2000 Tamil Nadu Co-operative Milk Producers' Federation Ltd., Aavin Illam, Madhavaram Milk Colony, Chennai 600 051, rep. By its Managing Director. .. Appellant in W.A.Nos.204 to 206/2000 Vs. Triad Trading Services Ltd, Chitra Towers, 332, Arcot Road, Kodambakkam, Chennai-24, rep. By its Director. ...First Respondent in W.A.No.204/2000 Quadrangle Trading Services Ltd, 140-A&B, College Road, Nanganallur, Chennai-61, rep. By its Director. ...First Respondent in W.A.Nos.205 and 206/2000 The State of Tamil Nadu, Rep. By its Secretary to Govt. Co-operation Food & Consumer Protection Department, Fort St.George, Chennai -9. The Commissioner of Milk Products Dairy Devt. Department, Madhavaram Milk Colony, Chennai-51. The Registrar of Co-operative Societies, Tamil Nadu, 170, Periyar E.V.R. High Road, Kilpauk, Chennai-10. ...Respondents 2 to 4 in W.As.204 to 206/2000 https://hcservices.ecourts.gov.in/hcservices/ Vatsala Distributors, 17/1, B Block, Flat No.2, Desikar Street, Vadapalani, Chennai-26. ...Fifth Respondent in in W.A.No.204/2000 M/s.Balaji Agencies, 15,Prasanna Vinayagar Koil Street, Purasawalkam, Chennai 600 007. ...Fifth Respondent in W.A.No.205/2000 A.R.R.Milk Products, No.34, Hoppmen 2nd Street, Cement Road, Alandur, Chennai 600 016. ...Fifth Respondent in W.A.No.206/2000 Writ appeals filed under Clause 15 of the Letters Patent against the order dated 30.08.1999 passed by the learned Single Judge of this Court in W.P.Nos.4652 to 4654 of 1999 on the file of this Court. Which were filed under Article 226 of constitution of India, praying in common to issue a writ of Mandamus to direct the respondents 1 to 4 their officers and agents to take action to ensure compliance with the law by their distributors and wholesalers, including the 5th respondent herein and or punish and remove such of them for unlawfully refusing to supply their products to the petitioner. For Appellant : Mr.M.Kempraj in all W.As. for Mr.S.Subbiah For Respondents : Mr.Prakash Goklaney for R1 in all W.As. Mr.A.Arumugham for R2 to R4 Special Government Pleader Mr.P.B.Krishnamoorthy for R5 C O M M O N J U D G M E N T M.VENUGOPAL,J The Appellant/Third Respondent has preferred these Writ Appeals as against the common order dated 30.08.1999 passed by the learned Single Judge in W.P.Nos.4652 to 4654 of 1999. 2. The learned single Judge while passing common order on 30.08.1999 in the above writ petitions has among other things observed that ...............'Even in these cases, the petitioners are being regulated under the provisions of Monopolies And Restrictive Trade Practices Act, 1969. So, in the event of non- https://hcservices.ecourts.gov.in/hcservices/ supply of the said products, it is the duty of the Court to enforce the same. Moreover, the third respondent is under the all pervasive control of the State Government. In view of the above, the submission of the learned counsel for the third respondent that these writ petitions are not maintainable against the third respondent cannot be sustained in law and accordingly allowed the writ petitions with costs of Rs.2,000/- to be paid by the fifth respondent.' 3. According to the learned counsel for the Appellant/Third Respondent, the learned single Judge has committed an error in issuing the writ petitions against the Appellant, a Cooperative Society registered under the Tamil Nadu Cooperative Societies Act 1961 and in fact, as per the Full Bench decisions of this Court in 1992 1 MLJ 154 and 1994 1 MLJ 398, no writ will lie against a Cooperative Society. But this aspect of the matter has not been properly appreciated by the learned single Judge in a real perspective. 4. Proceeding further, the learned counsel for the Appellant/Third Respondent submits that the learned Single Judge has misdirected himself in coming to the conclusion that the Appellant/Third Respondent, a Cooperative Society registered under the Tamil Nadu Cooperative Societies Act is amenable to the writ jurisdiction of this Court since it is under all pervasive control of the Tamil Nadu Government. 5. It is the contention of the learned counsel for the Appellant/Third Respondent that as per Section 3 of the Monopolies And Restrictive Trade Practices Act, 1969 unless the Central Government by notification in the official gazette otherwise direct the said Act, shall not apply to any undertaking owned or controlled by a Corporation (not being a company) established by or under any Central provincial or State Act (vide Section 3(b) and (c) of the Act) and such being the clear cut legal position, the learned single Judge ought not to have allowed the writ petitions. 6. As a matter of fact, the learned single Judge should have directed the First Respondents/Petitioners to approach Monopolies and Restrictive Trade Practices Commission as per Section 10 of the MRTP Act so as to enable the Commission to exercise its power under Section 11 for an investigation by the Director before issuance of process in certain cases and in case of its satisfaction of the existence of prima facie case of any restrictive trade practice as per Section 2(o) of the MRTP Act, 1969 to initiate a full-fledged enquiry as per Section 37 of the Act. 7. That apart, the Learned counsel for the Appellant/Third Respondent takes a plea that the Fifth Respondent/Dealer of the Appellant/Society will be well within its rights to withhold supplies of Butter from any wholesaler or retailer or to cause or procure https://hcservices.ecourts.gov.in/hcservices/ another supplier to do so if it has a reasonable cause to believe that the wholesaler or the retailer has been using as loss leaders any goods of the same or a similar description whether obtained from the supplier or not and the same shall not be rendered as an unlawful one by virtue of Section 40(2) of the MRTP Act. 8. Advancing his arguments, the learned counsel for the Appellant/Third Respondent contends that the learned single Judge has gone wrong in rendering a finding that the First Respondents/Petitioners are getting profit of 6 paise and this cannot be termed as a loss and that the respondents cannot insist the First Respondents/Petitioners to sell the said products only at the rate fixed as maximum retail price. In short, the learned single Judge has committed an error in mixing the two different legal aspects viz., the First Respondents/Petitioners selling the Butter at a lesser profit margin well below the recommended maximum retail price and the meaning of the term "Loss Leaders" employed in Section 40(2) of the MRTP Act as explained in Explanation II to the Section 40 of the Act and this has resulted in a wrong order being passed against the Appellant/Third Respondent and therefore prays for allowing the writ appeals in furtherance of substantial cause of justice. 9. In response, the learned counsel for the First Respondents/Petitioners submits that they are Dealers of various fast moving consumer goods, Groceries and Dairy products and was purchasing Butter/Ghee/Flavoured milk and other products of the Appellant/Third Respondent sold under the name of "Aavin" from the Fifth Respondent/Distributor for the area and the Fifth Respondent refused to sell its dairy products to them on the ground that they were selling the products to consumers at prices lesser than maximum retail price (M.R.P.) fixed for these products. In this regard, the First Respondents/Petitioners sent a letter dated 09.02.1999 explaining the position and also called upon the Fifth Respondent to resume supplies, etc., 10. Added further, the learned counsel for the First Respondents/Petitioners contends that the First Respondents/Petitioners addressed a letter dated 18.02.1999 to the Managing Director of the Appellant /Third Respondent by setting out the facts and pointing out that its distributors (wholesalers) had violated and were continuing to violate the provisions of the Essential Commodities Act as well as Section 39 and 40 of the Monopolies and Restrictive Trade Practices Act, 1969. 11. Projecting the arguments, the learned counsel for the First Respondents/Petitioners further contends that the Appellant/Third Respondent, being an instrumentality of the State, owes a public duty to ensure that its agents/distributors/wholesalers appointed for the sale of its products act in compliance with the laws and also of the Government policy of ensuring that products marketed by it are sold https://hcservices.ecourts.gov.in/hcservices/ to purchasers desirous of purchasing the same and it is inappropriate for a Government controlled agency to allow its distributor to refuse to sell products to an individual for the reason that the said interested purchaser is willing to resell it at a smaller margin of profit normally allowed to the trade and in short, the action of the Fifth Respondent, an appointee of the Appellant/Third Respondent affects the right of the First Respondents/Petitioners to carry on business and is violation of Articles 19 and 14 of the Constitution of India. 12. According to the learned counsel for the First Respondents/Petitioners, the learned single Judge while allowing the writ petitions was right in observing that 'in event of non supply of the products it is the duty of the Court to enforce the same', etc., and consequently allowed the writ petitions with costs of Rs.2,000/- to be paid by the Fifth Respondent in each cases. 13. Countering the submissions of the Learned counsel for the First Respondents/Petitioners, the Learned counsel for the Appellant/Third Respondent submits that the Appellant/Third Respondent is marketing its Dairy products under the name 'Aavin' in the city of Madras through wholesale Dealers/Franchise Retail Dealers and through parlours run by it and the wholesale dealers are paying the entire product costs in advance by means of Bank Drafts and they take delivery of Aavin products and distribute to the Retailers as per the prices determined by the Appellant/Third Respondent from time to time. 14. As a matter of fact, the wholesale dealers are given the trade commission at the rate of 4% and the Appellant/Third Respondent allows 6% retailers' margin and the retailers are selling the dairy products at the recommended maximum retail price and not more than that and in regard to the retailers appointed by the Appellant/Federation they are given 6% margin for Dairy products. 15. Expatiating his submissions, the Learned counsel for the Appellant/Third Respondent contends that there is no privity of contract between the First Respondents/Petitioners and the Appellant/Third Respondent and indeed the privity of contract is between the Appellant/Third Respondent and its wholesale Dealers/Franchisees only. Moreover, the Appellant/Third Respondent is not legally competent to compel either its wholesale Distributors or its Franchise Retailers to supply its Aavin products to the First Respondents/Petitioners, when they are acting under the provisions of the Monopolies and Restrictive Trade Practices Act, 1969. 16. The other contention of the Learned counsel for the Appellant/Third Respondent is that the First Respondents/Petitioners are the Franchisees of M/s.Subhiksha Trading Services Ltd., Chennai are making use of Aavin brand butter marketed by the the https://hcservices.ecourts.gov.in/hcservices/ Appellant/Third Respondent as 'Loss Leaders' when it re-sell them otherwise than in a genuine seasonal or clearance sale not for the purpose of making a profit on resale but for the purpose of attracting to the establishment at which the goods are sold customers likely to purchase other goods, etc., and as per Section 40(2) of the Monopolies and Restrictive Trade Practices Act, the wholesalers/Retailers of the the Appellant/Third Respondent are entitled to withhold supplies of Aavin butter if they have reasonable cause to believe that the First Respondents/Petitioners have been using as Loss Leaders any goods of the same or similar description whether obtained from that supplier or not, etc., 17. It is the specific contention of the Learned counsel for the Appellant/Third Respondent that the First Respondents/Petitioners have an alternative, viable and effective remedy of lodging a complaint with the MRTP Commission under the Act and without existing the remedy, they have approached this Court by means of writ petitions under Article 226 of the Constitution of India and therefore the writ petitions are not maintainable in law. 18. In the counter to W.P.No.4653 of 1999 filed by the Managing Direction of the Fifth Respondent, it is mentioned that it pays the entire product cost in advance by means of Bank Draft to the Appellant/Third Respondent and will take delivery to Aavin products and distribute to the dealers as per the prices determined by the third respondent from time to time and in this process, a normal trade commission at 4% will be received by the fifth respondent and other dealers and the Appellant/Third Respondent further allows 6% to the retailers and that any product should not be sold to the consumer beyond the maximum retail price fixed by the Appellant/Third Respondent. 19. The fifth respondent to its shock and surprise received complaints from various retailers that the First Respondents/Petitioners is obtaining the product from the fifth respondent and sold it to the consumer with a margin of 0.06%. For example, the petitioner purchases 500gm butter from the fifth respondent at the rate of Rs.51/- and sold it to the consumer at Rs.51.95/- hardly 0.06% margin. The consumers complaint before the other retail vendors including the FROs and parlours directly run by the Appellant/Third Respondent that the product viz., 500gm butter is being sold for Rs.51.95/- by the First Respondents/Petitioners at its retail shops whereas the same product is sold as Aavin parlour as well as other retail shops for Rs.55/-. 20. The Fifth Respondent wrote a complaint to the Appellant/Third Respondent on 25.11.1998 to take action against the First Respondents/Petitioners to curb the unfair trade practice of the First Respondents/Petitioners. The Appellant/Third Respondent has instructed the First Respondents/Petitioners not to supply the https://hcservices.ecourts.gov.in/hcservices/ products of the Appellant/Third Respondent to the First Respondents/Petitioners unless the First Respondents/Petitioners ensure the selling price of the Appellant/Third Respondent product to the consumer only at the maximum retail price as being sold by other retailers and since the First Respondents/Petitioners have not changed its under cutting trade, the fifth respondent has been left with no other option except to stop supply to the First Respondents/Petitioners. 21. In the counter to W.P.No.4654 of 1999 filed by the Fifth Respondent, it is mentioned that the Appellant/Third Respondent is a Co-operative Society, registered under the Tamil Nadu Cooperative Societies Act and is not fully controlled by the State and therefore it does not come within the ambit of Article 12 of the Constitution of India and therefore the writ petition is not maintainable, also because of the fact that being a private individual, no writ will lie against the Fifth Respondent. 22. Further, the Fifth Respondent has inter alia stated that it supplies Aavin products more particularly Butter and Ghee to the First Respondents/Petitioners by adhering to the guidelines given by the Appellant/Third Respondent and the First Respondents/Petitioners with the motive of advertising his Business at the costs of the respondents resold the products without profit otherwise than in a genuine seasonal or clearance sale, etc., and the First Respondents/Petitioners used to sell the goods with a sole motive of attracting the customers to sell its other goods at the cost of the respondent and spoiled the reputation of the respondent and as per guidelines, it took steps to avoid unwanted trade competition in the locality which is not in anyway violation of Article 14 and 19 of the Constitution of India. 23. The Learned counsel for the Appellant/Third Respondent in support of the contention that the Tamil Nadu Government is not having any pervasive control over the administration and therefore, the Appellant/Third Respondent cannot be construed to be a STATE coming within the ambit of Article 12 of the Constitution of India, relies on the Larger Bench decision of this Court K.MARAPPAN V. THE DEPUTY REGISTRAR OF COOPERATIVE SOCIETY, NAMAKKAL CIRCLE AND ANOTHER, 2006 (4) CTC 689 at page 710 in paragraph 21, it is observed as follows:- "....From the above discussion, the following propositions emerge: (i) If a particular co-operative society can be characterised as a 'State' within the meaning of Article 12 of the Constitution (applying the tests evolved by the Supreme Court in that behalf), it would also be 'an authority' within the meaning and https://hcservices.ecourts.gov.in/hcservices/ for the purpose of Article 226 of the Constitution. In such a situation, an order passed by a society in violation of the bye-laws can be corrected by way of Writ Petition; (ii) Applying the test in Ajay Hasia it is held that a co-operative society carrying on banking business cannot be termed as an instrumentality of the State within the meaning of Article 12 of the Constitution. (iii) Even if a society cannot be characterised as a 'State' within the meaning of Article 12 of the Constitution, a Writ would lie against it to enforce a statutory public duty cast upon the society. In such a case, it is unnecessary to go into the question whether the Society is being treated as a 'person' or 'an authority' within the meaning of Article 226 of the Constitution and what is material is the nature of the statutory duty placed upon it and the Court will enforce such statutory public duty. Although it is not easy to define what a public function or public duty is, it can reasonably said that such functions are similar to or closely related to those performable by the State in its sovereign capacity. (iv) A society, which is not a 'State' would not normally be amenable to the writ jurisdiction under Article 226 of the Constitution, but in certain circumstances, a writ may issue to such private bodies or persons as there may be statutory provisions which need to be complied with by all concerned including societies. If they violate such statutory provisions a writ would be issued for compliance of those provisions. (v) Where a Special Officer is appointed in respect of a Co-operative society which cannot be characterised as a 'State' a writ would lie when the case falls under Clauses (iii) and (iv) above. (vi) The bye-laws made by a Co-operative society registered under the Tamil Nadu Co-operative Societies Act, 1983 do not have the force of law. Hence, where a society cannot be characterised as a 'State', the service conditions of its employees governed by its bye-laws cannot be enforced through a Writ Petition. https://hcservices.ecourts.gov.in/hcservices/ (vii) In the absence of special circumstances, the Court will not ordinarily exercise power under Article 226 of the Constitution of India when the Act provides for an alternative remedy." 24. He also invites the attention of this Court to the Full Bench decision T.K.ANANDA SAYANAN V. THE JOINT REGISTRAR OF COOPERATIVE SOCIETIES, VELLORE AND ANOTHER, 2007 (5) CTC at page 1, wherein it is among other things held that 'every case of suspension or deprivation of wages for period or termination will not entitle employee of Co-operative Society to invoke writ jurisdiction and plead violation of Article 21 of the Constitution of India and that an employee of Co-operative Society cannot invoke writ jurisdiction for every alleged or imagined invation of his rights.' Also in the aforesaid decision, it is observed that 'Applications to secure performance of obligations owed by Government or Society towards its employees or to resolve any private dispute cannot be decided on the basis of Article 21 of the Constitution of India.' 25. It is worth to recall the observations made in paragraph No.12 of the Full Bench decision in T.K.ANANDA SAYANAN V. THE JOINT REGISTRAR OF COOPERATIVE SOCIETIES, VELLORE AND ANOTHER, 2007 (5) CTC 1 at page 7, which runs as follows:- "12. In BINNY LTD. AND ANR. V. V.SADASIVAN, 2005(5) CTC 117:J.T. 2005(7) SC 214, the Supreme Court delineated what would be a private law remedy and a public law remed and that indication of jurisdiction of the High Court under Article 227 of the Constitution is obtaining a public law remedy. In this case, they also referred to GENERAL MANAGER, KISAN SAHKAR CHINI MILLS LIMITED, SULTANPUR, U.P. V. SATRUGHAN NISHAD AND ORS. (cited supra), wherein it was held that the High Court had no jurisdiction to entertain an Application under Article 226 of the Constitution as the mill was engaged in the manufacture and sale of sugar which would not involve any public function. The following extracts are relevant: "19.In VST Industries Ltd. V. Workers' Union, J.T. 2001 (1) SC 36, the very same question came up for consideration. The appellant Company was engaged in the manufacture and sale of cigarettes. A petition was filed by the first respondent under Article 226 of the Constitution seeking a writ of mandamus to treat the members of the respondent Union, who were employees working in the canteen of the appellant's factory, as employees of the https://hcservices.ecourts.gov.in/hcservices/ appellant and for grant of monetary and other consequential benefits. Speaking for the Bench, Rajendra Babu,J. (as then he was), held as follows: (SCC p.305, para7) "7.In DE SMITH, WOOLF AND JOWELL'S JUDICIAL REVIEW OF ADMINISTRATION ACTION, 5th Edn., it is noticed that not all the activities of the private bodies are subject to private law e.g. The activities by private bodies may be governed by the standards of public law when its decisions are subject to duties conferred by statute or when, by virtue of the function it is performing or possibly its dominant position in the market, it is under an implied duty to act in the public interest. By way of illustration, it is noticed that a private company selected to run a prison although motivated by commercial profit should be regarded, at least in relation to some of its activities, as subject to public law because of the nature of the function it is performing. This is because the prisoners, for whose custody and care it is responsible, are in the prison in consequence of an order of the Court, and the purpose and nature of their detention is a matter of public concern and interest. After detailed discussion, the learned authors have summarised the position with the following propositions- (1)The test of whether a body is performing a public function, and is hence amenable to judicial review, may not depend upon the source of its power or whether the body is ostensibly a 'public' or a 'private' body. (2) The principles of judicial review prima facie govern the activities of bodies performing public functions. (3)However, not all decisions taken by bodies in the course of their public functions are the subject- matter of judicial review. In the following two situations judicial review will not normally be appropriate even though the body may be performing a public function: (a) Where some other branch of the law more appropriately governs the dispute between the parties. In such a case, that branch of the law and its remedies should and normally will be applied; and https://hcservices.ecourts.gov.in/hcservices/ (b) Where there is a contract between the litigants. In such a case the express or implied terms of the agreement should normally govern the matter. This reflects the normal approach of English law, namely, that the terms of contract will normally govern the transaction, or other relationship between the parties, rather than the general law. Thus, where a special method of resolving disputes (such as arbitration or resolution by private or domestic tribunals) has been agreed upon by the parties (expressly or by necessary implication), that regime, and not judicial review, will normally govern the dispute." 26. The order of this Court dated 29.07.2008 in W.P.No.12483 of 1999 (G.KALYANARAMAN AND 5 OTHERS V. THE STATE OF TAMIL NADU REP. BY SECRETARY, ANIMAL HUSBANDRY DEPARTMENT AND 2 OTHERS) is relied on the side of the Appellant/Third Respondent, whereby and whereunder at paragraph No.6, it is observed thus: "In one such case, this Court in Surat Packaging (P) Ltd., rep. By its General Manager, M.K.Karwa, S.S.Iyengar Road, Madras 18 Vs. State of Tamil Nadu rep. By Secretary, Finance Department, Madras 9 by judgment dated 17.08.1994 in W.P.Nos.10798 to 10800 of 1994 has gone into the very same issue and held that the Tamil Nadu Co-operative Milk Producers Federation Limited is neither a public sector undertaking nor a State within the meaning of Article 12 of the Constitution of India and the activities of the said Corporation cannot be brought within the