Case: Reckitt Benckiser India Limited Vs. Alekzander Prabhu

(1) The appellant-company, inter alia, manufactures and sells shoe polish in various colours and quantities. On August 19,1997 the appellant company formulated a scheme of giving a free gift of 15 gms tin of dark tan shoe polish to every consumer purchasing one 40 gms tin of black shoe polish. This gift offer scheme was launched in all major cities in September, 1997 and in Bangaloreon9.10.1997.(2) Even before the scheme was launched in Bangalore, a complaint was filed by the respondent who is a resident of Bangalore, before the Monopolies and Restrictive Trade Practices Commission (referred to hereinafter as "the Commission") on 22.2.97. The allegations in the complaint were that the prince of 40 gms tin of dark tan was increased by the appellant from Rs. 16.35 to 17.50 around June,. 1997 and that the free gift which has been sought to be offered was really a devious way of recovering the price already covered in the price of a 40 gms tin. The complaint had been filed under section 10(a)(i) of the Monopolies and Restrictive Trade Practices, Act 1969. In response to the show cause notice, which was issued, the appellant pointed out that the complaint itself was not maintainable as the complainant was not in fact a consumer. It was also pointed out that the complaint was filed well before the scheme was launched or introduced in Bangalore where the complainant resided. On the merits, it was stated that the price of a shoe-polish tin of 40 gms had been increased much prior to the formulation and implementation of the scheme. The increase in price has been necessitated by several circumstances, which were detailed in the affidavit filed by the appellant company before the Commission. It was also pointed out that the price increase carried out by the appellant was in keeping with the market trend and that the same price was being charged for similar products by other manufacturers. It was asserted that the scheme had been formulated as a goodwill measure and no part of the cost of the free gift had been passed on the consumers, nor was the increase in the price of the 40 gms tin of shoe polish inclusive of any part of the cost of the 15 gms tin of dark tan shoe polish. It was given as a free gift. The appellant also annexed several documents to its reply such as invoices showing prices at which 15 gms shoe polish tin had been sold between the period 13.7.96 to 19.10.97: copies of the bill of entries and invoice-cum-challans showing that the increase in the price of paraffin wax was contributing to the increase of the price of shoe-polish; documents showing increase of the salaries being paid to the employees of the appellant and a copy of the survey report by a market survey agency to the effect that from before the period that the gift offer scheme was launched the sale of shoe-polish tins of both sizes, namely 40 gms and 15 gms, had registered an increase as compared to the same period for the previous year. (3) The complainant, in his rejoinder before the commission did not seriously dispute that he was not a consumer. However, the commission persisted with the inquiry by converting the complaint into "a public interest suit". The director general (investigation and registration) was also directed to prosecute the case in public interest. The complainant was also directed to furnish all relevant documents to the director general and to assist the director general in the proceedings. (4) It appears that the complainant took no further interest in the proceedings before the commission and indeed has not appeared before this Court despite several attempts to serve him not personally and by publication. The director general also did not file any affidavit of evidence before the commission nor called any witness in support of the allegations contained in the complaint. The commission, however, found against the appellant in a manner and on grounds, which are unacceptable, (i) the commission proceeded with the matter as if the onus was on the appellant to prove the negative and not on the complainant or the director general, as the case may be, to establish the allegations made against the appellant. As stated in the decision of this Court in H.M.M. Ltd. v. Monopolies and Restrictive Trade Practices Commission1 "It was the director general who made this application and it was for him to establish it. Since he did not, the allegation ought to have been rejected," (ii) The commission appears to have proceeded on the basis that no evidence had been produced by the appellant despite the documents filed by the appellant alongwith its reply to the show cause notice of inquiry. In contradiction to the observation that no evidence had been produced, the commission noted that "Certain invoices were annexed with the respondents reply to the notice of inquiry, the same are not quite legible." In the absence of any document on the part of the complainant or any traverse in regard to the specific statements and details given by the appellant and in the absence of any dispute as to the genuineness of the documents relied upon by the appellant in its reply, the commission should not have rejected the evidence produced by the appellant in the manner it did; and (iii) the conclusion of the commission that the appellants free gift of 15 gms of dark tan tin on every purchase of 40 gms tin of shoe polish was not actually given free of charge but its cost was purely covered by the price increased prior to the launching of the gift scheme in question was illogical and does not appear to be a conclusion which could be rationally arrived at on the basis of the materials on record. (5) It has been pointed out to us by learned counsel appearing on behalf of the appellant that the scheme had in fact ceased to operate in November, 1997 and the stock of free gifts had been liquidated. Nevertheless, the commission apart from issuing an order to the appellant "to cease the aforesaid practice forthwith" also directed the appellant "to desist from adoption of and indulgence in the same or similar objectionable trade practices" in future. It is submitted by learned counsel that it was not open to the commission to issue a blanket order pre-empting the introduction of another scheme without any separate inquiry and assessment of the facts which would be relevant in connection with that scheme. It is not necessary for us to determine this issue particularly when we have held that the decision of the commission is not maintainable on merits.

Decision reasoning: 1[ds]On the merits, it was stated that the price of atin of 40 gms had been increased much prior to the formulation and implementation of the scheme. The increase in price has been necessitated by several circumstances, which were detailed in the affidavit filed by the appellant company before the Commission. It was also pointed out that the price increase carried out by the appellant was in keeping with the market trend and that the same price was being charged for similar products by other manufacturers. It was asserted that the scheme had been formulated as a goodwill measure and no part of the cost of the free gift had been passed on the consumers, nor was the increase in the price of the 40 gms tin of shoe polish inclusive of any part of the cost of the 15 gms tin of dark tan shoe polish. It was given as a freeappellant also annexed several documents to its reply such as invoices showing prices at which 15 gms shoe polish tin had been sold between the period 13.7.96 to 19.10.97: copies of the bill of entries andshowing that the increase in the price of paraffin wax was contributing to the increase of the price ofdocuments showing increase of the salaries being paid to the employees of the appellant and a copy of the survey report by a market survey agency to the effect that from before the period that the gift offer scheme was launched the sale oftins of both sizes, namely 40 gms and 15 gms, had registered an increase as compared to the same period for the previousIt appears that the complainant took no further interest in the proceedings before the commission and indeed has not appeared before this Court despite several attempts to serve him not personally and by publication. The director general also did not file any affidavit of evidence before the commission nor called any witness in support of the allegations contained in the complaint. The commission, however, found against the appellant in a manner and on grounds, which are unacceptable, (i) the commission proceeded with the matter as if the onus was on the appellant to prove the negative and not on the complainant or the director general, as the case may be, to establish the allegations made against theIt has been pointed out to us by learned counsel appearing on behalf of the appellant that the scheme had in fact ceased to operate in November, 1997 and the stock of free gifts had been liquidated. Nevertheless, the commission apart from issuing an order to the appellant "to cease the aforesaid practice forthwith" also directed the appellant "to desist from adoption of and indulgence in the same or similar objectionable trade practices" in future. It is submitted by learned counsel that it was not open to the commission to issue a blanket orderthe introduction of another scheme without any separate inquiry and assessment of the facts which would be relevant in connection with that scheme. It is not necessary for us to determine this issue particularly when we have held that the decision of the commission is not maintainable on merits.