Case: Bajaj Auto Ltd.  Vs. Director General (I and R) and Ors.

application of Section 33(1)(b) are lacking inasmuch as the said letter dated 11.5.1994 neither obliges nor compels the dealer to purchase all the goods as a condition of purchase of other goods nor does it oblige the dealer as a condition of purchaser of any of them to purchase any other goods. The said letter only sets targets, requesting the dealer to gear up for their achievement and answering their expectation and, therefore, the jurisdictional facts for application of Section 33(1)(b) of the MRTP Act are lacking and both the notice and the application are not maintainable in this behalf. 20. The appellant submitted that the jurisdictional facts for applicability of Section 33(1)(f) are lacking inasmuch as the letter dated 7.9.1994 cannot be read in isolation but has to be read with the appointment letter. The relevant portion of Clause `Q of the Dealership Agreement reads as under: You shall not sell our vehicles at higher than our recommended retail prices. You will, however, be free to sell at lower than the recommended retail prices. Taxes and Octroi whenever applicable, may be charged extra. (emphasis supplied) 21. The appellant, Bajaj Auto Ltd. on its own initiative for a fair and wide geographical distribution of Bajaj products and availability of adequate after-sales-service appointed dealers for its products all over the country so as to ensure that Bajaj products and adequate after-sales-service are available throughout the country. It is submitted on behalf of the appellant that there is no territorial restriction or restraint on allocation of geographical area to the dealer. The appointment of dealer at a specific geographical location is to ensure that their services are made available to the consumers. 22. It was also submitted on behalf of the appellant that if the dealer is not appointed at a specific geographical location, the dealer would not be obliged to have in that geographical area the showroom, workshop, service facility and stock of spares. The absence of such facilities etc. would not be and is not in public interest. Appointing a dealer at a geographical location in no way restricts, prevents or distorts competition in any manner, as a customer has a choice of buying any makes he likes or going to any person he likes for servicing or repair of his vehicle. Such appointment also ensures that the dealer who is selling the Bajaj products in a particular geographical location is responsible for adequate after-sales-services to the customers of the vehicle sold by it and to keep them running and in good condition. 23. The appellant also submitted before the Commission that to motivate the dealers for increasing sales, the appellant fixes sales target for the year. Fixing of sales targets do not and cannot mean that the dealer is required or compelled to buy one or the other Bajaj products. The appellant submitted that the setting of target as outlined in the said letter dated 11.5.1994 is not a process of performance appraisal, but is a condition imposed in the agreement, the gateway laid down in Clause h of Section 33(1) of the MRTP Act is squarely applicable as the condition does not directly or indirectly restrict or discourage competition in the two and three wheeler market to any extent at all. 24. It is submitted that, by no stretch of imagination, the appellant has indulged in restrictive trade practice and the provisions of Clauses (b), (f) and (g) of Section 33(1) of the MRTP Act are not attracted. 25. The appellant company placed reliance on the case of Mahindra and Mahindra Ltd. v. Union of India [1979]2SCR1038 , wherein it was held that it is only where a trade practice has the effect, actual or probable, or restricting, lessening or destroying competition that it is liable to be regarded as a restrictive trade practice and in order to arrive at a decision that a trade practice is a restrictive trade practice, the same cannot be decided on any theoretical or a prior reasoning, but by inquiring whether the trade practice has or may have the effect of preventing, distorting or restricting competition. 26. Reliance has also been placed on the case of Paras Brothers (1994) 4 Comp. Law Journal 395, wherein it was held that a restrictive trade practice must have the following elements: i. It should be a trade practice defined in Section 2(o) of the Act. ii. it should have an actual or probable effect of preventing, distorting or restricting competition in some manner. iii. the competition necessarily envisages the same or a similar situation. iv. there should be manipulation of prices. v. there should be unjustified costs or restriction as a result of such manipulation. 27. Reliance has also been placed on the case of L.C. Malhotra v. Rahul Bajaj (1995) 1 Comp. Law Journal 421, in which it was held that even isolated acts should be viewed in the context of the practice of the respondent in relation to the question as to whether the respondent had manipulated the conditions of delivery. 28. In the instant case, neither the notice nor the application even allege that the appellant has ever indulged in or that the alleged trade practice has or may have the effect of preventing, distorting or restricting competition in any manner and in particular it, inter-alia, tends to obstruct the flow of capital or resource into the stream of production or tends to bring about manipulation of prices or conditions of delivery or to affect flow of supplies into the market in such a manner so as to impose unjustified costs and/or restrictions on the consumers of goods in question and therefore ex facie neither notice nor the application are maintainable. 29. Before parting with this case, we deem it appropriate to observe that the Commission must be extremely careful before issuing notices to the parties because it has serious consequences on the reputation and credibility to the activities of those parties. Frivolous notices breed long drawn avoidable litigation before various forums.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]28. In the instant case, neither the notice nor the application even allege that the appellant has ever indulged in or that the alleged trade practice has or may have the effect of preventing, distorting or restricting competition in any manner and in particular it, inter-alia, tends to obstruct the flow of capital or resource into the stream of production or tends to bring about manipulation of prices or conditions of delivery or to affect flow of supplies into the market in such a manner so as to impose unjustified costs and/or restrictions on the consumers of goods in question and therefore ex facie neither notice nor the application are maintainable.29. Before parting with this case, we deem it appropriate to observe that the Commission must be extremely careful before issuing notices to the parties because it has serious consequences on the reputation and credibility to the activities of those parties. Frivolous notices breed long drawn avoidable litigation before various forums.