Case: M/S. Haridas Exports Vs. All India Flat Glass Mfrs. Asson.

2. Respondent No. 1 is an association of float glass manufacturers in India. During March-April, 1998, complaints were made by the said respondent to the Customs Department, alleging that the Indonesian manufacturers of float glass, in association with Indian importers were allegedly indulging in heavy under-invoicing. The respondents were, however, informed by the Customs Department in Calcutta that if they had any genuine grievance, the same could be made before the Designated Authority, Ministry of Commerce dealing with anti-dumping complaints. On 26th May, 1998, the respondent No. 1 presented a complaint before the Designated Authority. This complaint appears to have been filed before the Anti-Dumping Authority and the same was possibly not pursued by the complainant.3. On 10th September,1998, the respondent No. 1 filed a complaint before the MRTP Commission under Section 33(1)(j), (ja) and Section 36A read with Section 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the ‘MRTPagainst three Indonesian companies alleging that they were manufacturing float glass and were selling the same at predatory prices in India, and were hence resorting to restrictive and unfair trade practices. In the complaint, it was stated that the float glass of Indonesian origin was being exported into India at the CIF price of US $ 155 to 180 PMT. At this price, some float glass had been shipped into India during the period December, 1997, to June, 1998. It was alleged that these sale prices were predatory prices as they were less than not only the cost of production for the product in Indonesia but also the variable cost of production of the product. The complainant gave figures indicating the estimated cost of float glass internationally as well as the cost of production of float glass in India with a view to demonstrate that the Indian manufacturers of float glass would not be able to compete with the price at which the Indonesian manufacturers were presently selling or intending to sell to Indian consumers. On this basis, it was contended that the sale of float glass by the Indonesian manufacturers at the said price of US $ 155 to 180 PMT will restrict, distort and prevent competition by pricing out Indian producers from the market. This would result in lowering the production of the Indian industry and the consequent idle capacity and losses would force the industry to become sick which would lead to its closure which would have a direct impact on the employment in the industry.4. In response to the notice issued to the Indonesian companies, M/s. P.T. Mulia Industries (respondent No. 2 in this appeal) wrote a letter to the MRTP Commission stating that it had never in the past exported float glass to India. The other two respondents did not send any reply to the Commission. The appellant, however, which is the Indian importer of the float glass from Indonesia had filed a caveat before the Commission. It also filed a reply refuting the allegations of the respondent and it was the contention of the appellant that respondent No. 1 was a cartel of Indian manufacturers of float glass which was, in fact, exporting out of India at prices far lower than their own cost of production in India. It was also contended by the appellant herein that the cost of production of float glass was lower in Indonesia than in India and float glass was not being exported to India at predatory prices.5. The application under Section 12-A for interim injunction was heard by the Chairman of the Commission and a second Member. There was a difference of opinion amongst them. While the Chairman vide order dated 18th January, 1999, allowed the application and restrained the Indonesian companies from exporting to India their float glass production at predatory prices, Dr. S. Chakravarthy, the second member dismissed the application, inter alia, holding that there was no evidence to substantiate the plea of predatory pricing at this stage. By order dated 9th February, 2000, the third member who heard the case concurred with the view taken by the Chairman and passed an order of injunction against the Indonesian companies.6. While Civil Appeal No. 2330 of 2000 is filed by the Indian importer who was the caveator before the Commission, Civil Appeal No. 3572 of 2000 has been filed by P.T. Muliaglass which is the subsidiary of P.T. Mulia Industrindo. It is the case of P.T. Muliaglass that the holding company does not carry out any manufacturing operations and that is why it had informed the MRTP Commission that it was not engaged in the export of float glass to India and, therefore, it did not appear before the MRTP Commission. P.T. Mulia Glass which, in fact, manufacturers the float glass being aggrieved by the order of the MRTP Commission has filed the appeal, inter alia, contending that it is not exporting float glass to India at predatoryAppeal No. 3562 ofThe complainant — M/s. Alkali Manufacturers Association of India (AMAI for short) had filed a complaint before the MRTP Commission under Section 33(1)(d), Section 36-A and Section 40 read with Section 2(i) and (o) of the MRTP Act. The complainant Association had 34 members carrying on the business of Soda Ash in India. In the complaint, it was stated that the Soda Ash was being manufactured by six companies in India and was being sold to the Indian consumers at a net price of Rs. 8,190/- to Rs. 8,320/- PMT net of excise. It was alleged that the appellant M/s. American Natural Soda Ash Corporation (hereinafter referred to as ANSAC) consisted of six producers of natural Soda Ash who have joined together to form an Export Cartel by virtue of a Membership Agreement amongst them entered into in America on 8th December, 1983. By this agreement, the six producers had agreed that all export sales by them or by any of their subsidiaries will be made through ANSAC which was set up as a Corporation in accordance with the provisions of the United States Export Trade Act, 1918. It was further alleged in the complaint that ANSAC in an attempt to invade the Indian market and undercut the Indian producers, it sold American Soda Ash to Indian consumers at an unrealistically low price of US $ 132 PMT-CIF. With a view to circumvent the prohibition in Indian law against monopolistic, restrictive and unfair trade practices, a strategy had been adopted by ANSAC by selling American Soda Ash to Indian consumers though the front of one M/s. G. Premjee of Singapore in whose favour the Indian producers had opened letters of credit. According to this complaint, there was a bulk sale of Soda Ash by ANSAC to the Indian consumers through the conduit of M/s. G. Premjee of Singapore. On the basis of these averments, namely, that ANSAC was a Cartel of American Soda Ash Producers and was likely to affect maintenance of prices at reasonable and realistic levels in India and with a view to adversely affect the local production and availability of Soda Ash, the MRTP Commission should enquire against this restrictive and unfair trade practice and grant an ex-parte injunction restraining ANSAC from despatching the goods. On the basis of these allegations, the MRTP Commission on 9th September, 1996 passed an ad-interim injunction, which was subsequently confirmed by it, directing ANSAC not to indulge in the practice of cartelisation by exporting Soda Ash to India in the form of cartel directly or indirectly. The order further stated that it was without prejudice to the final outcome of the said enquiry as well as to the rights of the importers or exporters in the individual capacity to export Soda Ash to India. This order has been affirmed by the Commission byorder of 9th March, 2000.3. While denying that ANSAC was a cartel or that export of Soda Ash of India was violative of any of the provisions of the MRTP Act, ANSAC has submitted in this appeal that the MRTP had no extra-territorial jurisdiction and furthermore in view of the provisions of the anti-dumping law, the MRTP Commission had no jurisdiction to decide the case.4. This appeal was heard along with Civil Appeal No. 2330 of 2000, M/s. Haridas Exports v. All India Float Glass Manufacturers Association. In Haridas Exports case common contentions raised in this appeal regarding jurisdiction of the MRTP Commission and the scope and ambit of the MRTP Act vis-a-vis Anti-Dumping Duty have been dealt with. We now propose to deal with the allegation of export by the appellant, which is alleged to be a cartel, and whether there was justification for granting the injunction.

Reasoning: 39. Under Section 33(1)(j) of the Act, any agreement to sell goods at such prices as would have the effect of eliminating competition or a competitor is regarded as an agreement relating to restrictive trade practice and shall be subject to registration. The Act nowhere states that this agreement should be only in India or between Indian parties. In effect, this section recognizes the ‘effectsnamely, where an agreement results in saleof goods atsuch prices which would have the effect of eliminating competition or a competitor. In the very nature of things, the sale of goods keeping in mind the definition of the wordin Section 2(e) must be of goods imported into India, in the case like the present. But if we replace the wordin Section 33(1)(j) with the definition of41. In other words, where the goods are already in India, then any agreement which has the effect of eliminating competition or a competitor of the sale of those goods existing in India would be a restrictive trade practice and it would be immaterial as to where the agreement takes place in relation to the sale of those goods. Theld be applicable only in relation to those goods which are within the territory of India before its sale referred to in Section 33(1)(j) of the Act. An agreement, which results in sale outside India and the export of the goods to India, even if that sale is at predatory prices, would not fall within the ambit of Section 33(1)(j) of the Act. It is a subsequent agreement of sale of the imported goods, if it has the effect of eliminating competition or a competitor, which would be registerable under Section 33(1)(j) of the Act.42. Even if an agreement is executed outside India or the parties to the agreement are not in India and agreement may not be registerable under Section 33, being an outside India agreement, nevertheless, if any, restrictive trade practice, as a consequence of any such an outside agreement, is carried out in India then the Commission shall have jurisdiction under Section 37(1) in respect of that restrictive trade practice if it comes to the conclusion that the same is prejudicial to the public interest.43. It is possible that persons outside India indulge in such trade practices, not necessarily restricted to the effectuation of prices within India, which have the effect of preventing, distorting or restricting competition in India or gives rise to a restrictive trade practice within India then in respect of that restrictive trade practice, MRTP Commission will have jurisdiction. The Counsel for the respondents is right in submitting that if the effect of restrictive trade practices came to be felt in India because of a part of the trade practice being implemented here the MRTP Commission would have jurisdiction. Thisll clothe the MRTP Commission with jurisdiction to pass an appropriate order even though a transaction, for example, which results in exporting goods to India at predatory price, which was in effect a restrictive trade practice, had been carried out outside the territory of India if the effect of that had resulted in a restrictive trade practice in India. If power is not given to the MRTP Commission to have jurisdiction with regard to that part of trade practice in India which is restrictive in nature then it will mean that persons outside India can continue to indulge in such practices whose adverse effect is felt in India with impugnity. A competition law like the MRTP Act is a mechanism to counter cross border economic terrorism. Therefore, even though such an agreement may enter into outside the territorial jurisdiction of the Commission but if it results in a restrictive trade practice in India then the Commission will have jurisdiction under Section 37 to pass appropriate orders in respect of such restrictive trade practice.The jurisdiction of the MRTP Commission, in our opinion, is not ousted by the Anti-dumping provisions in the Customs Act. The two Acts operate in different fields and have different purposes. The Import Control Act and the Customs Tariff Act are concerned with import of goods into India and the duty which could be imposed on the imported items. Import may be allowed on the basis of an import licence or, depending upon the policy, import may be allowed under OGL Open General Licence - where no specific licence for import is required. Whether to allow import or not and the terms on which an item may be imported is a matter of policy and regulated by law.46. There is in this case no challenge to the import policy allowing import of float glass and even if such a challenge was to be there it would hardly succeed. The grievance of the respondents is that import is being made at predatory prices. The challenge is to the actual import. But allowing such a challenge will amount to giving the MRTP Commission jurisdiction to adjudicate upon the legal validity of the provisions relating to import, which jurisdiction the Commission does not have. It is not a Court with power of judicial review over legislative action. Therefore, it would have no jurisdiction to decide whether the action of the Government in permitting import of float glass even at predatory prices is valid or not. The Commission cannot prohibit import, it is jurisdiction commences after import is completed and any restrictive trade practice takesparty cannot contend before the MRTP Commission that the rate of duty is too high or too low. In fact, such a challenge is hardly likely to succeed in a Court of law and the question of the MRTP Commission having such a jurisdiction does not arise.48. Apart from the rate of duty the value of the goods imported has to be determined for the purpose of levy of duty. The customs authorities are required to determine whether the value of the goods imported has been correctly declared. In case of wrong valuation, the customs authorities can determine the correct value and levy duty thereon. Normally the goods are valued at the price at which they are actually purchased. Then that will be the value at which the duty will be imposed. It is not the case of the respondents that the appellants are guilty of under-valuing the goods imported. It is the low price which has been charged by the Indonesian exporter which is really the object of attack.49. The levy or non-levy of anti-dumping or other duty being a legislative act pursuant to the exercise of powers under the Customs Tariff Act can also not be a subject-matter of judicial review by the MRTP Commission. The two Acts substantially operate in different fields and the following table brings out some of the distinctions between the MRTP Commission and the Anti-dumpingperusal of the above chart indicates that the two statutes and regimes operate in different and distinct spheres and there is no conflict between the two regimes/statutes. Hence, the question of implied repeal of the provisions of Section 33(1)(j) of the MRTP Act, 1969 on account of the provisions of Section 9A of the Customs Tariff Act, 1975 does notit would be incorrect to say that the incorporation of the anti-dumping provisions ousts the jurisdiction of the MRTP Commission to inquire and pass orders, inter alia, with regard restrictive trade practice inthe facts of this case, we are not inclined to agree that such a case is made out. As far as Section 33(1)(j) is concerned, there must be an agreement between the foreign seller and the Indian importer to sell goods at such prices as would have the effect of eliminating competition of a competitor, i.e., here the Indian industry. What seems to have happened here is that the monopolistic Indian undertakings are now having to face competition. The quantum of import in the present case is a small fraction of the total float glass which is manufactured and sold in India. The reduction in prices of the Indian importer is to the benefit of the Indian customer. It is only if there is an agreement between the Indian importer and the foreign seller which has such an effect that the production in India of float glass by efficient Indian industry would have to stop and such stoppage is considered prejudicial to the public interest, can an order under Section 12-A or Section 37 be passed. It is the case of the petitioners that the Indian manufacturers have formed a cartel of their own and are charging high prices because of lack of competition. It is alleged that the Indian manufacturers are making much profits and despite import of float glass having taken place for the last 5-10 years the Indian industry has not suffered. On the other hand, the volume of sales has increased and the profit of the Indian producers not decreased. Under these circumstances, it was contended, the passing of the injunction was wholly uncalled for.In our opinion, the MRTP Commission has no extra territorial jurisdiction. The action of an exporter to India when performed outside India would not be amenable to jurisdiction of the MRTP Commission. The MRTP Commission cannot pass an order determining the export price of an exporter to India or prohibiting him to export to India at a low or predatory price.55. The matter may be examined from another angle. In this case, there is a sale of float glass by the exporter in Indonesia. If the float glass was ready and available, then being ascertained goods the sale would be regarded as having taken place where the goods existed at the time of sale, i.e., in Indonesia. If the glass had to be manufactured and not readily identifiable, then the sale would take place outside India when the goods are appropriated to the contract by the foreign exporter. Here the appropriation would take place in Indonesia when the glass is earmarked and exported to India. In either case the MRTP Commission would have no jurisdiction to stop that sale. If the said sale cannot be stopped and the import policy permits the Indian importer to import on payment of duty then we fail to see what jurisdiction the MRTP Commission can possibly have till a restrictive trade practice takes place after float glass is imported into India.From the aforesaid discussion and reasons, we arrive at the followingAnti-dumping provisions do not per se oust the jurisdiction of the MRTP Commission.(2) The MRTP Commission can, inter alia, take action whenever a Restrictive Trade Practice is carried out in India in respect of imported goods or otherwise.(3) It is only in respect of the Indian leg of the restrictive trade practice, can an order under Section 12-A and/or Section 37 be passed.(4) Under Section 33 of the Act what can be registered is only an agreement in regard to which any party to an agreement carries on business in India [Section 35 Explanation I]. But this does not mean that if an agreement is entered into outside India and which results in a Restrictive Trade Practice in India, the MRTP Commission has no jurisdiction. Thell apply and Section 2(o) read with Section 2(u) and Section 37 gives jurisdiction to the MRTP Commission to pass appropriate orders qua the Restrictive Trade Practice in India. The MRTP Commission, in such a case, may not be able to stop import but there can be order imposing post import restrictions such as, for example, not to sell imported goods in India in such a manner which will be regarded as a restrictive trade practice under Section 37.(5) In Explanation I to Section 35 the use of the wordsbe deemed to be an agreement within the meaning of thisand the time-frame for registration clearly indicates that Section 33 and Section 35 apply only to Indian agreements or agreements in India and, therefore, it became necessary to incorporate Explanation I so as to enlarge the ambit and give extra territorial jurisdiction in relation to those agreements which relate to performance of services in India and any party to that agreement carries on business in India.(6) On the facts of this case, the impugned order passed by the MRTP Commission against the Indonesian exporters cannot be sustained and is set aside.Insofar as Section 33(1)(d) is concerned, the scheme appears to be that every agreement falling under Section 33(1)(a) to (l) is presumed to be one relating to restrictive trade practice and is subject to registration. An agreement falling under Section 33 need not necessarily be one in writing inasmuch as Section 2(a) defines an agreement as including any arrangement or understanding as well. Therefore, if apart from written agreement there is an arrangement or understanding amongst the sellers or the purchasers with regard to the purchase or sale of goods to be only at the prices or on terms or conditions agreed upon amongst them then such an agreement would require registration. Section 33(1)(d) regards an agreement to be one relating to restrictive trade practice if such agreement relates to purchase or sale of goods or to tender for sale or purchase of goods only at prices or on terms or conditions agreed upon amongst the sellers or amongst the purchasers. Such an agreement amongst the sellers or amongst the purchasers relating to purchase or sale or to the prices in respect thereof may be regarded as the formation of a cartel.We need not go into the question whetheranti-dumping provisions in the Customs Act can be an effective remedy against suchcartelisation. But if the cartel caries out Restrictive Trade Practice in India oractions have the effect of a Restrictive Trade Practice being carried out in India, then the MRTP Commission will get jurisdiction to act under Section 37(1) of the MRTP Act.17. We make it clear that we are expressing no opinion as to whether the appellant is a cartel or on the question of predatory prices for the reason that we are satisfied that here no case had been made out by the respondents for the grant of injunction against the appellant. The injunction issued against the appellant was not only against the provisions of Section 14 of the Act but even on facts as alleged no case had really been made out for any order under Section 12-A or Section 37 of the Act more so when no import of Soda Ash into India from the appellant had, in fact, taken place. On the other hand, prima facie the allegation of the appellant that it is the respondents which have formed a cartel and do not welcome any competition does merit consideration, perhaps in another case.