Raymond Woollen Mills Ltd. (Now Known As ... vs Director General (Investigation And ...

2. Brief facts which are necessary to dispose of this appeal are as under:

5. The Commission directed respondent No. 1 [Director General (I&R)] to furnish a copy of the Preliminary Investigation Report on the basis of which the Notice of Enquiry was issued to the appellants.

7. The appellants filed the affidavit of evidence of Pradeep H. Paranandan, Sales Manager of appellant No. 2. The said witness was also cross-examined on behalf of the Director General (I&R).

8. The complainant/informant M/s Roop Milan complained that it was appointed as a retail dealer on 19.4.1982 and that it was getting regular supplies of blazers, suits, safaris and trousers till December 1986 when the appellants stipulated that blazers, suits and safaris would be supplied only if substantial orders were placed for readymade trousers. From the information furnished by the complainant/informant, it transpired that out of 139 items supplied by the appellants, 119 were trousers and the balance 20 were blazers and suits.

9. The complainant in his statement further stated that his dealings with the appellants came to an end in July 1987 when appellant No. 2 compelled him to place an order for trousers along with order for blazers, safaris and suits.

11. The Commission, after evaluating the evidence, observed that 133 trousers were supplied to the complainant/informant in the year 1985-86. However, no record of the order placed with the appellants could be produced, but the complainant/informant stated that he was compelled by the appellants to place substantial order for trousers in order to get supplies of blazers, safaris and suits. The invoices which were produced as part of evidence revealed the quantity of garments supplied by the appellants and undoubtedly, the quantity of trousers was substantial. It was further observed that there was pressure on the dealers to accept higher quantity of trousers than required and when he showed his unwillingness to accept the large quantity of trousers, his dealership was terminated and the security deposit was refunded to him. The Commission arrived at the conclusion that the allegation of tie-up of sales of trousers with other garments supplied by appellant No. 2 appeared to have been fully established.

12. On the basis of the aforementioned complaint, the Commission arrived at the conclusion that the appellants had indulged in restrictive trade practice within the meaning of Sections 2(o)(ii) and 33(1)(b) of the MRTP Act.

20. The evidence of the sole witness produced by the respondent, being Viren Shah, partner of M/s Roop Milan, the complainant retail dealer, would show that even the allegation of `tie up" of sales of "trousers" as a condition for sale of "other garments" like blazers, coats, safaris, suits has not been established. On the contrary, the evidence of the said witness establishes that there was no "tie up", as alleged. In fact, the evidence shows that all readymade garments manufactured by appellant No. 2 were in short supply since it could not expand its manufacturing capacity due to licensing controls. When all items are in demand and are in short supply, there cannot be any question of "tie up" of sales, which is resorted to for the purpose of selling an unwanted item along with an item having high demand.

40. The appellants further contended that, in any event, the evidence in the present case clearly establishes that the complainant firm M/s Roop Milan had itself asked for return of its security deposit from appellant No. 2. which was duly returned and thereafter, there was no dealing between the parties. As such, there can be no case of termination of dealership. The said complainant firm was mainly dealing with the products of other manufacturers and out of its total turnover of Rs. 25 lakhs per annum, its purchases from appellant No. 2 was only to the extent of Rs.50,000 per annum. In these circumstances, the said complainant firm did not desire to continue to deal with the appellants' products and as such sought refund of its security deposit, which was duly made. The relevant extract in this behalf from the evidence of Viren Singh, partner of the complainant firm is reproduced as under:

18. According to the appellants, the allegation of "tie up" of sales is to be considered in the light of the above provisions of the MRTP Act, before any order directing that "such practice shall be discontinued and shall not be repeated," can be passed. Such an order is also referred to as a "cease and desist order". For passing such an order under Section 37 of the MRTP Act, the followings have to be established:

19. According to the appellants, on the basis of the record, none of the above conditions is satisfied in the present case.

45. When the evidence on behalf of the appellants clearly shows that there are several manufacturers including small scale manufactures, the little share of the complainant/informant does not affect the competition in the relevant trade or industry and, accordingly, in these circumstances, to pass any order under Section 38(1)(h) cannot be justified.

47. On consideration of the totality of the facts and circumstances, the appeal is allowed and the impugned order passed by the Commission is accordingly set aside. The Notice of Enquiry is also discharged. In the facts and circumstances of the case, the parties are directed to bear their own costs.