Case ID: 3797

Judgment:
Appeal No. 680 of 1976. From the Judgment and Order dated the 17th March	 1976 of the Monopolies and Restrictive Trade Practices Commis sion	 New Delhi in R.T.P. Enquiry No. 11 of 1974. L.M. Singhvi	 Ravinder Narain	 Talat Ansari and Shri Narain for the Appellant. L.N. Sinha	 Sol.General	 B. Datta and Girish Chandra for Respondents Nos. 1 and 2. G.A. Shah and N. Nettar for Respondent No. 13 The Judgment of the Court was delivered by C.J. This is an appeal under section 55 of the Monop olies & Restrictive Trade Practices Act	 1969 (hereinafter referred to as 'the Act ') against the order and judgment of the Monopolies & Restrictive Trade Practices Commission	 New Delhi (hereinafter referred to as the 'Commission ')	 in proceedings started under section 10(a) (iv) of the Act against the appellant M/s. Hindustan Lever Ltd. (hereinafter referred to as 'the Company ')	 upon information furnished by Bhogilal Manilal Shah of M/s. Shah Manilal Motichand & Sons of Poona (hereinafter referred to as the 'informant '). The informant was a redistribution stockist of the appellant company carrying on business regulated by the terms of an agreement	 known as the redistribution stockists agreement of the company	 found in a standard printed form	 entered into with each stockist. The agreement has 23 terms or clauses in it. The clauses complained of are 5 and 9	 which may be reproduced here: "5.The Redistribution Stockist shall use his best endeavours to maintain and in crease the trade of the Products in the said town and for this purpose he shall at all times keep and 'maintain adequate stocks of the Products in all its packings and he shall carry. out all instructions and directions including those as to the maximum resale price which may from time to time be given by the Company or by the Company 's accredited repre sentatives in respect of the sale or resale or disposal by the Redistribution Stockist of stocks of the Products supplied to him in pursuance of this Agreement. The Redistribution Stockist is prohibited from charging in excess of the maximum resale prices stipulated by the Company	 but he may	 at his discretion	 charge prices lower than the said maximum resale prices. The Redistribution 459 Stockist shall purchase and accept from the Company such stock as the Company shall at its discretion send to the Redistribution Stockist for fulfilling its obligations under this Agreement. In order to ensure equitable and reasonable distribution of stocks at fair prices	 the Redistribution Stockist shall not rebook or in any way convey	 transport or despatch parts of stocks of the products received by him outside the aforesaid town except when he is so expressly directed in writing by the Company. He shall also whenev er so required by the Company make available from the stocks of Company 's merchandise purchased by him such part as the Company directs him. to do for purposes of resale on his behalf by the Company 's employee." It is alleged that the two clauses	 set out above found in identical agreements entered into by the Company with its stockists	 whose number is quite large	 constitute or autho rise restrictions which are unreasonable and illegal. Hence	 it was submitted by the respondents that it must be struck down or modified so as to make the business and trade of the appellant company and its stockists conform to the requirements of law. The Commission had accepted the case brought to its notice by the informant and made the following order : "(1). Clause 5 of the Agreement (Exhib it F) shall stand modified so that the follow ing shall be substituted in place thereof: "5. The Redistribution Stockists shall use his best endeavours to maintain and in crease the trade of the products in the said town and for this purpose he shah at all times keep and maintain adequate stocks of the products in all its packings and he shall carry out the instructions and directions including those as to maximum resale price which may from time to time be given by the Company or by the Company 's accredited repre sentatives in respect of the sale or resale or disposal by the Redistribution Stockist of stocks of the products supplied to him in pursuance of this Agreement. The Redistribu tion Stockist is prohibited from charging in excess of the maximum resale prices stipulated by the Company but he may at his discretion charge prices lower than the said maximum resale prices". "(2). The practices of resale price maintenance and full line forcing to which original clause 5 of the agreement related	 shall be discontinued and shall not be repeat ed. (3) Clause 9 of the Agreement (Exhibit F) shall be void. (4) The practice of area allocation to which clause 9 of the Agreement (Exhibit F) related	 shall be discontinued and shall not be repeated. 460 (5) In all future price circulars or lists to be issued by the Respondents	 it shall be clearly stated that the prices there in mentioned are maximum prices and that prices lower than these prices may be charged. (6) This order shall come into force with effect from 1st July	 1976. On or before the said date	 the Respondents shall intimate all Redistribution Stockists of the modifica tions in Clauses 5 of the Agreement (Exhibit F) and the voidity of clause 9 of the Agree ment (Exhibit F)". There was some argument before us on the question whether proceedings before the Commission were maintainable at the instance of a "complainant" who had reasons to nurse a grievance against the Company and whose motives could be questioned. It was pointed out that the agreement of the company with the informant had been terminated. The version of the informant was that this had been done because his firm had sold Vanaspati at the rate of Rs. 127/ per tin which was below the price of Rs. 129.05 per tin fixed by the Company. The informant stockist said that the price had to be reduced by him to remove public discontent. We think that the motives of the informant are quite irrelevant in such a case. All that the Commission	 and	 on appeal	 this Court has to examine is whether what would undoubtedly be a "practice" by the appellant company	 of introducing the two clauses complained of	 in its agreements with its stockists	 amounted to a restrictive trade practice. The distinction sought to be made .	on behalf of the appellant	 between a practice and clauses in a contract which give a company the power to regulate trade in a manner which may constitute a restriction	 appears to be inconse quential here. We do not think that we can isolate the terms of a contract from the actual practice of the company. It is not the case of the company anywhere that the clauses in its agreement with its stockists are to be treated as deadletter. Its case is that they do not operate as restrictions. The introduction of such clauses in so many agreements meant to regulate relations	 either between a principal and an agent or the seller and the stockist who acquires complete proprietary rights in the stock of goods purchased	 is itself a trade practice. The simple question before us is: Can powers conferred upon the company under such clauses be exercised in such a way as to constitute restrictive trade practices? It is true that the practice of imposing restrictions under such clauses is one thing and the practice of intro ducing such clauses is quite another thing. Both may con stitute separate practices. Nevertheless	 the introduction of such clauses into an agreement between the manufacturer and the seller who purchases and stocks his goods is in itself something practised. It is immaterial that the use of powers under such clauses may constitute another set of practices which depend upon the existence of 'such clauses as sources or springs. Inasmuch as the introduction of clauses in such an agreement is a practice	 taken by itself	 the question whether such a practice amounts to a restric tive trade practice or not could only be decided by consid ering 461 whether the clauses could be so used as to unjustifiably restrict trade? It would be specious reasoning	 in such a case	 to separate the clauses in the agreement from action under the agreement and then to urge that	 as evidence of action under the clauses is meagre or even absent	 the clauses are innocuous and should not be modified or struck down because we are only concerned with what is actually being practised under them or with the use that is being made of such clauses and not with what is permissible or possible under the clauses of the agreement of the kind before us. This argument seems to us to overlook the definition of "restrictive trade practice" contained in section 2(0) of the Act which lays down: "(0) "restrictive trade practice" means a trade practice which has	 or may have	 the effect of preventing distorting or restricting competition in any manner and in particular (i) which tends to obstruct the flow of capital or resources into the stream of pro duction	 or (ii) which tends to bring about manipula tion of prices	 or conditions of delivery or to affect the flow of supplies in the market relating to goods or services in such manner as to impose on the consumers unjustified costs or restrictions." 0 It is clear from a bare perusal of the above mentioned definition that it is not only the actual practice of a restriction under a clause which is struck by the provisions of the Act	 but also a "trade practice" which "may have" the effect of restrictions falling within the mischief" provided for. In other words	 if the introduction of the clause in itself is a trade practice and could be used to prevent	 distort or restrict competition "in any manner" it may be struck down. A trade practice is defined by section 2(u) of the Act as follows : "(u) "trade practice" means any practice relating to the carrying on of any trade	 and includes (i) anything done by any person which controls or affects the price charged by	 or the method of trading of	 any trader or any class of traders. (ii) a single or isolated action of any person in relation to any trade". This definition is wide enough to include any "trade practice" if it is in relation to the carrying on of a trade. It cannot be argued that the introduction of the clauses complained of does not amount to an action which relates to the carrying on of a trade. If the result of that action or what could reasonably flow from it is to restrict trade in the manner indicated	 it will	 undoubted ly	 be struck by the provisions of the Act. Reliance was sought to be placed by learned counsel for the appellant company on a recent decision of this Court in Tata Engineering & Locomotive Co. Ltd. vs The Registrar of the Restrictive 3 502 SCI/77 462 Trade Agreements	 New Delhi(1) (hereinafter referred to as the "Telco" case) where it was held: "The definition of restrictive trade practice iS an exhaustive and not	 an inclusive one. The decision whether trade practice is restrictive or not has to be arrived at by applying the rule of reason and not on the doctrine that any restriction as to area or price will per se be a restrictive trade practice. Every trade agreement restrains or binds persons or places or prices. The ques tion is whether the restraint is such as regulates and thereby promotes competition or whether it is such as may suppress or even destroy competition. To determine this ques tion three matters are to be considered. First	 what facts are peculiar to the business to which the restraint is applied. Second	 what was the condition before and after the restraint was imposed. Third	 what is the nature of the restraint and what is its actual or probable effect". It was also held there: "The question of competition cannot be considered in vacuo or in a doctrinaire spirit. The concept of competition is to be understood in a commer cial sense. Territorial restriction will promote competi tion whereas the removal of territorial restriction would reduce competition. As a result of territorial restriction there is in each part of India open competition among the four manufacturers. If the territorial restriction is removed there will be pockets without any competition in certain parts of India. If the dealer in Kashmir is allowed to sell anywhere in India wealthy cities like Delhi	 Bombay	 Calcutta will buy up trucks allocated for Kashmir and the buyer in Kashmir will not be able to get the trucks. The other three manufacturers whose trucks are not in equal demand will have Kashmir as an open field to them without competition by Telco. Therefore	 competition will be re duced in Kashmir by the successful competition being put out of the field". It is evident that in the Telco case this Court was considering the territorial restrictions placed upon the stockists of Telco in the Light of the special facts and circumstances of that particular case. Each type of busi ness has	 undoubtedly	 its peculiarities	 its own mode of operation	 the special features relating to the market for it	 and the requirements of distribution of particular goods which may be the subject matter of an agreement so as to secure a just and equitable distribution consistently with maintenance of freedom of competition so that prices are not artificially pushed up. In the Telco case	 the subject matter of the agreement was sale of trucks of a type in which the Telco had a monopoly inasmuch as no other firm produced trucks which were of such special quality and specifications. Hence	 there was great demand for these trucks	 which were in short supply. Again	 for the mainte nance and running of those especially designed trucks the manufacturer had to provide especially trained and skilled personnel and special equipment and tools so as to enable stockists to service and repair trucks distributed. Unless the manufacturers were able to impose restrictions upon sales outside the areas in which they had (1) ; 463 established their stockist cum servicing suppliers	 they could not at all render the kind of service they were giving in addition to selling. In other words	 it was a mixed practice for purchase of trucks and provision of specialised service to the consumers	 through the stockists. On the peculiar facts and circumstances of that case	 it was found that the agreements did not	 on the whole	 result in re stricting trade or curtailing competition. The facts of the case before us are entirely different. We are concerned here with a manufacturer of mixed consumer goods of different varieties. The appellant company pro duces dehydrogenated oil (known in the market as "Vanas pati")	 toilet preparations of various kinds such as soaps	 shaving creams	 toothpastes	 and baby milk powder	 and animal feeds. The soaps manufactured by it are undoubtedly the main type of goods supplied. But	 it manufactures other type of goods too. It can	 therefore	 compel stockists to by them	 whether stockists want these other goods or not	 if the terms of the agreement are to be held to be binding and enforceable. The manufacturer is under no obligation to render any service in relation to maintenance of the goods supplied. The whole trade is completely unlike that of manufacture and sale of motor trucks for which the stock ists	 selling to the actual consumers	 had to	 as already pointed out	 also have the services of the manufacturer 's trained personnel for the purposes of maintenance and repair of the vehicles supplied. It would mount to an application of the law in a thoroughly doctrinaire fashion if we were to deduce some general principles	 from the very different facts of the Telco case and attempt to apply them to those of the case now before us. Thus	 the contention advanced on behalf of the appellant	 against a doctrinaire approach in such cases	 really weighs against the appellant company. In the Telco case	 the agreement could not be understood without reference to the actual facts to which they were sought to be applied. Those facts explained the nature of the special agreements for restriction or distribution of areas. In the case before us	 the problem entirely different. This is not a case in which certain terms of the agreement require to be explained by the facts to which they were meant to be applied. It is a Clear case in which the meanings of the clauses are decisive. If these clauses are capable of being so used	 on the meanings which appear unambiguously from them	 as to undoubtedly restrict trade	 the intention to so use them to restrict trade could reason ably be inferred without any difficulty. Otherwise	 why have them ? No oral evidence could be led to deduce their meaning or to vary it in view of the provisions of sections 91 and 92 of the Evidence Act. the principles of which were we think rightly applied by the Commission. The Telco case	 on the other hand	 was one in which extraneous evi dence could be led under section 92 proviso (6)of the Evidence Act which may be set out here with Section 92: "92.When the terms of any such contract	 grant or other disposition of property or any matter required by law to be reduced to the form of a document	 have been proved 464 according to the last section	 no evidence of any oral agreement or statement shah be admit ted	 as between the parties to any such in strument or their representatives in interest	 for the purpose of contradicting	 varying	 adding to or subtracting from	 its terms: Proviso (6) Any fact may be proved which shows in what manner the language of a document is related to existing fact". The principle embodied in section 92(6) of the Evidence Act	 which was applicable in Telco case (supra)	 is not	 for the reasons given above	 applicable in the case now before us. Indeed	 no attempt has been made by reference to any case law apart from the Telco case '(supra)	 which we have dis tinguished above	 to show that extraneous evidence could have been led herein order to apply section 92 proviso (6) of the Evidence Act. In the Telco case this provision was not directly referred to	 but	 we think	 that it could have been applied there. Thus	 we think that the basic difficulty	 placed before us by learned counsel for the appellant	 in the way of examining the plain meaning and effect of clauses 5 and 9 of the Distribution Stockists agreement	 does not exist at all in the case now under consideration. We must	 therefore	 proceed to examine the meanings of these clauses from the point of view of what could be done by the Company under them. If what may be done under these clauses could be a restrictive practice as defined by the Act	 it was enough to vitiate them. A clause having been introduced in an agreement entered into	 as a part of the settled practice of the company	 could be struck by the provisions of section 2(0) of the Act	 set out above	 quite apart from what is actually done under it. We do not think that any other question is really relevant or need be considered by us at all in such a case. It is not a case in which we could be taken through the oral evidence	 as has been attempted to be done	 because that is shut out by an application of provisions of sections 91 and 92 of the Evidence Act if all we need do is to interpret the agreement. We are unable to see why these provisions do not apply here. Not much argument appears to us to be needed to demon strate that the last sentence in paragraph 5 of the above mentioned clause places the redistribution stockist at the mercy of the company which can dictate to him what amounts of various commodities he "shall purchase and accept from the company" in the form of a total lot supplied to him. The company need only send to the redistribution stockists what it "shah at its discretion send to the Redistribution Stockists for fulfilling its obligations under this Agree ment". The meaning and effect are obvious here. The intro duction of the word "shall" does not bind down the exercise of the discretion by reference to any requirements of the consumers in a particular area which the stockists may convey to the company. Hence	 if the stockists want to remain on the list of the redistribution stockists of the company. the stockist is bound to accept and carry out the decision of the company. Even if in view of some other practice adopted by the company 465 a power given in such wide terms was not meant to be exer cised unreasonably	 its presence in the agreement would be a needless surplusage which could	 whenever the company wanted it	 be used to impede freedom of competition and trade. This result was enough to make it quite objectionable. We	 therefore	 think that the Commission was quite right in reframing clause 5 in the way it did. We are unable to find any flaw in the detailed reasons given by the Commission for doing that. The Commission rightly points out that	 among agreements the registration of which is compulsory according to the provisions of Chapter V of the Act is	 under section 33(1)(b) is "any agreement requiring a purchaser of goods	 as a condition of such purchase	 to purchase some other goods". The last part of clause 5	 as we have observed	 clearly makes it necessary 	for the stockist to purchase such goods and in such combination as the company may de cide. Hence	 it would be struck by section 33(1)(b) of the Act. It has not been shown to have been registered under the Act. It is also submitted on behalf of the respondent that clause 5 of the agreement infringes section 33(1)(f) of the Act which requires registration of . "any agreement to sell goods on condi tion that the prices to be charged on resale by the purchaser shall be the prices stipulat ed by the seller unless it is clearly stated that prices lower than those prices may be charged". 0 The Commission held that clause 5 of the agreement meant provision for "prices stipulated" and that it had been so treated by the company in its circulars stating that prices lower than the "maximum resale price stipulated" by the company may be charged. If that was clear	 there was no reason why the company should have attempted to clarify by means of its circulars what	 according to it	 the stockist is free to do under the agreement. Even if the practice of the company by issuing circulars is established	 it does not justify the retention of clause 5 in a form which can be used to compel stockists to act on the company 's behests whether reasonable or not. On the other hand	 it justifies its clarification by an alteration of it in the manner directed by the Commission so as to make the clause covering price regulation also very clear. The order of the Commis sion modifying clause 5 only makes the position crystal clear. Inasmuch as clause 5	 even before deletion of the last sentence of it by the Commission	 expressly gives the stockist the discretion to sell at lower than maximum resale prices stipulated	 the agreement was not struck by section 33(1)(b) of the Act. But	 the deletion of the last sentence was essential to prevent possible misuse of the company 's powers	 by resort to it	 so as to even regulate prices contrary to express provisions found earlier in the clause. Turning now to clause 9 of the agreement	 we think that the Commission was right in rejecting the argument that evidence led on behalf of the company was enough to estab lish that clause 9 fell within one 466 of the "gateways" provided by section 38 of the Act. A power to impose restrictions falling under this provision had to be justified by the company by actual proof of a public interest which could not be better served without it. The submission that section 38 could be applied here amounts at least to a concession that a clause conferring such wide power upon the manufacturer may be so used as to amount to a restrictive practice. It is the practice of putting in such a clause which has to be justified. The power given to the company under clause 9 is very wide. The manufacturer can compel the redistribution stock ists to make available to the company any stocks purchased by the stockist. It also compels the stockist to take the permission of the company for conveying	 transporting	 or despatching parts of stocks of the products received by him outside a specified town except when he is so expressly directed in writing by the company. It directly prevents him from doing so without the company 's permission. If the stockist violates this condition the whole agreement can be revoked by the company so that the stockist loses his right to carry on business under the agreement. If what had to be justified is not how this power is actually used	 but the practice of conferring such powers upon the company by placing the stockist at the mercy of the company	 the evi dence of facts showing how the power is exercised could be relevant only very indirectly. However	 if it could be shown that some facts did exist which make it imperative to confer such a power on the company for the benefit of ' the public	 that may be relevant to establish the existence of a "gateway" under section 38. But	 it could certainly not be used to determine the meaning of a clause for which it is not necessary here to go beyond the language of the clause involved. We are primarily concerned in this case	 as we have repeatedly emphasized	 with the clear meanings of the two clauses. As the Commission pointed out	 it is immaterial that a purchaser from outside may be able to get round clause 9 by purchasing across the counter from the stockist inside a town. The clause itself	 however	 gives to the company an unreasonably wide power of deciding what is actually fair and equitable distribution. The Commission very rightly points out that this is more properly a part of the duty of governmental authorities which may be entrusted with powers of rationing such consumers ' goods if this is found to be necessary in public interest. However	 before any question of reasonableness of a power to ration any goods is entrusted by any method to any person or authority those goods must be shown to be scarce or in Short supply. That was the position in the Telco case (supra). Evidence establishing such a need has not been shown to exist. And	 in any case	 it has to be a very exceptional set of facts indeed which could justify lodging of such a power in the manufacturer. The Commission has dealt with a good deal of evidence to justify its conclusion that the need to justify the lodging of such a power in the company has not been established. We see no reason to disturb it. Under the provisions of section 55 of the Act	 an appeal lies to this Court only on one of the grounds mentioned in section 100 of the 467 Code of Civil Procedure. It is	 therefore	 necessary in all such cases for counsel to clearly formulate and direct our attention to only questions of law which arise so that these may be decided. It is not permissible to go over the whole range of evidence led as was attempted before us. Learned counsel for the appellant when asked by us to formulate the questions of law which arise mentioned the following questions: Firstly	 whether the Commission was right in applying what he described as the "per se" rule as opposed to "the rule of reason". It was submitted that the correct rule which should have been applied is stated in Board of Trade of the City of Chicago vs United States of America	 as follows (at p. 237): "Every agreement concerning trade	 every regulation of trade	 restrains. To bind to restrain	 is of their very essence. The true test of legality is whether the restraint imposed is such as merely regulates and per haps thereby promotes competition	 or whether it is such as may suppress or even destroy competition. To determine that question the Court must ordinarily consider the facts peculiar to the business to which the re straint is applied; its condition before and after the restraint was imposed; the nature of the restraint	 and its effect	 actual or probable. The history of the restraint	 the evil believed to exist	 the reason for adopt ing the particular remedy	 the purpose or end sought to be attained	 are all relevant facts. This is not because a good intention will save an otherwise objectionable regulation	 or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences". We find no objection whatsoever in adopting the rule indi cated above in cases to which it applies. That was a case in which a rule adopted by the Board of Trade of the City of Chicago (supra) prohibiting offers to purchase during the period between the close of the call and the opening of the session on the next business day for sales of wheat	 corn	 oats	 or rye at a price other than at the closing bid	 was challenged. Hence	 questions relating to effects of the rule arose so as to determine its reasonableness. Such questions could not be determined without examining evidence of facts to which the rule was meant to apply and findings as to how it operated. The issue was whether the rule	 having regard to the facts to which it was to be applied	 offended against the Anti trust laws. The Government 's case was thus stated by Mr. Justice Brandeis (at p. 237) : "The Government proved the existence of the rule and described its application and the change in business practice involved. It made no attempt to show that the rule was designed to or that it had the effect of limiting the amount of (1) 62 Law.p. 231.468 grain shipped to Chicago; or of retarding or accelerating shipment; or of raising or depressing prices; or of discriminating against any part of the public; or that it resulted in hardship to anyone. The case was rested upon the bald proposition that a rule or agreement by which men occupying positions of strength in any branch of trade fixed prices at which they could buy or sell during an important part of the business day is an illegal restraint of trade under the Anti trust Law. But the legality of an agree ment or regulation cannot be determined by so simple a test as whether it restrains competi tion". Apparently	 Dr. Singhvi means	 by his plea against the use of a "per se rule"	 nothing more than an assumption	 that a restriction is illegal in itself	 should not be made without examining its impact upon the particular trade involved. As contrasted with any such assumption what the learned counsel describes as "the rule of reason" was stated in the earlier passage quoted above giving the nature of facts to be considered so aS to determine the context in which the restraint was imposed. This Court accepted the correctness	 in the Telco case (supra)	 of the approach that no bald or simple test	 divorced from the context or sur rounding circumstances	 should be adopted in judging the legality of a restraint upon trade. Such a view	 applicable to actual restrictions imposed	 has really nothing to do with the rules relating to interpretation of documents which are used in finding out the effect and intent of words used in a document. It is after a difficulty of interpretation	 if any	 is resolved and a rule or a clause in an agreement is found to have either a clear meaning or to be ambiguous that its effect can be considered. No doubt that effect has to be examined to determine how a restraint actually imposed affects trade. It is one thing to say that the impact of the restraint imposed on trade should be considered with refer ence to the nature of the trade or business to be regulated. It is quite another to say that the effect cannot be gauged	 sometimes	 even by a bare examination of the meaning of a clause giving power to impose restraints apart from other evidence of what its actual effects are or may be. In some cases	 the effect itself is given primarily by the clear meaning of the language used in the clause which is alleged to infringe the law We do not think that any "per se rule"	 if we may use this somewhat quaint expression is adopted whenever a Court determines the meaning and effects of the words of a rule or a clause in an agreement. All that the Court does in such a case is simply to interpret the clause	 the effect of which may become obvious on a bare determina tion of the meaning or may be seen from other evidence too. Where that effect is not obvious	 as we have already indi cated	 evidence may be led to show how the language used is actually applied to the facts to which it was meant to apply. That is also a recognised rule of interpretation. It is the function Of Courts to indicate and explain the vary ing facts and circumstances to which different rules of interpretation may apply. Where meaning and intent of lan guage used is given by the words used nothing more is needed. 469 Furthermore	 the Commission held that	 taking into account the nature of goods or the business to be regulated by the agreement under consideration	 the clauses	 as they stood	 were not permissible. It had applied the rule of reason in arriving at the conclusion that	 upon the facts of a business in commonly used consumer goods of several varie ties	 Which are not shown to be scarce	 clauses under con sideration having the obvious meaning and effect which their language carried with them	 are unreasonable and illegal. We are unable to see how any law laid down in American deci sions	 dealing with Anti trust laws	 or in English cases	 dealing with agreements in restraint of trade	 lay down rules of reason at variance with the ones we are applying here. The rules of reason applicable to a case like the one before us may be simply stated as follows: Firstly	 the meaning of the impugned clause or clauses in an agreement said to offend the law must be determined according to law; secondly	 the possible effects of such a clause upon compe tition in the trade to be regulated must be determined. We think that the Commission had rightly applied these rules and found the clauses to be capable of misuse. We think that this was enough to vitiate the impugned clauses. We would like to make it clear that we are really con cerned only with the law as we find it in our own statute and can only examine evidence in the light of our own law of evidence. We think that the confusion which may be created by using terms such as "per se" rule which could perhaps be more usefully applied to indicate doctrines or to de scribe practices developed under very different sets of circumstances in other countries with statutory provisions couched in language which differs from that before us	 should be avoided so far as possible. Secondly	 it was submitted that we should look at evi dence of what takes place in the trade under consideration rather than clauses 5 and 9 of the agreement we have consid ered. We have already indicated the correct procedure in 'such cases as the one before us. Indeed	 we think that a consideration of extraneous evidence is not required at all when the practice complained of is the introduction of clauses conferring wide powers which may be used to impose restrictions contrary to the Act. In such a case	 the introduction of clauses constitutes the restrictive prac tice. Hence	 their interpretation is all that we are really concerned with here in accordance with our law. Evidence of what is actually practised could only be relevant 1or pur poses other than a determination of the meaning and the effect which follows logically or reasonably from such determination. Thirdly	 it was submitted that	 in holding clause 9 to be invalid	 the purpose of "equitable distribution"	 which imposes a limit on the powers of the company	 was overlooked by the Commission. For the reasons already given	 we do not think that this supposed limitation reasonably restricts the company 's power to decide what to distribute. The company is left entirely to itself to decide what is "equitable distri bution". An interpretation of a document	 according to well established rules	 cannot be dispensed with by labelling it as an application of a "per se" doctrine. We think that the clause	 as it stands	 470 confers too wide a power and has to be struck down wholly as unreasonable on that ground. Fourthly	 our attention was sought to be drawn to the absence of evidence of distortion of competition and the presence of evidence that competition prevails in the market despite these clauses. We have already held such oral evidence to to really unnecessary for judging the possible effects of the clauses. The probability of the effect is only part of the rule of reason to be applied where extrane ous evidence is admissible. In the instant case we are only	 as already indicated above	 concerned with a reasonable and natural interpretation of the clauses of the agreement and their reasonably possible effects. Fifthly	 it was submitted that there was clear evidence of public benefit from an equitable distribution in actual practice so that the requirements of a "gateway" under section 38 were satisfied. We cannot assume public benefit from a mere declaration of intention to exercise a power so as to bene fit the public. We are not satisfied	 on the evidence actually adduced and placed before us	 that this power was necessary so as to benefit the public. Furtherfore	 we cannot reassess evidence. Actual benefit to the public is a question of fact on which find ings cannot be reopened unless some error of law is revealed. No error of law in assessing evidence is disclosed. This is an additional reason for not disturbing the findings of fact recorded by the Commission. Sixthly	 it was submitted that the Commission had ignored the last sentence of clause 9 in interpreting it. We have	 however	 considered it and find that	 far from making clause 9 more acceptable and reasonable	 the last part of it makes it more objectionable and unreasonable inasmuch as it enhances the powers of the Company. Learned counsel for the appellant company has pointed out that the order of the Commission was to come into force from 1 July 1976	 ' so that the appellant company had nearly four months to rewrite the agreements which are over four thousands in number. He prays for extension of time for six months from today for executing fresh agreements. It is not really necessary for us to fix any particular time within which the company will print or get new agreements executed on freshly printed forms in accordance with law. That is a matter for parties themselves to each agreement to decide and work out. ' All that we need make clear is that all agreements which are operative and binding between parties will be so interpreted now as if clause 9 was not there at all and clause 5 was there only in the 	modified form which omits the last sentence from clause 5 as it originally stood. However	 if the company wants	 to complete any for malities for bringing each individual agreement into line with the law as declared by this Court it may do .so; and	 it will file	 within six months from today an affidavit showing that it has done this. The requirement to file 471 such an affidavit showing compliance will ensure that the company has taken due steps to inform each stockist of the correct legal position. The time given for doing this wilt not	 however	 authorise it to act under those parts of the agreement which this Court has declared to be illegal. Subject to the observations made above we uphold the Commissions order and dismiss this appeal with costs. P.B.R. Appeal dismissed.

Summary:
According to section 2(0) of the Monopolies & Restric tive Trade Practices Act a "restrictive trade practice" means inter alia a trade practice which has	 or may have	 the effect of preventing	 distorting or restricting competi tion in any manner. The appellant	 who was a manufacturer of consumer goods such as soaps and toilet preparations	 entered into agreements with redistribution stockists for the wholesale distribution of its products. Clause 5 of the agreement	 inter alia	 provides that a stockist shall keep and maintain adequate stocks and shall carry out instructions and direc tions given by the appellant. He is prohibited from charg ing anything more than the stipulated maximum resale price. The last part of the clause provides that "the redistribu tion stockist shall purchase and accept from the company such stock as the company shall	 at its discretion	 send to the redistribution stockist for fulfilling its obligations under this agreement". Clause 9 prohibits the redistribution stockist from re booking or in any way conveying	 transport ing or despatching parts of stocks of the products received by him outside the town except when he was so expressly directed in writing by the appellant. He shall also	 when ever so required by the appellant	 make available from the stocks such part as the appellant directs him to do. On a complaint made to the Monopolies & Restric tive Trade Practices Commission by one of the stockists the Commission	 after examining cls. 5 and 9 of the impugned agreement	 held that the practice of resale price mainte nance and full line forcing to which the original el. 5 related	 shall be discontinued and shall not be repeated. It directed deletion of the last sentence of cl. 5 and declared cl. 9 as void. Dismissing the appeal to this Court. HELD: The Commission was right in reframing cl. 5 in the way it did. Deletion of the last sentence of cl. 5 was essential to prevent possible misuse of the appellant 's power so as to regulate the prices contrary to the express provisions in the clause. (a) The last part of cl. 5 placed the redistri bution stockist at the mercy of the appellant which could dictate to him what amounts of various commodities he "shall purchase and accept from the company". It also empowered the appellant to allocate send to the redistri bution stockist only what it "shall	 at its discretion	 send to the redistribution stockist for fulfilling its obliga tions" under the agreement. [464 G] (b) The word "shall" used in the clause did not bind down the exercise of the appellant 's discretion by reference to any requirements of the consumers in a particu lar area in which the stockist might sell. The stockist was bound to accept and carry out the appellant 's decisions. [464 H] 2(a) The contention that though the clauses gave power to the appellant to regulate trade	 in practice they did not operate as restrictions	 is not well founded. It is not possible to isolate the terms of a contract from the practice. The appellant did not intend that the clauses in the agreement would be treated as 456 dead letter. Although the practice of imposing restrictions under such clauses and the practice of introducing such clauses are separate practices	 introduction of a clause like cl. 5 is itself a trade practice. Moreover	 even if the power given in such wide terms was not meant to be exercised unreasonably	 its presence in the agreement was a needless surplusage which could be used to impede freedom of competition and trade and this made it objectionable. [465 A] (b) Inasmuch as the introduction of clauses in an agree ment taken by itself	 is a practice it would be specious reasoning to separate the clauses in the agreement from action under the agreement and then urge that the clauses are innocuous and should not be modified. [460 H; 461 A] 3. From the definition of "restrictive trade practice" it is clear that if the introduction of the clause in itself is a trade practice and could be used to prevent	 distort or restrict competition "in any manner"	 it could be struck down. The definition of "trade practice" is wide enough to include any "trade practice" if it is in relation to the carrying on of a trade. If the result of introduc tion of a clause is to restrict trade it would be struck by the provisions of the Act. [461 E G] 4(a) Each type of business has its peculiarities	 its own mode of operation	 the special features relating to the market for it and the requirements of distribution of par ticular goods	 to secure a just and equitable distribution consistently with the maintenance of freedom of competition so that prices are not artificially pushed up. [462 G] (b) The Telco case is distinguishable from the present on the ground that in that case the manufacturer who had the monopoly of special quality trucks	 had to provide specially trained and skilled personnel with special equipment and tools for their maintenance and running. Therefore	 the agreements did not restrict trade or curtail competi tion. [462 H] (c) In the instant case	 the appellant could compel the stockist to buy the goods manufactured by it irrespective of whether the stockist wanted the goods or not. The appel lant was under no obligation to render any service for the maintenance of the goods supplied. Secondly	 the present is not a case in which the terms of the agreement were required to be explained by the facts to which they were meant to be applied. [463 C D] Tata Engineering & Locomotive Co.	 Ltd. vs The Registrar of Restrictive Trade Agreements ; distin guished. If it was clear from the agreement that prices lower than the "maximum re sale price stipulated" might be charged by the stockist	 then	 there was no reason why it was necessary to clarify by circulars	 what the stockist was free to do under the agreement. Even if the appellant 's practice of issuing circulars was established	 it did not justify retention of cl. 5 in a form which could be used to compel the stockist to act at the appellant 's behests. The last part of cl. 5 made it necessary for the stockist to purchase such goods and in such combination as the appellant might decide. Hence it would be struck by section 33(1)(b) of the Act. [465 C] (b) Inasmuch as. the original el. 5 gave the stockist the discretion to sell at lower than maximum resale prices the agreement was not struck by section 33 (1 ) (b). But	 the deletion of the sentence was essential to prevent possible misuse of the appellant 's power by resort to it. [465 G] The Commission was justified in declaring cl. 9 as void and inoperative. [465 H] 7(a) The power to impose restrictions falling under section 38 had to be justified by the appellant by actual proof of public interest which could not be better served without it [466 A]. (b) Clause 9 gave the appellant an unreasonably wide power of deciding what is actually fair and equitable distribution which is more a part of the duty of governmen tal authorities entrusted with powers of rationing such consumer goods in public interest. Before any question of reasonableness of a power to 457 ration any goods is entrusted to any person or authority those goods must be shown to be scarce or in short supply and evidence establishing such a need has not been shown to exist in this case. [466 F G] (c) The appellant was wrong in its contention that in holding cl. 9 to be invalid	 the purpose of "equitable distribution" was overlooked by the Commission. This sup posed limitation did not restrict the appellant 's power to decide what to distribute. The appellant was left to itself to decide what is "equitable distribution". The clause conferred too wide a power and is unreasonable. [469 H] 9. Under section 55 an appeal lies to the Supreme Court only on one of the grounds mentioned in section 100	 C.P.C. It is necessary for the parties to formulate questions of law that arise for decision. [467 A] 10(a) The plea against use of "per se" rule referred to by the appellant means that on the assumption that a restriction is illegal in itself should not be made without examining its impact upon the particular trade involved. On the other hand the "rule of reason" envisages consideration of facts of each case so as to determine the context in which the restraint was imposed. [468 C] Board of Trade of the City of Chicago vs United States of America (b) In Telco case this Court accepted the correctness of the approach that no bald or simple test should be adopted in judging the legality of a restraint upon trade. Such a view has nothing to do with rules _relating to inter pretation of documents used in finding out the effect and intent of words used in a document. Whenever a court deter mines the meaning and effect of the words of a rule or a clause in an agreement it does not adopt what is termed as "per se" rule. All that the court does in such a case is to interpret the clause	 the effect of which may become obvious on a bare determination of the meaning or may be seen from other evidence. Where that effect is not obvious	 evidence may be led to show how the language used is actually applied to the facts to which it was meant to apply. [468 D F] In the instant case	 the Commission has correctly ar rived at the conclusion that the clauses were unreasonable and illegal after taking into account the relevant fac tors. The rules of reason applicable to a case like the present are (i) the meaning of the impugned clause or clauses in an agreement must be determined according to law and (ii) the possible effects of such a clause upon competition in the trade to be regulated must be determined. [469 B C] (c) Consideration of extraneous evidence is not required at all when the practice complained of is the introduction of clauses conferring wide powers	 Which may be used to impose restrictions contrary to the Act. In such a case the introduction of clauses constitute restrictive practice. Evidence of what is actually practised could only be rele vant for purposes other than a determination of the meaning and the effect which follows logically or reasonably from such determination. [469 F G] (d) No oral evidence could be led to adduce the meaning of the clauses in the agreement in view of sections 91 and 92 of the Evidence Act. Section 92 proviso (6) is not applicable to the present case. [464 C] (e) It is unnecessary to admit extraneous evidence as to the absence of distortion of competition. The probability of the effect is only part of the rule of reason to be applied where extraneous evidence is admissible. [470 B] (f) It is not possible to assume public benefit from a mere declaration of intention to exercise a power so as to benefit the public. On the evidence adduced it was not shown that this power was necessary so as to benefit the public. [470 D] (g) Actual benefit to the public is a question of fact on which findings cannot be reopened unless some error of law is revealed. No error of law in assessing evidence was disclosed. E] 458 (h) The confusion which may be created by using such terms as "per rule which could be applied to describe prac tices developed in other countries with different statutory provisions	 should be avoided. [469 D E] 10. Proceedings before the Commission ' are maintainable at the instance of a complainant whose motives in making the complaint are quite irrelevant. All that the Commission	 and	 on appeal	 this Court	 has to examine is whether a practice by a company of introducing clauses complained of in the agreements with the stockists	 amounted to a restric tive trade practice. [460 D]