Full Judgment Text
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PETITIONER:
HINDUSTAN LEVER LTD.
Vs.
RESPONDENT:
COLGATE PALMOLIVE (I) LTD. & ANR.
DATE OF JUDGMENT: 17/12/1997
BENCH:
S.C. SEN, M. JAGANNADHA RAO.
ACT:
HEADNOTE:
JUDGMENT:
THE 17TH DAY OF DECEMBER, 1997
Present:
Hon’ble Mr.Justice Suhas C.Sen
Hon’ble Mr.Justice M.Jagannadha Rao
Harish N.Salve, Sr.Adv., Rajesh Malhotra, Dalip Kumar
Malhotra, Advs. with him for the appellant
Soli J.Sorabjee, Iqbal Chaqla, Kirit Rawal, Sr. Advs.,
R.Karanjawala, S.Ganesh, Ms, Ruby Ahuja, . Arunabh
Chawdhury, and Ms. Manik Karanjawala, Advs. with them for
the Respondents,
J U D G M E N T
The following Judgment of the Court was delivered:
M. JAGANNADHA RAO,:.
Hindustan Lever Ltd. has filed this Civil Appeal under
Section 55 of the Monopolies and Restrictive Trade Practice
Act. 1969 thereinafter called the Act) against the order of
the Monopolies & Restrictive Trade Practices Commission
thereinafter called the Commission). The order is dated 576
November, 1997 and is passed in Injunction Application No.
336 of 1997 filed in the Main Case No. 405 of 1997.
The two respondents are colgate Palmolive (India) Ltd.
and Miss Pallavi S. Desai. The said respondents were the
complainants 1 and 2 respectively in the main case No. 4054
of 1997 which is pending before the Commission . By virtue
of the impugned order, certain directions in the nature of
temporary injunction have been granted in favour of the
respondents complainants and against the appellant. It is to
be noted further that the Commission., which directed a
panel of experts to give it its onion on the issue
involved, made it clear that the order that was being
passed was a "temporary interim order "be and a final order
on the injunction Application would be passed later after
receiving the opinion at the experts. The Commission said:
" If the parties are agreeable, the
order passed at present may be
treated as a purely temporary
interim order subject to
modification, variation or vacation
after perusing the opinion of the
aforesaid panel of experts".
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We shall state the brief facts and the conclusions pf
the Commission in so far as they are material for the
purposes of this appeal.
The first respondent, Colgate-Palmolive (India) Ltd.
manufactures Colgate Dental Cream. The appellant too has
various brands of tooth paste but we are concerned here with
the New Pepsodent’ toothpaste introduced by the appellant
recently into the market. The appellant had given
advertisement in the print, visual, and boarding media,
claiming that its toothpaste "new Pepsodent" was "102 %
better than the leading toothpaste". The advertisement
contains a "schematic’ picture supposedly of samples of
saliva It depicts on one side of the advertisement a
pictorial representation of the germs in a sample taken
from the mouth of a person hours after brushing with "the
leading toothpaste." And another pictorial representation is
or the germs from a similar sample taken from the mouth of
another person using the "New Pepsodent". The former shows
large number of germs remaining in the sample of salive
where the leading toothpaste is used and the latter shows
almost neglible quantity of germs in the sample of salive
where New Pepsodent’ is used. The advertisement also speaks
of tests conducted at the Hindustan L ever Dental Research
Centre and says that the appellant’s product is based on a
Germ check formula which is twice as effective on germs as
the leading toothpaste and that it was, in fact, 102% better
in fighting germs. In the TV advertisement of the appellant,
two boys are asked the name of the toothpaste with which
they had brushed their teeth in the morning. The
advertisement shows Pepsodent 102% superior in killing germs
which is being used by one of the by. So far as the other
boy is concerned, who is using another toothpaste which is
inferior in killing germs, the lip movements according to
the respondents, indicated that the boy was using "Colgate "
though the voice is muted. Additionally, when this muting is
done there is a sound of the same jingle as is used in the
usual Colgate- advertisement, leaving, according to the
complainants,. doubts in the minds of the viewers that
"pepsodent" was being compared with Colgate.
On these and other allegations, the complaint was filed
by the respondents before the Commission relying upon
Sections 10, 36A and 36B of the Act and in particular upon
Section 36A (viii) and (x) of the Act. The respondents also
filed an Injunction Application 336/1997 for grant of
temporary Injunction under Section 12A if the Act, It was
contended that the appellant was guilty of unfair trade
practice under Section 36A in as much as the appellant
allegedly adopted, for the purpose of promotion sales, use
or supply of its goods, an unfair method or deceptive
practice by making a representation as stated in Section 36A
(viii) and giving false or misleading facts "disparaging"
the goods of the appellant as stated in Section 36A m(x).
The appellant, while defending itself, contended that
there was no unfair trade practice practiced by it under
clause (viii) or (x) of Section 36A and that no case for
grant of temporary Injunction under Section 12A was made
out. The appellant contended that the complainants were
bound to prove that the facts depicted in the advertisement
as to 102% superiority of Pepsodent were false. Unless such
falsity was proved in the I.A. no temporary injunction
could be granted.
The Commission in its order dated 9th/6th November.
1997 after referring to the facts and contentions, held that
the injection based on Sections 36B and 10 as to
maintainability of the complaint was not tenable because the
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Commission was empowered, even to act upon its own knowledge
or information for purpose of inquiry under the Act.
Further, the 2nd complainant, who was a consumer, could rely
upon Sections 10 and 36B. It found that inasmuch as the
overall market share of Colgate was shown to be 59 % in the
second quarter of the year 1997 and the appellants share was
27 % , the reference in the advertisement to a ’leading’
toothpaste must be taken to be a reference to ’Colgate
dental cream of the 1st complainant and this was also
obvious from the use of the word ’the ’ before the word
’leading; in the TV and newspaper advertisements. The TV
advertisement with the Two boys shown alongwith the jingle
was sufficient to identify the leading toothpaste as
Colgate, according to the Commission.
As to the ’anti-bacterial’ superiority, the Commission
stated that the inference was that the appellant was not
merely treating its toothpaste as superior but was treating
Colgate as 102% ’interior’. It was not necessary that there
should be any direct reference about inferiority and it was
sufficient if there was an allusion, hint etc, to that
effect and such a reference prims facie amounted to
’disparagement’ for purposes of Section 36A(X). Adverting to
the contention of the appellant that there would be no
’disparagement;’ if the factual cata relied upon by the
appellant was true, the Commission observed that the
appellant has produced opinions of "certain experts to
controvert the case of Colgate", that Colgate, have also
brought on record certain test-regarts from certains
institutions including one from Haffkine Institute.,
According to the respondents, there was not much difference
between the Pepsodent (old version) and the ’New Pepsodent’
marketed buy the appellant. As the old one was not superior
to Colgate, the new one was also not superior. The
appellants also contended before the Commission that the
protocols adopted for testing the germ-content were not
uniform and that the complainant a protocols were not the
correct ones. Adverting to these protocols., the Commission
referred to the objection of the appellant, as follows:
At this state, it may be noted that
the case of the
applicants/complainant is that
Colgate offered to the respondent
that the test of the concerned
toothpaste products of both colgate
and the respondent should be
carried out by certain experts who
should decide their own protocols
for the puspcse. It appears that
the respondent has not agreed to
it"
Having states as above in regard top the protocols, the
Commission noticed that so far as the claims of 102 %
bacterial superiority was concerned, it was a matter which
required a highly scientific approach and should be decided
by independent experts and it would be hazardous for the
Commission to venture even a prima facie. It then referred
to the voluntary suggestion of the appellant for appointing
a panel of experts. as follows:
" In fact , the respondent has also
volunteered in its reply that this
may be done by a team of experts.
That may be done at the stage of
final hearing. If the parties
agree, it can be done at the
interim stages also, provided each
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side furnishes the names of experts
with their consent to give opinion,
if so desired by the Commission,
within the reasonably specified
time limit..."
Thus, by adverting to the suggestion of the appellant,
and relying on the same the Commission felt that the claims
of superiority of the appellant and the respondent could be
decided by an expert body, which could submit its report in
4 or 5 months. For that purpose each side could suggest the
name of an expert and the Commission would nominate a third
expert. Parties were to give the names in a fortnight, The
commission then stated that thus was a purely temporary
interim order. It said that this was:
"a purely temporary interim order,
subject to modification, variation
or vacation after perusing the
opinion of the panel of experts-."
The Commission therefore held that prima facie the
reference in the appellant advertisements were referable to
Colgate and that because of the claim or anti-bacterial
superiority, a orima facie case for purpose of interim
relief was made. It referred to Colgate Palmolive Pvt. Ltd.
Vs. Rexona Pty. Ltd. (1981) 37 ALR 391 (Australia) where
temporary injunction was granted against making such tall
claims" till the truthfulness of the claim was established
at the trial. The Commission, then went into the question of
’balance of convenience’ and held that the representation
through the media, in particular through the TV was likely
to make consumers take the appellants claim as a true
statement’ If not as the gospel truth’ and that there was
evidence filed by Colgate showing that there was a reduction
of 5% of its sales in August 1997 and 8% in September 1997.
The Commission observed that the appellant was not likely to
suffer much if interim relief was granted and if fact,
appellant would be saving on its advertisement expenses.
On the basis of the above reasoning, the Commission
granted a temporary interim injunction against the appellant
from making any reference ’directly or indirectly in the
appellants advertisement claiming anti-bacterial superiority
and also from making any ’specific quantum’ of anti
bacterial superiority "till its claim of such anti bacterial
superiority is fully established". This would also be for
protecting the Consumer’s interest. In the last paragraph of
the order., the Commission clarified that the injunction
would apply whether the reference to Colgate was by any
allusion or hint.
It is against the above order of temporary interim
injunction that this appeal has been preferred. We have
heard elaborate arguments by Shri Harish Salve for the
appellant and of Sri Soli J. Sorabjee for the 1st
Complainant and of Shri Iqbal Chegla for the 2nd
Complainant.
The point for consideration is whether the
discretionary order of temporary interim injunction granted
buy the Commission p[ending the passing of final order sin
the Injunction application filled by the respondents-
complainants, is liable to be set aside or modified?
From the facts set out above, it is clear that the
Commission has granted a temporary injunction which is of an
’interim nature and the Commission is yet to pass further
orders in the same injunction application, after receipt of
the opinion of the panel of experts. It is also to be noted
that the Commission proposed the appointment of an expert
panel for two reasons. The first reason was that both sides
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were relying upon laboratory tests or opinions of their own
experts. These opinions were conflicting and the Commission
had no machinery of its own to verify the claims of the
parties unless a body of experts could give its opinion to
the Commission. The second reasons according to the
Commission was that the appellant itself volunteered and
suggested that such a panel of experts could be appointed.
There was some argument before us by the learned
counsel for the appellant that appellant had nor agreed for
the panel as stated in the order. In this behalf. we are
satisfied that what the Commission had stated in its order
is correct and is clearly borne out by what the appellant
had stated in its re[ply before the Commission. In fact,
after the Commission had passed its orders on 5/6 November,
1997, the appellant gave an advertisement on 6.11.1997 in
the press to the effect that the Commission had appointed a
panel of experts at the suggestion of the appellant.
It was, however, vehemently argued by Shri Harish Salve
for the appellant that the 1st complainant put forward it
case upon clause (x) of Section 36A and under that clause,
unless it was " proved" by the complainant that the
appellant had " given false or misleading facts disparaging
the goods., service or trade" of the 1st complainant, it
could not be said, even prima facie, " that the appellant
was guilty of any ’unfair trade practice; referred to in
that sub-clause. Learned counsel relied upon Lakhanpal
National Ltd. vs. MRTS Commission _ 1989 (3) SCC 251- which
has also been referred to by the Commission in the impugned
order and to judgements of Courts in UK and USA and to the
principles of law stated in several books, for contending
that unless it was established by the complainant that the
facts stated in the advertisement were ’false’ or untrue’
it could not be said that there was unfair trade practice or
disparagement. Learned counsel also relied upon Section 12A
of the Act which deals with grant of Temporary injunction by
the Commission and contended that the said provisions
requires ’proof of an unfair trade practice’ and also that
such practice was likely to affect prejudicially public
interest or the interests of traders or consumers generally.
On the other hand, it was contended by Sri Soli
Sorabjee for the respondent and by sri Iqbal Chagla for the
2nd respondent that the above contentions are not correct
and that this was an appeal under Section 55 of the Act and
the grounds available in the appeal are the same grounds as
specified in Section 100 C.P.C (before the 1976 Amendment)
and that the discretion exercised by the Commission was
proper in the circumstances of the case, that the claim of
the 1st complainant was not only under Section 36A (k) but
also under Section 36A (vii) and under the latter clause, it
was sufficient for the purpose of proving an unfair trade
practice’ that the appellant had made a representation in a
form which purported to be a warranty or guarantee and which
was materially misleading or that there was no reasonable
prospect that such warranty or guarantee would be carried
out. It was also argued that the conduct of the appellant in
having voluntarily proposed the appointment of a panel of
experts has to be taken into account in deciding whether the
Commission went wrong in directing an expert body. which was
to be nominated as stated in the order, to give its opinion.
On a consideration of the above contentions and on a
careful appraisal of the season given by Commission we are
of the view that the order passed by the Commission was a
purely discretionary order and was also an interim order
p[ending the passing of a final order of temporary
injunction and is not liable to be interfered with in this
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appeal. As stated earlier, a reading of the Commission’s
order snows that it noticed that the appellant was playing
upon opinions of experts to substantiate its claim of 102%
superiority in anti-bacterial action while the respondent,
1st experts to contradict the appellant’s claim. The matter
being technical in nature, if the Commission felt, as
suggested by the appellant in its reply, that a panel of
experts could go into the correctness of rival claims and
give its opinion and if the Commission further said that
after the opinion was given, parties could make their final
submissions in the Injunction application and if the
Commission felt that till then an order of an interim nature
should operate, we do not think that it is a fit case for
interference with such a discretionary order, we do not
therefore propose to go into the merits of the contentions.
Further, any expression of opinion by this Court on merits
at this preliminary stage could cause prejudice to the
claims and contentions of one or other of the parties.
For the aforesaid reasons, This appeal fails and is
dismissed. We may make it clear that we should not be
understood as having stated anything on the merits of
contentions either of the complainants or of the appellant.
In the circumstances of the case, there will be no order as
to costs.