Full Judgment Text
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CASE NO.:
Appeal (civil) 3640 of 1998
PETITIONER:
M/s. Premier Engineers
RESPONDENT:
M/s. Taj Rubber Industries & another
DATE OF JUDGMENT: 12/08/2005
BENCH:
ASHOK BHAN & S.B. SINHA
JUDGMENT:
J U D G M E N T
BHAN, J.
This appeal by grant of leave is directed
against the order dated 16.5.1997 passed by the
Monopolies and Restrictive Trade Practices
Commission [for short "the MRTP Commission"] in
Compensation Application No. 53 of 1993 wherein it
has allowed the application for compensation under
Section 12-B of the Monopolies and Restrictive Trade
Practices Act, 1960 [for short "the MRTP Act"]
filed by the Respondent No. 1 and has directed the
appellant to refund to the first respondent a sum of
Rs. 1,04,164/- with interest @ 18% per annum plus
compensation of Rs. 5,000/-.
Shortly stated the facts are:
M/s N.A. Rubber Industries through its partner
Shri Nasiruddin, a partner of the applicant firm \026
respondent as well, placed an order in December,
1980 for the supply of one rubber mixing machine of
size 14" x 36". Appellant agreed to supply the
said machine to the respondent by its letter dated
10.12.1980. In terms of acceptance, the appellant
was to supply the said machine for Rs. 55,000/- ex-
factory price by May 1981 and the respondent was to
supply certain input components like electric motor,
reduction gear box and fluid coupling to be fitted
to the machine by the appellant as these input
components were not manufactured by the appellant.
Respondent paid a sum of Rs. 2,000/- for which a
receipt was given by the appellant. Later on a sum
of Rs. 5,000/- was also paid by the respondent on
16.3.1981. N.A. Rubber Industries was closed and
thereafter respondent firm M/s Taj Rubber Industries
was started in its place. On 21.2.1985 the
appellant informed the respondent that the machine
would be ready and supplied within a week. The
respondent thereafter paid Rs. 50,000/- in May 1985
and approached the appellant for taking delivery of
the machine. Due to certain reasons which were
accepted by both the parties the machine could not
be supplied till May 1990. Ultimately, the machine
was supplied in the month of October, 1990.
According to the respondent the aggregate amount of
Rs. 80,184/- was paid by it to the appellant. It
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was alleged that the respondent had paid Rs.
23,980/- for procuring and supplying the electric
motor, fluid coupling, reduction gear box etc..
Respondent filed an application under
Section 12-B of the MRTP Act against the appellant
alleging therein that the machine supplied after a
considerable delay and it was defective, non-
working and old/second hand machine. It was fitted
with old and second hand parts and it has failed to
fit the "oil system" and thereby appellant has
indulged in unfair trade practice under Section 36 A
(1) of the MRTP Act.
Appellant in its detailed reply apart from
replying on merits took five preliminary objections:
1. That since the order was placed on the
appellant in the year 1980 i.e. before the
amendment of MRTP Act relating to unfair
trade practice (Section 36-A) and
compensation (Section 12-B) which were
inserted with effect from 1st August, 1984,
the action was not maintainable as these
amendments do not have retrospective
operation and, therefore, the compensation
application was not maintainable.
2. The order of machine in question was not
placed by the applicant but by the N.A.
Rubber Industries. There being no privity of
contract between the applicant and the
appellant firm, the compensation application
was not maintainable.
3. There is "not even a single averment
disclosing any unfair trade practice."
4. The controversy must be adjudicated upon by a
civil court, as it relates to enforcement or
breach of contract between the parties.
5. An earlier application of the applicant had
been closed by the Commissioner and thus the
present application was barred by the
principle of res judicata.
On merits, the allegations made against the
appellant were controverted and the appellant denied
its liability to compensate the respondent.
The MRTP Commission overruled the preliminary
objections raised by the appellant and came to the
conclusion that the appellant had indulged in unfair
trade practices as there was abnormal and
unconscionable delay in supplying the machine by
almost ten years and that the machine did not work
even for a single day and was suffering from various
defects. Allegations made that old second hand
parts had been fitted in the machine were also
accepted. Based on these findings the MRTP
Commission directed the appellant to refund a sum of
Rs. 1,04,164/- to the respondent with interest at
the rate of Rs. 18% per annum w.e.f. 16.10.1990 upto
the date of its payment. Rs. 5,000/- was awarded by
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way of compensation for mental agony and harassment
suffered by the partner of the respondent firm.
Aggrieved against the order of MRTP Commission
the present appeal has been filed.
Counsels for the parties have been heard at
length.
Counsel appearing for the appellant reiterated
the submissions made on behalf of the appellant that
the order of the MRTP Commission deserve to be set
aside and the application filed by the respondent
under Section 12-B dismissed. Without going into
the preliminary objections which have been raised,
this appeal deserves to be allowed on another point
as in Colgate Palmolive (India) Ltd. Vs. MRTP
Commission & Ors., 2003 (1) SCC 129, in which one of
us [Justice Sinha] was a member, analysed the
Section 36-A of the MRTP Act and observed that a
bare perusal of Section 36-A would clearly indicate
that the following five ingredients are necessary to
constitute an unfair trade practice:
1. There must be a trade practice [within a
meaning of Section 2 (u) of the Monopolies
and Restrictive Trade Practices Act].
2. The trade practice must be employed for the
purpose of promoting the sale, use or supply
of any goods or the provisions of any
services.
3. The trade practice should fall within the
ambit of one or more of the categories
enumerated in clauses (1) to (5) of Section
36-A.
4. The trade practice should cause loss or
injury to the consumers of goods or services.
5. The trade practice under clause (1) should
involve making a ’statement’ whether orally
or in writing or by visible representation."
After having observed so the Court set aside
the order of the MRTP Commission in which the
Commission had held that actual loss and injury are
not the essential ingredients of the unfair trade
practice. It was observed that causation of loss or
injury thus is a sine qua non for invoking the
principles of Section 36-A of the MRTP Act.
In Hindustan Ciba Geigy Vs. Union of India &
Ors., 2003 (1) SCC 134, again Sinha, J. sitting in a
combination of three-Judge Bench held that causation
of loss or injury to the consumer was a must for
attracting the provisions of Section 36-A of the
MRTP Act. The order passed by the Commission was
set aside wherein the Commission had taken the
contrary view. It was observed:
"7. A bare perusal of the
aforementioned provision would
clearly go to show that an unfair
trade practice would mean a trade
practice which for the purpose of
promoting the sale, use or supply
of any goods or for the provision
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of any services, adopts one or
more the practices specified
therein adopted and as a result
thereof loss of injury has been
caused to the consumers of such
goods or services, either by
eliminating or restricting
competition or otherwise. It
would furthermore clearly go to
show that the two conditions
precedent mentioned therein are
required to be read conjunctively
and not disjunctively."
After having said so this Court observed that the
Commission had committed a manifest error in holding
that the actual loss or injury need not be caused to
the consumers.
In the present case, we find that in the
application filed by the applicant/respondent apart
from saying that the defective machinery fitted with
old/second hand parts had been supplied after
considerable delay the respondent did not say a word
regarding the actual loss and injury or a notional
loss caused to the respondent. There is nothing on
the record to suggest that any actual loss or injury
was caused to the respondent. The application filed
by the applicant/respondent was not only cryptic but
lacked in particulars to fall within the definition
of unfair trade practice as defined in Section 36-A
read with Section 2 (u) of the MRTP Act. The MRTP
Commission in its order has not adverted to this
fact and has not recorded a finding as to the any
actual loss or injury caused to the respondent.
Since the respondent in the present case failed
to aver as well as prove that actually any loss or
injury was caused to it which was the sine qua non
for invoking the provisions of Section 36-A, this
appeal is accepted. The MRTP Commission has also
not recorded any finding as to whether any actual
loss or injury or a notional loss was caused to the
respondent. Accordingly, impugned order is set
aside and the appeal is allowed. There shall be no
order as to costs.