Monopolies and Restrictive Trade Practices Commission
Alkali Manufacturers' Association Of ... vs American Natural Soda Ash Corporation ... on 24 June, 1998
ORDER
S. Chakravarthy, Member
1. The Commission on an application received from Alkali Manufacturers' Association of India ("the complainant", hereafter), has instituted an enquiry for restrictive, unfair and monopolistic trade practices, On September 9, 1996, an ex parte interim injunction was passed by this Commission that American Natural Soda Ash Corporation ("respondent No. 1", hereafter) shall not indulge in the practice of cartelisation by exporting soda ash to India in the farm of cartel, directly or indirectly. Later, after issuing notice to the parties and in particular to respondent No. 1, a very detailed order was passed by the Commission dated June 10, 1997, confirming the said interim injunction order dated September 9, 1996, dismissing the prayer of respondent No. 1 to vacate the injunction order. Among the allegations of the complainant against respondent No. 1 are, inter alia, cartelisation and predatory pricing.
2. The order dated June 10, 1997, was carried in appeal to the Supreme Court which dismissed the same. The order of the Supreme Court is of the date August 19, 1997, in Civil Appeal No. 5325 of 1997, with Civil Appeal No. 5405 of 1997. Thus, the confirmatory order of injunction of this Commission dated June 10, 1997, stands.
3. Through an order dated July 16, 1997, the Commission has allowed the All India Glass Manufacturers Federation ("respondent No. 4", hereafter) as intervener in the proceedings. It was also made clear therein that respondent No. 4's intervention "will be at the stage of evidence/ arguments and not earlier".
4. Now, respondent No. 1 has moved an application without quoting any Section of law, seeking the vacation of the injunction order dated September 9, 1996. The said application of date October 13, 1997, was communicated to the respondents for their reply. On May 1, 1998, respondent No. 1 moved a further application for amending the prayer clauses in the aforesaid application dated October 13, 1997, Respondent No. 4, as intervener has also moved an application dated October 13, 1997, making same or similar averments as respondent No, i and seeking vacation of the said injunction order dated September 9, 1996, of the Commission.
5. This order will dispose of the application of respondent No. 1 dated October 13, 1997, read with application for amendment to the prayer clauses of date May 1, 1998, and the application of respondent No. 4, dated October 13, 1997.
6. Respondent No. 1 in its application dated October 13, 1997, after traversing what transpired in the Commission leading to the injunction orders dated September 9, 1996, and June 10, 1997, has sought the vacation of the injunction order dated September 9, 1996, on the following grounds :
1. In an application filed by respondent No. 4 (the intervener) seeking to vacate the injunction against respondent No. 1, a ground has been advanced that a new enquiry has been initiated against the complainant's three largest members who collectively control 87 per cent, of the Indian soda ash market.
2. The Director-General (Investigation and Registration) after an enquiry has alleged that the complainant's three members, namely, Tata Chemicals Ltd., Birla VXL Limited and Gujarat Heavy Chemicals Limited, are indulging in cartelisation imposing unwarranted increase in prices on the consumers.
3. This new evidence demonstrates that the members of the complainant are "extracting excessive and monopoly profits" by virtue of their cartelisation. Thus "a minor sale" of respondent No. 1's material cannot threaten the complainant's members with irreparable harm or shut down their plants or result in large scale unemployment. The claim of the complainant regarding the threat to its members must be regarded as false.
4. The new evidence demonstrates that the complainant had misrepresented the facts to the Commission when it secured the ex parte injunction order dated September 9, 1996, against respondent No. 1.
5. The complainant having "knowingly made" a "false or misleading statement(s) in relation to a material particular" the injunction granted "without giving notice to the opposite party" needs to be vacated under Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908.
7. Respondent No. 1 supports the application filed by respondent No. 4 for vacation of the injunction order as the complainant had materially misrepresented the facts relating to public interest dimension.
8. Respondent No. 1 has, therefore, prayed that the injunction order dated September 9, 1996, may be vacated or in the alternative respondent No. 1 may be allowed to export soda ash to India of certain quantities (specified in the application) up to the year 2000.
9. Respondent No. 1 subsequently on May 1, 1998, filed an application under Order VI, Rule 17 read with Section 151 of the Code of Civil Procedure, 1908, seeking amendments in respect of the prayer clauses in its original application dated October 13, 1997. According to the said respondent, the amendments are necessary, as the injunction order dated September 9, 1996, has been confirmed by the Commission by its order dated June 10, 1997, and that, therefore, the prayer clause needs to be amended seeking the vacation of the injunction order dated September 9, 1996, as confirmed by the order dated June 10, 1997 (the prayer clause in the original application was for the vacation of the injunction order dated September 9, 1996, and did not seek the vacation of the subsequent confirmatory order dated June 10, 1997). A further amendment sought by respondent No. 1 is that the Commission may suo motu take note of the fraud committed by the complainant and recall the injunction order dated September 9, 1996, as confirmed on June 10, 1997.
10. The complainant has resisted the prayers in the original application of respondent No. 1 dated October 13, 1997, and also the application dated May 1, 1998, seeking amendment to the prayers in the original application, Before narrating the reply of the complainant to respondent No. 1's application dated October 13, 1997, we would like to dispose of the application of respondent No. 1 dated May 1, 1998, seeking amendments to the prayer clauses.
11. Respondent No. 1's reasons in support of the amendment sought are that the injunction order dated September 9, 1996, has been already confirmed by a subsequent order of the Commission dated June 10, 1997, and that as a consequence the prayer clause needs to be amended to specify that respondent No. 1 is praying for the vacation of the injunction order as confirmed subsequently. In other words, respondent No. 1 seeks the vacation, of not just the original injunction order dated September 9, 1996, but seeks the vacation of the injunction of the order dated September 9, 1996, as confirmed on June 10, 1997. The complainant's response is that the order dated September .9, 1996, stands merged into the order dated June 10, 1997, and that, therefore, the application for amendment is an abuse of the indulgence of the Commission.
12. We are not in agreement with the complainant, as the application for amendment filed by respondent No. 1 is only to ensure that a technical objection may not be raised by the complainant at a later stage, that respondent No. 1 did not seek the vacation of the injunction order dated June 10, 1997, confirming the earlier injunction order. A perusal of Order VI, Rule 17 of the Code of Civil Procedure, 1908, will show that the Commission at any stage in the proceedings can allow a party to alter or amend its proceedings in the interest of determining the real questions in controversy between the parties. We are of the view, that, if the prayer clause in the original application had been made by inadvertence or erroneously and if there are no mala fides apparent on the part of respondent No. 1, it would be denial of justice not to permit respondent No. 1 to correct the error (Hundari Bewa v. Keluni Dei, AIR 1984 Orissa 37, at page 38, is in support). In any case as the original injunction order dated September 9, 1996, and the confirmatory order dated June 10, 1997, are practically one and the same, the amendment sought by respondent No. 1 cannot prejudice the complainant. A further amendment sought by respondent No. 1 is to add a prayer that the Commission should suo motu take note of the fraud committed by the complainant and recall the injunction orders. As the main prayer of respondent No. 1 is for recalling the injunction orders, this additional prayer sought now gets subsumed in the main prayer for vacating the injunction orders. There is no need to dwell on this aspect.
13. Now to the reply of the complainant to the application of respondent No. 1 dated October 13, 1997 (as amended by respondent No. 1's application dated May 1, 1998), which is summarised below :
1. The application of respondent No. 1 is misconceived and is yet another attempt to obtain vacation of the injunction order of this Commission, The Hon'ble Supreme Court has upheld the injunction order of the Commission.
2. Respondent No. 1, respondent No. 2 and respondent No. 3 were afforded reasonable opportunities to canvass their arguments in the Commission as well as in the Hon'ble Supreme Court. Having failed to have the injunction orders vacated, the Commission has now been moved with yet another application. Respondent No. 1 should be prevented from reagitating the same issues,
3. Respondent No. 1 has not adduced any evidence in respect of its claim that the complainant has made false averments in the Commission, merely because separate proceedings have been initiated against some of the members of the complainant. Respondent No. 1 has held it to be ipso facto proof of the falsity of averments of the complainant. The attempt of respondent No. 1 is not bona fide.
4. The remedy under the first proviso to Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, is not available to respondent No. 1 or other respondents as nothing has been established that the complainant had made any false averments in the Commission leading to the injunction orders already referred to above. The second proviso to Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, cannot be invoked by lespondent No. 1 as an opportunity has already been given to respondent No. 1 for being heard.
5. The proceedings in the Commission against three members of the complainant have no relevance to the current proceedings. In that case the complainant is not even a party, A notice of enquiry has been issued in the other case against three members of the complainant and this fact cannot give rise to the conclusion that the complainant had misrepresented to the Commission before the impugned orders were passed. Nor does the fact of the issuance of a notice of enquiry in another case constitute a change in circumstances warranting the second proviso to Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, being pressed into service by respondent No. 1. The fact that some members of the complainant are facing an enquiry in the Commission does not give rise to the vacation of the injunction orders.
14. There are other averments of the complainant on the merits of the charges of cartelisation and predatory pricing but they are not relevant for the disposal of the application of respondent No. 1 dated October 13, 1997.
15. We gave a hearing to Shri R. K. Jain, senior advocate, for the complainant and Shri Dushyant Dave, senior advocate, for respondent No. 1.
16. At the outset Shri Dushyant Dave, senior advocate for respondent No. 1, stated that the application of his client, respondent No. 1 dated October 13, 1997, is not a review application under Section 13(2) of the Monopolies and Restrictive Trade Practices Act, 1969. He added that the application may be treated as one under Section 12A(2) of the Act.
17. We have already noted that the Hon'ble Supreme Court in its order dated August 19, 1997, in Civil Appeal No. 5325 of 1997, with Civil Appeal No. 5405 of 1997, had dismissed the appeal filed by respondent No. 1 impugning the injunction order of this Commission. In the light of the said dismissal order of the Supreme Court, there cannot be a reagitation of the same issues which were articulated in the Commission leading to the impugned orders and in the Hon'ble Supreme Court leading to the dismissal of the appeal. Shri Dushyant Dave, senior advocate for respondent No. 1, however, stated during his arguments that the application of his client under Section 12A(2) of the Monopolies and Restrictive Trade Practices Act, 1969, leans on Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, and that he is entitled to press for the vacation of the injunction order as the opposite party namely the complainant has made false and misleading statements in the Commission and as there is also a change in the circumstances. In order to appreciate the proposition of Shri Dushyant Dave, it is desirable to look at the relevant provisions of the Monopolies and Restrictive Trade Practices Act, 1969, and the Code of Civil Procedure, 1908.
Section 12A(2) of the Monopolies and Restrictive Trade Practices Act, 1969 :
"The provisions of Rules 2A to 5 (both inclusive) of Order XXXIX of the First Schedule to the Code of Civil Procedure, 1908 (5 of 1908), shall, as far as may be, apply to a temporary injunction issued by the Commission under this section, as they apply to temporary injunction issued by a civil court, and any reference in any such Rule to a suit shall be construed as a reference to any inquiry before the Commission."
Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908 :
"Any order for an injunction may be discharged, or varied or set aside by the court, on application made thereto by any party dissatisfied with such order :
Provided that if in an application for temporary injunction or in any affidavit supporting such application, a party has knowingly made a false or misleading statement in relation to a material particular and the injunction was granted without giving notice to the opposite party, the court shall vacate the injunction unless, for reasons to be recorded, it considers that it is not necessary so to do in the interests of justice :
Provided further that where an order for injunction has been passed after giving to a party an opportunity of being heard, the order shall not be discharged, varied or set aside on the application of that party except where such discharge, variation or setting aside has been necessitated by a change in the circumstances, or unless the court is satisfied that the order has caused undue hardship to that party." (emphasis added)
18. It follows from the above extracts that where an application has been made under Section 12A(2) of the Monopolies and Restrictive Trade Practices Act, 1969, Order XXXIX, rules 2A to 5 of the Code of Civil Procedure, 1908, will apply. In particular, Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, will apply. For such application, it is necessary for the Commission to be satisfied that the opposite party namely the complainant has knowingly made a false or misleading statement in the Commission before the injunction orders were passed (first proviso to Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908) or that there has been change in the circumstances (second proviso to Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908).
19. A perusal of the application of respondent No, 1 dated October 13, 1997, shows that in para. 12 thereof, reference has been made to expressions in the first proviso namely "knowingly made", "false or misleading statement in relation to a material particular", and "without giving notice to the opposite party". Thus, respondent No. 1 has invoked the first proviso and not the second proviso. However, in para. 10 of its application, respondent No. 1 has referred to "new evidence" which refers to another enquiry instituted in the Commission against three members of the complainant, In a manner of speaking, respondent No. 1 has sought to invoke the second proviso also through its reference to "new evidence".
20. We have, therefore, to determine whether either of the two provisos of Order XXXIX, Rule 4 of the Code of Civil Procedure, 1908, is available to respondent No. 1 for vacating the impugned injunction orders of this Commission.
21. At the outset, we agree with Shri R. K. Jain, senior advocate for the complainant, that the so-called "false or misleading statement" or the so-called "new evidence" has its root in the other enquiry instituted by the Commission against three members of the complainant, namely, Tata Chemicals Ltd., Birla VXL Limited and Gujarat Heavy Chemicals Ltd. In that case, which has the number R.T.P.E. No, 105 of 1995, a notice of enquiry has been issued after a report was received from the Director-General of Investigation and Registration. The complainant is not a respondent or a party in those proceedings. The proceedings are against just three manufacturers of soda ash in India who are members of the complainant. Even granting that the complainant has not disclosed the fact of the pendency of the proceedings in R.T.P.E. No. 105 of 1995, it was not obliged to do so as it is not the charged party nor a respondent therein. Furthermore, as Shri R. K. Jain, senior advocate for the complainant, pointed out, the notice of enquiry in that other case was issued on August 7, 1997, well after the Commission had confirmed its injunction on June 10, 1997. The question of concealment of any material particulars or misrepresentation on the part of the complainant, therefore, does not arise. We agree with Shri R. K. Jain, senior advocate, for the complainant,
22. Shri Dushyant Dave, senior advocate, for respondent No. 1 placed an alternative argument before us to the effect that three members of the complainant are themselves facing an enquiry for charges of cartelisation and that, therefore, the complainant should not be entitled to any relief against respondent No. 1 for similar charges of cartelisation. A number of case laws were cited by Shri Dushyant Dave, senior advocate for respondent No. 1 in support of his arguments. In view of what has been stated earlier, namely that the complainant is not a party in the other proceedings (R. T. P. E. No. 105 of 1995) and that the notice of enquiry in that case was issued after the confirmation of the injunction of this Commission of date June 10, 1997, there is no need to discuss the case laws cited by Shri Dushyant Dave. However, in order to drive home our conclusion, we will refer to a few of them, which in our opinion, are important.
23. Shri Dushyant Dave observed that a party who approached this Commission must come with clean hands and that in the instant case, the complainant without disclosing all the material facts has been disingenous with the Commission. He cited the observations of the Hon'ble Supreme Court in Rajabhai Abdul Rehman Munshi v. Vasudev Dhanjibhai Mody, AIR 1964 SC 345, that a court would be justified to revoke its order if there appears that a party had attempted to over reach or mislead the court by withholding true information which would have a bearing on the question before the court.
24. Thereupon, he cited yet another decision of the Hon'ble Supreme Court in Udaichand v. Shankar Lal, AIR 1978 SC 765, in which the stay was vacated as there was "a mis-statement of a material fact which was of decisive importance in the case". In the said judgment of the Hon'ble Supreme Court, a reference was made to the judgment of the King's Bench in Rex v. Kensington Income-tax Commissioners [1917] 1 KB 486, wherein it was observed that (page 509) :
"It is perfectly well-settled that a person who makes an ex parte application to the court ... is under an obligation to the court to make the fullest possible disclosure of all material facts within his knowledge . . ."
25. Shri Dushyant Dave, senior advocate for respondent No. 1, submitted that an injunction being an equitable relief, the principle "that he who comes into equity must do so with clean hands" would apply.
26. The question is whether the complainant withheld material facts. A material fact is one which if proved would have the effect of establishing or refuting an essential element of a cause of action or defence asserted by the parties and would also affect application of the principle of law to the rights and obligations of the parties. Relevancy is that which conduces to the proof a pertinent hypothesis, which, if sustained would logically influence the issue. We agree with Shri R. K. Jain, senior advocate for the complainant, that proceedings in another matter (R. T. P. E. No. 105 of 1995) wherein the complainant is not even a party cannot be a material fact which is obligatory to be disclosed by his client. Furthermore, if three members of the complainant are charged with the offence of cartelisation, it has nothing to do with the charges of cartelisation against respondent No. 1. Respondent No. 1 cannot escape the consequence of cartelisation even if some of the members of the complainant are accused of cartelisation. The lis in the two cases are different.
27. Shri Dushyant Dave, senior advocate for respondent No. 1, advanced another line of argument that the complainant had perpetrated a fraud on this Commission and drew our attention to the Hon'ble Supreme Court's observations in Indian Bank v. Satyam Fibres (India) Pvt. Ltd, [1996] 5 SCC 550 ; [1998] 92 Comp Cas 149 to the effect that "fraud and justice never dwell together (fraus et jus nunquam cohabitant)" and that "fraud and deceit defend or excuse no man (fraus et dolus nemini patrocinari debent)". He added that the courts have an inherent power to set aside an order obtained by fraud practised upon it.
28. We are unable to appreciate the allegation of respondent No. 1 that any fraud has been practised by the complainant upon this Commission. We have already noted that even the notice of enquiry against the three members of the complainant was issued only after the injunction order confirming the interim injunction was pronounced by the Commission on June 10, 1997. Obviously, even if for some reason, the complainant is held to be obliged to disclose the information of that enquiry, it could have not done so even before the enquiry was instituted.
29. This leads us to the final segment of the arguments advanced by Shri Dushyant Dave, senior advocate for respondent No. 1. He submitted that as the complainant itself is charged with the offence of cartelisation, it is disentitled to the discretionary and equitable relief of the injunction granted by the Commission against respondent No. 1. This argument cannot be sustained, as the complainant is not facing the charge of cartelisation but just three of its members. In support of his argument, Shri Dushyant Dave, senior advocate for respondent No. 1 drew our attention to a decision of the Supreme Court of Illinois in the Leslie E. Keeley v. Frederick B. Hargreaves et al 236 Ill 316, dated October 26, 1908, wherein, it has been observed that :
"A court of equity will not enjoin the fraud or unfair competition of rivals in business in order that a complainant guilty of such misrepresentation may have a monopoiy in deceiving the public."
30. Yet another case he cited was American Thermos Bottle Co. v. W. T. Grant Co. in which the District Court, Massachusetts, observed that ;
"... in pari delicto with the plaintiff, and that in urging wrong doing by the plaintiff, counsel for the defendant by necessary implication condemns his own client. But, in such cases, it is the general public or sound public policy, that is, so to speak, the client of the court. The public has a vital interest in protecting the honest, proper use of trade marks and in preventing the dishonest and misleading use of trade marks. In such a case, the defendant prevails not on its own merits, but because of the demerits of the plaintiffs . . ."
31. Shri R. K. Jain, senior advocate for the complainant, counter argued the above submissions of Shri Dushyant Deve, senior advocate for respondent No. 1 and observed that even assuming that some of the members of the complainant are allegedly a cartel, the remedy sought in preventing a cartel like respondent No. 1 from operating in India is not for the purposes or benefit of the complainant but in furtherance of public interest. If the anti-competitive combination of six American soda ash companies, namely, ANSAC (respondent No. 1), is permitted to operate in India as a cartel, it would irreparably prejudice public interest. The principle of pari delicto has no application whatsoever to the instant case.
32. Pari delicto is a doctrine resting on the Rule that courts will not enforce an invalid contract and that no party can recover in any action where it is necessary for it to prove an illegal contract in order to make out its case. In other words, under this doctrine, a transgressor will not be allowed to profit from his own wrong doing. In the instant case, it is not anybody's case that respondent No. 1 and the complainant are acting in concert and that the complainant had misrepresented the said concert between those two parties. Each charge of cartelisation has its own root, its own steam and its own consequences. The two enquiries namely the instant case and R.T.P.E. No. 105 of 1995, are different in facts and circumstances and are totally distinguishable. At the risk of repetition we would like once again to state that the complainant is not even a party in the other case (R.T.P.E. No. 105 of 1995), but only three of its members. The principle of pari delicto will not apply.
33. In view of the foregoing discussion, we conclude that there is no merit in the application dated October 13, 1997, of respondent No. 1 as modified by its application dated May 1, 1998, seeking vacation of the injunction orders of this Commission dated September 9, 1996, as confirmed by the Commission's order dated June 10, 1997. The confirmatory injunction order dated June 10, 1997, shall stand (the appeals against the injunction orders of this Commission have already been dismissed by the Hon'ble Supreme Court as noted earlier).
34. We have also given consideration to the alternative prayer in the application of respondent No. 1 dated October 13, 1997. The prayer is that during the pendency of the enquiry, respondent No. 1 should be allowed to export soda ash to India "in its present form" of certain quantities up to the year 2000. The very spirit of the injunction order of this Commission is that respondent No. 1 shall not indulge in the practice of cartelisation by exporting soda ash to India in the form of cartel, directly or indirectly. The prayer of respondent No. 1 is that it should be allowed to export soda ash to India in its present form. As we had concluded in our confirmatory injunction order dated June 10, 1997, that prima facie respondent No. 1 is a cartel indulging in the alleged trade practice of cartelisation in so far as the soda ash exports are concerned, we cannot grant the above mentioned alternate prayer of respondent No. 1.
35. Respondent No. 4 as intervener in the case has also prayed for the vacation of the injunction order of this Commission. Shri Dushyant Dave, senior advocate for respondent No. 1, stated at the Bar on May 15, 1998, that his arguments covered the arguments on behalf of respondent as intervener as well. Even though through our order dated July 16, 1997, we had made it clear that the intervention of respondent No. 4 would be only at the stage of evidence/arguments and not earlier, respondent No. 4, having been represented by the senior advocate for respondent No. 1 at the time of arguments, its prayer has also been disposed of by this order.
36. In the premises, the application of respondent No. 1 dated October 13, 1997, as amended by its application dated May 1, 1998, and the application of respondent No. 4 dated October 13, 1997, are all dismissed.