Monopolies and Restrictive Trade Practices Commission
In Re: Godrej And Boyce Mfg. Co. P. Ltd. vs Unknown on 12 October, 1987
ORDER
D.C. Aggarwal, Member
1. An enquiry has been instituted against Godrej and Boyce Mfg. Co. Pvt. Ltd., Bombay under Section 36B(d) read with Section 36A/36D of the Monopolies and Restrictive Trade Practices Act, 1969, and a notice of enquiry was issued to the said manufacturer (hereinafter referred to as "the respondent") on November 27, 1986. The notice of enquiry is concerned mainly with the complaint of one Shri B. M. Gupta of Bombay who purchased a Godrej refrigerator on May 13, 1984. The respondent-company issued a warranty. Under this warranty, the respondent-company is liable to carry out repainting and repairs/replacements of parts. The notice of enquiry says that the refrigerator sold to Mr. B. M. Gupta developed many defects and the respondent-company did not render satisfactory "after sale service". It is by reason of these allegations that Clauses (vii) and (viii) of Section 36A(1) are said to be attracted.
2. The respondent-company challenged the maintainability of the enquiry by a Writ Petition No. 36 of 1987 before the High Court of Bombay. By an order of the High Court of Bombay, the Commission has been directed to dispose of the preliminary issue on or before October 5, 1987. The order of the High Court also says that the respondent-company would file their objections before the Commission to the maintainability of the enquiry proceeding. Accordingly, the respondent-company filed a preliminary objection statement before this Commission. Mr. H. D. Pithawala, advocate for the respondent, and Mr. O. P.Dua, advocate for the Director-General (I&R), have been heard in this respect.
3. In the objection statement, the respondent-company Submits that the Commission has no jurisdiction to issue the notice of enquiry to initiate or continue with the enquiry under the Monopolies and Restrictive Trade Practices Act on the grounds :
Firstly : That the sale of the refrigerator to Mr. Gupta took place before the coming into force of the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984. The Monopolies and Restrictive Trade Practices (Amendment) Act, 1984, came into force on 1st August, 1984, and it had not been given retrospective effect. Therefore, it cannot apply to any transaction which took place before 1st August, 1984.
Secondly : The existence of an unfair trade practice as defined in Section 36A of the Act is a condition precedent to the exercise of jurisdiction by the Commission. The act complained of does not constitute an unfair trade practice. In any case, the facts as disclosed do not make out a case of unfair trade practice.
Thirdly: The allegations in the notice of enquiry are ambiguous, lacking in precision about the nature of the trade practice and the necessary features showing how they constitute an unfair trade practice. According to the respondent, the notice of enquiry does not conform to the principles of natural justice and is, therefore, not valid in law.
4. It may be mentioned that Mr. H. D. Pithawala, advocate, learned counsel for the respondent-company, in the course of the oral submission before me, merely laid stress on the fact that the sale of the refrigerator to Mr. B. N. Gupta was effected on May 13, 1984, and, therefore, the cause of action, if any, occurred before the coming into force of Section 36A relating to unfair trade practices. According to him terminus a quo and terminus ad quem both relate to the time before the coming into force of Section 36A under the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984. This being so, the initiation of enquiry under the provisions of Section 36A of the Act is without jurisdiction inasmuch as otherwise, the Commission would be giving retrospective effect to Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969.
5. In this respect, it may be apposite to advert to the relevant provisions of Sub-section (1) of Section 36A. Under Section 36A, a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any services, adopts practices (reproduced hereunder) will be an unfair trade practice, to wit, the practice of making any statement, whether oral or in writing or by visible representation which-
(i) falsely represents that the goods are of a particular standard, quality, grade, composition, style or model;
(ii) falsely represents that the services are of a particular standard, quality or grade;
(iii) falsely represents any re-built, second-hand, renovated, reconditioned or old goods as new goods ;
(iv) represents that the goods or services have sponsorship, approval, performance, characteristics, accessories, uses or benefits which such goods or services do not have ;
(v) represents that the seller or the supplier has a sponsorship or approval or affiliation which such seller or supplier does not have ;
(vi) makes a false or misleading representation concerning the need for, or the usefulness of, any goods or services ;
(vii) gives to the public any warranty or guarantee of the performance, efficacy or length of life of a product or of any goods that is not based on an adequate or proper test thereof :
Provided that where a defence is raised to the effect that such warranty or guarantee is based on an adequate or a proper test, the burden of proof of such defence shall lie on the person raising such defence ;
(viii) makes to the public a representation in a form that purports to be -
(i) a warranty or guarantee of a product or of any goods or services ; or
(ii) a promise to replace, maintain or repair an Article or any part thereof or to repeat or continue a service until it has achieved a specified result, if such purported warranty or guarantee or promise is materially mis leading or if there is no reasonable prospect that such warranty, guarantee or promise will be carried out;
6. It will show that where a duty or obligation cast upon the respondent-company stemming or flowing from the transaction of sale and purchase extends beyond the date of sale or purchase and thereby occurs during a period of time when the relevant provisions of Section 36A are in operation, I think that that duty or obligation is to be governed by the said provisions. The 12-month warranty period had not come to an end before the enforcement of the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984, on August 2, 1984. Where the duty cast upon the seller gets completed on the date of sale itself or for that matter before August 2, 1984, certainly Section 36A, introduced by the Amendment Act of 1984, would be inapplicable. In the instant case, we are not solely dealing with the false representation about the quality or standard of the product, in which case it could be possible to say that the false or misleading representation which induced the customer to purchase the product was not cognizable on the date of the sale. Any way, since it is not the point in issue, I am not persuaded to give a decisive view of mine on this aspect of the matter. The notice of enquiry just brings into focus the allegation of non-rendering of satisfactory "after-sale service" within the warranty period. In this connection Clause (viii) of Sub-section (1) of Section 36A specifically relates to a representation that purports to be a promise to replace, maintain or repair an Article or any part thereof or to repeat or continue a service until it has achieved a specified result This being so, the cause of action, if at all, it may be a condition precedent, to institute an enquiry will be an event or circumstance which necessitates the fulfilment of a promise to replace or repair an Article or to repeat or continue a service until it has come to a satisfactory result. The event occurred at a point of time after Section 36A came into operation under the Amendment Act of 1984. In the premises, it cannot be said that in issuing this notice of enquiry with the object in view as stated therein, the Commission gives retrospective effect to the Monopolies and Restrictive Trade Practices (Amendment) Act of 1984.
7. On behalf of the Director-General, learned counsel Shri O. P. Dua, advocate, cited State of Bombay v. Vishnu Ramchandra, AIR 1961 SC 307, Bashiruddin Ashraf v. Bihar Subai Sunni Majlis-Awaqf, AIR 1965 SC 1206 and Kapur Chand v. B.S. Grewal, AIR 1965 SC 1491. In State of Bombay v. Vishnu Ramchandra, AIR 1961 SC 307, the question was whether a person convicted for theft on November 16, 1949, could, on the basis of this conviction, be externed outside the area of the District Magistrate's jurisdiction under Section 57 of the Bombay Police Act, 1951. The Bombay Police Act, 1951, came into operation subsequent to the conviction dated November 16, 1949. Under Section 57 of the Bombay Police Act, 1951, any person, who has been convicted under Chapter XII, XVI or XVII of the Indian Penal Code can be externed to ensure protection of the public from the activities of such an undesirable person. It was held that since the externee fulfilled the requisites of Section 57 as being a convicted person, it was not that the Bombay Police Act, 1951, was being applied retrospectively. In Bashiruddin Ashraf v. Bihar Subai Sunni Majlis-Awaqf, AIR 1965 SC 1206, the question was whether the mutawalli, for wilful disobedience of the orders and directions of the Majlis constituted under the Bihar Waqfs Act, 1947, could be removed from office by the Majlis after the Act as amended in 1951 came into force. Prior to the amendment of the Act, the power lay with the District Judge and could be exercised by him on an application from the Majlis. Subsequent to the amendment, the power came to be vested in the Majlis itself. In the wake of an allegation of mismanagement and misappropriation, the Sadr of the Majlis directed the mutawalli to deposit the amount of Rs. 9,682.13 on or before April 2, 1951. Since the mutawalli failed to deposit the amount, the Sadr passed an order on June 28, 1951, removing him from the office. A plea was raised that Bihar Waqfs (Amendment) Act, 1951, was not retrospective in its application and, therefore, the power under the Act by the Majlis could be exercised only in respect of orders and directions of the Majlis given after the date on which the Amended Act came into force and not in respect of orders and directions issued earlier. The Supreme Court held (p. 1209) :
"The amendment, no doubt, conferred jurisdiction upon the Majlis to act prospectively from the date of the amendment, but the power under the amendment could be exercised in respect of orders and directions issued by the Majlis and disobeyed by the mutwalli before the amendment came into force... The enquiry had already commenced before the Majlis and it would have reported to the District Judge for removal of the appellant, but this was unnecessary because the Majlis itself was competent to act. A statute is not necessarily used retrospectively when the power conferred by it is based on conduct anterior to its enactment, if it is clearly intended that the said power must reach back to that conduct"
8. In Kapur Chand v. B.S. Grewal, AIR 1965 SC 1491, the question was of the ejectment of a tenant who failed to pay rent regularly. The case was under the Punjab Security of Land Tenancy Act, 1953. Section 14A was introduced in the Act in the year 1955, which enabled a land owner to apply for the eviction of his tenant on any of the grounds stated in Section 9. Under Section 9(1)(ii), a landlord is competent to eject a tenant if he fails to pay rent regularly without sufficient cause. The tenant had failed to pay rent for the years 1952, 1953 and 1954. Pursuant to the order of the court, the tenant paid the arrears on January 22, 1957, and the balance on June 21, 1957 ; however, he failed to pay rent for the year 1955. The landowner, therefore, made an application on October 10, 1956, under Section 14A(1) for the eviction of the tenant on the ground, inter alia, that he failed to pay rent regularly without sufficient cause. An argument was advanced in the Supreme Court that Section 9(1)(ii) applied prospectively and the conduct of the tenant prior to the enactment of Section 14(A) cannot be taken into account Held (p. 1493) :
"In our opinion, the conduct of the tenant prior to the coming into force of the new Section can be taken into account. No doubt a statute must be applied prospectively. But a statute is not applied retrospectively because a part of the requisites for its action is drawn from a moment of time prior to its passing. The clause, in question, makes a particular conduct the ground for an application for eviction. The necessary condition for the application of Section 9(1)(ii) may commence even before the Act came into force and past conduct, which is as relevant for the Clause as conduct after the coming into force of the Act, cannot be overlooked."
9. It may be mentioned that the same is the principle as has been enunciated in the United Kingdom as is evident from the case-law cited at pages 215 to 218 of Maxwell's Interpretation of Statutes, 12th edition by P. St. J. Langan. A pointed reference can be made to the case of Solicitor's Clerk, In re [1957] 1 WLR 1219 (QB). The clerk was convicted in 1953 on charges of larceny, but the charges did not relate to money or property of his employer or employer's client, and so an order prohibiting solicitors firm employing him could not be made under Section 16 of the Solicitors Act, 1941. The Solicitors (Amendment) Act, 1956, Section 11, amended Section 16 so as to in'clude convictions for larceny irrespective of ownership. It was held that it enabled an order to be made disqualifying him from acting as a solicitor's clerk in future and what happened in the past is the cause or reason for the making of the order, but the order had no retrospective effect.
10. Thus construed, the purchase of the refrigerator in May, 1984, when the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984, had not come into operation merely furnishes a part of the requisites for action and it is significant to note that the promise for repair or replacement of the refrigerator or any part thereof till a satisfactory result was achieved is within the warranty period and the said warranty period had not expired when it came under the ken or glare of Section 36A. The warranty had not exhausted itself nor did the obligations under the warranty cease before the coming into force of the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984. Being, as it did, a continuing breach of obligation imposed by law, there is no force in the plea that in issuing the notice of enquiry, the Commission acted in excess of its jurisdiction and applied Section 36A retrospectively.
11. Mr. H. D. Pithawala did not lay any stress on the other points raised by the respondent-company in their written statement of preliminary objections ; rightly so, because as for any ambiguity or lack of adequacy of facts which allegedly constitute unfair trade practices, the respondent is not debarred from asking for further and better particulars, if so required. The only contention made by learned counsel was that even though comments were called by the Joint-Director (Research) from several consumers, yet only three of them complained against the respondent in the matter of adequacy of "after-sale service" rendered by it. It may be mentioned that under the Monopolies and Restrictive Trade Practices Act, it is not required that a particular number of complaints would be necessary to make out a case of unfair trade practice. Under Section 2(u)(ii) of the Monopolies and Restrictive Trade Practices Act, a single or isolated act of any person in relation to any trade is enough to be characterised as a trade practice. In this respect, it may be mentioned that the Commission thought it appropriate to take cognizance of only that complaint wherein the warranty period did not expire before the coming into force of Section 36A.
12. Learned counsel also referred to the orders of the Commission in UTPE No. 42 of 1984 dated July 3, 1985, and UTPE No. 45 of 1984 dated October 20, 1984, respectively. It may be mentioned that these orders relate to enquiries which were closed before issuing notice of enquiry to the com-plainees. Quite often, considering the grievance to be too trivial, the Commission declines to issue a notice of enquiry on its own knowledge or information. In UTPE No. 42 of 1984, the notice of enquiry was not issued because the warranty period also had expired before the coming into force of the Amendment Act, 1984. In UTPE No. 45 of 1984, the complaint related to an advertisement of August, 1982. It was held that the resultant transaction had taken place in September, 1982, and that the Monopolies and Restrictive Trade Practices (Amendment) Act, 1984, could not be retrospectively applied. So, a reference to the orders in these two UTP enquiries is beside the point.
13. In the result, the preliminary objections raised by learned counsel for the respondent-company are held to be lacking in merit and the notice of enquiry cannot be discharged on the ground that the Commission has no jurisdiction to enquire into it. It is ordered accordingly. I may add that this order does not touch upon the merits of the allegations. Whether the facts brought out in the course of enquiry would of would not make out a case of unfair trade practice, prejudicial to the interest of the consumer, or a particular segment of consumers, needless to say, is a question which has to be adjudicated upon on the basis of evidence adduced and arguments addressed before the Commission.
14. Pronounced in the open court.