Monopolies and Restrictive Trade Practices Commission
Ajmer Pratap Singh vs Orient General Industries Ltd. And Ors. on 16 March, 1993
ORDER
A.N. Varma, Chairman
1. By this order we are disposing of the injunction application in an enquiry which has been initiated upon the complaint of one Shri Ajmer Pratap Singh, who claims to be a consumer of the fan in question. The complainant approached this Commission with a complaint purporting to be under Section 36B(a) read with Section 36A(3)(a) and (b) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as "the Act").
2. The complainant assails the validity of a gift scheme introduced by Orient General Industries Ltd. ("Orient" for short) arrayed as the first respondent in the complaint and the injunction application. The case of the complainant is that Orient introduced a gift scheme on November 21, 1992, called "Orient fans free gift scheme". Under the scheme, on purchase of an Orient fan manufactured by the sixth respondent, the purchaser would get a free gift coupon offering 555 prizes including a Contessa car and an Ambassador car apart from scooters, VCRs, refrigerators, etc. The case of the complainant is that the scheme is directly hit by Clauses (a) and (b) of Section 36A(3) of the Act inasmuch as the scheme was intended to allure customers not because of the standard and quality of the fan but purely because of the attractive prizes offered under the scheme. It is further stated that the price lists issued by the fifth respondent, who is a distributor for Orient fans, would indicate that the prices of the fans were increased just before the commencement of the scheme and it continued to show an upward trend throughout the period that the scheme has been in operation as on the date of the filing of the complaint. It is also the case of the complainant that the cost of the gifts and prizes offered under the scheme is covered by the amount charged by the respondents in the transaction as a whole, whereas the impression that is being sought to be created by the impugned scheme is that the prizes or gifts are being offered free of charge.
3. On these facts, it is claimed that the impugned gift scheme and the contest clearly attracts Clauses (a) and (b) of Section 36A(3) of the Act. Along with the complaint, the complainant also filed an injunction application under Section 12A of the Act. After hearing learned counsel for the complainant and perusing the complaint and the injunction application, the Commission issued a notice of enquiry to the respondents under Clauses (a) and (b) of Section 36A(3) of the Act. On the injunction application, the Commission simply issued notices to the respondents and fixed a date.
4. In response to that notice, the respondents have entered appearance and filed a consolidated reply. Thereupon, we heard learned counsel for the parties in the injunction matter. Both sides addressed us on the usual two issues that arise for consideration in matters of grant of injunction, namely, (1) whether or not prima facie case exists ; and (2) on which side does the balance of convenience tilt.
5. The issue of prima facie case need not detain us as, on being satisfied at the very threshold that the impugned contest does apparently attract Clause (a) and, possibly, Clause (b) also of Section 36A(3) of the Act, the Commission has already issued notice of enquiry to the respondents under both these clauses.
6. So far as the applicability of Clause (a) of Section 36A(3) of the Act is concerned. Dr. Singhvi fairly conceded that the matter stands concluded by authoritative pronouncements of this Commission including the Full Bench decision in Colgate Palmolive's case [1991] 72 Comp Cas 80. He, however, vehemently questioned the correctness of the view expressed in that case and submitted, inter alia, that most of the orders passed by the Commission based on Colgate Palmolive's case [1991] 72 Comp Cas 80 have been ordered to be stayed by the High Court of Delhi.
7. The main thrust of Dr. Singhvi's arguments was directed at Clause (b) of Section 36A(3) of the Act. He took us extensively through the pleas raised by the respondent in their reply and contended that on the material furnished by the complainant, Clause (b) cannot at all be attracted to the present case. The entire cost of the prize scheme has been borne by the respondent alone. Indeed before launching the scheme, the respondent had obtained the approval of the Government of Gujarat. In its application, the respondent-company had offered a clear undertaking that the entire cost of the scheme shall be borne by the company alone and that the company shall not raise the prices of the fans either before the introduction of the scheme or even during the period and that in any case the cost of the scheme will not be realised from the consumers in any manner. The respondent-company denies that it has increased the prices of the fans during the scheme. The marginal increase effected by some of the dealers of the respondent was, it is alleged, a perfectly normal seasonal phenomenon prevalent in the entire industry of fans. The increase was due to withdrawal of a part of the seasonal discount offered as per the trade practice in that industry. In any case, even if instead of introducing the said scheme, the prices of the fans were reduced to the extent of expenses likely to be incurred on the scheme, which works out to Rs.7.50 lakhs, the reduction in the price would only have been of the order of Rs. 2.50 per fan, i.e., below half per cent, of the price which would have been totally negligible. The consumers have, therefore, not suffered in the slightest degree by the impugned prize scheme.
8. Learned counsel for the respondent also submitted that the award of prizes out of profits of the respondent-company cannot be said to affect the competition in the market adversely.
9. We do not propose to express any concluded opinion for the present on the issue whether Clause (b) of Section 36A(3) of the Act applies to the facts of the present case as we have already issued notice of enquiry under this provision also and the matter will be considered at length in the enquiry.
10. This brings us to the issue of balance of convenience. The scheme admittedly commenced as far back as November 21, 1992. It has been in operation for over three months now. It was initially to terminate on January 31, 1993. Subsequently, it is stated by the respondents, that due to political disturbances in the country beginning with the Ayodhya episode on December 6, 1992, and followed by the riots in various parts of the country, the respondent-company got the scheme extended till March 31, 1993, with the approval of the Gujarat Government. It is said that there are more than 4,000 dealers of the respondent-company spread throughout the country which necessitated extension of the date from January 31, 1993, to March 31, 1993. The scheme has, therefore, all but run its course and there now remain just two weeks for its termination. The complainant came on the scene only on February 18, 1993, i.e., more than three months after the commencement of the scheme. We think that it will be unfair to the majority of its consumers who have participated in the scheme to suspend it at its fag end and at a time when they may be looking forward to the draw and the prizes which are to be distributed.
11. It is significant that the complainant himself has pleaded that because the respondent-company has not been mentioning the date on which the scheme is to end in its advertisements, more and more consumers would be participating in the scheme with the consequent diminution of the chances of the complainant and others like him who have participated in the scheme so far of getting prizes. The same logic applies against the complainant too when he asks us to restrain the respondents from distributing the prizes to the winners to be chosen by a draw of lots or lottery or otherwise. It is difficult to understand the psychology or the logic why the lucky ones should be indefinitely kept deprived of the prizes. It is not possible to understand how keeping the lucky consumers deprived of the prizes would serve the public interest or the interest of the complainant or other consumers.
12. We are already of the view that now that the prize scheme has almost come to an end, it would be unjust and unfair and indeed contrary to public interest to hold up the distribution of prizes or even to suspend the scheme thereby exposing the huge majority of consumers who have already participated in the scheme to unending suspense.
13. Mr. S. S. Kumar, learned counsel for the complainant, however, vehemently contended that the suspension of the scheme even at this stage would at least prevent further risk to the consumers who are being lured by the dazzling prizes offered by the scheme. The argument is indeed persuasive but on a balance, we think that the interest of the large majority of the consumers who have already participated in the scheme would clearly outweigh the remote possibility of prospective buyers being allured by the prizes offered under the scheme, that is, being misled into buying the fans not because of their quality and reputation but solely because of the prizes offered.
14. In this connection, it should not be forgotten that Orient fans have been in the market for now over 40 years as claimed by the respondents. Their contention that their fans have come to acquire a certain reputation for efficiency and that, therefore, their fans are bought because of that consideration and not merely for the prizes offered, cannot be rejected out of hand.
15. On a consideration of the entire facts and circumstances, therefore, we are not satisfied that this is a fit case in which the impugned scheme should be stayed during the pendency of the enquiry. We may add that Mr. S. S. Kumar, learned counsel for the complainant, has also invited our attention to several decisions of this Commission on the interpretation and scope of enquiry under Section 36A(3)(a) and (b) of the Act and submitted that the scheme under challenge is inherently such as attracts both these provisions. We, however, consider it unnecessary to dilate on this aspect as we have already issued notice of enquiry under both these provisions. We are, however, of the view that in the facts and circumstances of this case an ad interim injunction in terms prayed for ought not to be granted in this case. We do, however, think that the scheme should not be permitted to be continued beyond March 31, 1993. Indeed, Dr. Singhvi had himself offered and stated before us that the respondents shall not get the date extended beyond March 31, 1993. In this view, we issue a limited injunction that the respondent shall not extend the prize scheme beyond March 31, 1993. With these directions, the injunction application stands disposed of.