Monopolies and Restrictive Trade Practices Commission
Director-General Of Investigation And ... vs Manjog Builders on 9 June, 1987
Equivalent citations: [1987]62COMPCAS823(NULL)
ORDER
G.R. Luthra, J. (Chairman)
1. At present, the following preliminary issue is for decision besides application for interim injunction :
"Has this Commission no jurisdiction to entertain and decide this matter ?"
2. The Director-General of Investigation and Registration in compliance with the order of this Commission dated February 9, 1987 (communicated to him, vide letter dated February 12, 1987), carried out investigation and submitted a preliminary investigation report dated April 3, 1987, recommending taking action against the respondent in respect of commission of unfair trade practices. The said preliminary investigation report was considered on April 6, 1987, and notice of enquiry was directed to be issued.
3. The respondent is carrying on business at Bangalore. It claims to be a builder and seller of plots of land. It has been issuing advertisements from time to time that sites in Banashankari, Yelahanka and Megadi Road could be booked from it on prices ranging from Rs. 15,000 onwards and that the booking commenced from December 1, 1986. It was also mentioned in the advertisement that there was a special bumper offer for those who booked sites in December, 1986, and they could save Rs. 5,000 per booking. Photo copy of one such advertisement was sent to the Director-General by Karnataka Consumer Protection Board along with its letter dated December 15, 1986. Another advertisement appeared in Deccan Herald of February 13, 1987, in which the names of the roads and areas in which those sites were located were mentioned. The names of the villages and field or survey numbers were not mentioned.
4. Investigations by the Director-General revealed that the respondent has been indulging in misrepresentation and misleading statements to the public. Some of the misleading statements can be summarised as under:
(i) According to the provisions of Section 17 of the Karnataka Town and Country Planning Act and Section 32 of the Bangalore Development Authority Act, any person intending to sub-divide his plots or layout has to obtain prior sanction from the Bangalore Development Authority. It appears from a communication from the Bangalore Development Authority sent to the Director-General that no such sanction was taken. The Bangalore Development Authority stated that before the announcement of booking of sites, it was necessary that sanction should be obtained from it. In that communication, it was also stated that the Bangalore Development Authority sent notice through their advocate that they could not offer any site without prior sanction; that replies were received but the same were totally evasive because they merely emphasized that full compliance with law would be done. The Bangalore Development Authority warned the respondent that it was illegal on its part to receive money from intending buyers without informing them about non-existence of sanction of Bangalore Development Authority and they also issued a public notice cautioning the public not to be taken in by the misleading publicity of the respondent and not to book the sites. In spite of the above, advertisements have been continued by the respondent without mentioning that it had not obtained any sanction from the Bangalore Development Authority. On the other hand, the respondent had been warned by the Bangalore Development Authority not to book the sites without prior permission from them. This is material suppression of facts and hence is not only in the nature of misrepresentation but also committing a fraud.
It is also in the communication sent by the Bangalore Development Authority to the Director-General that the public were requested to cooperate and refrain from giving room for sub-standard urban sprawl, legal and financial complications for themselves by accepting offers relating to sites. This fact has also not been mentioned in the advertisements of the respondent.
(ii) Some of the areas in which sites are being offered are within the green belt where no building activities are permissible. Those areas are Majognagar, Jigani and Bannerghatta. In spite of that, the respondent is offering the sites in those areas without mentioning, by way of material suppression of facts, that no building activities are permissible in the said areas.
(iii) The respondent, in its advertisement dated February 13, 1987, has also made certain claims in respect of various sites offered by it. For example, in respect of Yelahanka, it is stated that the land is a stud farm and exempted under the Urban Land Ceiling Act. This has been refuted by the Bangalore Development Authority by stating that this land falls very much within the limits of the Bangalore Development Authority. Another example is that in respect of J. P. Nagar layout, the respondent has claimed that the land has already been exempted under the Urban Land Ceiling Act and that the layout has been approved by the Bangalore Development Authority. These claims have not been accepted by the Bangalore Development Authority in its note appended to the letter furnished by the Town Planner, Bangalore Development Authority (Annexure 7 to the application). The Director-General also has been successful in laying his hands on a notification published by the Income-tax Department of the Government of India which notified fpr the information of the public that the immovable properties known as AH Estate and Stud Farm, Yelahanka, belonging to Mr. Mahmood AH Mumtaj Ali (famous cine star) will be sold by public auction for the recovery of income-tax and wealth-tax arrears. This clearly shows that the respondent's offer of land in Yelahanka town cannot be correct as the same has already been attached by the Income-tax Department for the satisfaction of income-tax and wealth-tax arrears. This is a clear-cut indication of the misleading publicity campaign launched by the respondent to hoodwink gullible investors.
(iv) The respondent has claimed that it will be offering special bumper offer to those who booked sites in December, 1986, and they could save Rs. 5,000. This means that the buyers booking sites in December, 1986, would be able to have sites at Rs. 10,000 and onwards ; as against that, the Bangalore Development Authority is offering sites at a rate of not less than Rs. 20,000. Therefore, there is an assurance by the respondent which is not possible to be fulfilled and thus it becomes a misleading representation.
(v) The" respondent has claimed that all sites would be easily accessible but it has suppressed the details as to in which village or villages sites are situated and how far they would be from the road(s). That means that the "easily accessible" claims are unfounded and false.
(vi) The respondent has also claimed that it has completed successfully layout projects in J.P. Nagar and Jigani. In this connection, a note furnished by the Bangalore Development Authority revealed that in respect of J.P. Nagar layout, the respondent was asked to pay development charges of Rs. 15.15 lakhs and betterment levy of Rs. 1 lakh but the respondent has not paid the amount. It clearly shows that the respondent's claim that it has already completed layouts in J. P. Nagar is totally misleading and has been made only to allure the intending buyers by its alleged past performance.
5. The Director-General also filed an application under Section 12A of the Monopolies and Restrictive Trade Practices Act. On that application, vide order dated April 9, 1987 (Director-General of Investigation & Registration v. Manjog Builders--supra p. 823), we issued an ex parte temporary injunction, restraining, until further orders, the respondent from continuing with its false claims in its advertisements and other modes of publicity. An intimation of injunction order along with the notice of application was sent to the respondent for showing cause on April 28, 1987, as to why the injunction should not be made absolute during the pendency of the enquiry.
6. The respondent appeared on April 28, 1987, and did not file any reply on merits but filed an application for framing a preliminary issue relating to the jurisdiction of this Commission. It was submitted that "admittedly" the respondent was dealing in sale and purchase of immovable properties which was beyond the scope of the Monopolies and Restrictive Trade Practices Act and that, therefore, the Monopolies and Restrictive Trade Practices Commission had no jurisdiction to entertain or decide the present enquiry. We heard the arguments of the learned counsel for the parties on the aforesaid preliminary issue. Although the case was fixed for arguments on the injunction application also, the learned counsel for the respondent did not utter a single word in respect of vacating of injunction and he confined his arguments only to the preliminary issue.
7. Shri O.P. Dua, advocate for the Director-General, assailed the very legality of framing the preliminary issue and deciding the same without framing and deciding the issues on merits. He referred to Sub-rule (2) of Rule 14 of the Code of Civil Procedure, which reads as under :
" Court to pronounce judgment on all issues--
(1) Notwithstanding that a case may be disposed of on a preliminary issue, the Court shall, subject to the provisions of Sub-rule (2), pronounce judgment on all issues.
(2) Where issues both of law and of fact arise in the same suit, and the Court is of opinion that the case or any part thereof may be disposed of on an issue of law only, it may try that issue first if that issue relates to--
(a) the jurisdiction of the Court, or
(b) a bar to the suit created by any law for the time being in force, and for that purpose may, if it thinks fit, postpone the settlement of the other issues until after that issue has been determined, and may deal with the suit in accordance with the decision on that issue."
8. The learned counsel pointed out that it was clear from the aforesaid provision that the preliminary issue relating to jurisdiction could be framed if it involved only a question of law. He argued that in the present case, the issue relating to jurisdiction involved a mixed question of law and fact because it had to be shown by the respondent that actually it was dealing in immovable property. He explained that according to the allegations of the Director-General, the respondent neither possessed any land nor was dealing with any, but was merely making misrepresentations for booking sites. He further explained that the respondent was neither able to give the particulars of any land owned or possessed by him which could be divided into building sites nor did it obtain the sanction of the authorities concerned including the Bangalore Development Authority in respect of layout. He also pointed out that in reply to letters written by the Bangalore Development Authority, the respondent admitted that it did not have any land but that it would procure some and get the layout sanctioned in accordance with the law. In this respect, he relied upon the following words occurring in the letter dated January 23, 1987, of the respondent written to the Bangalore Development Authority :
"As already intimated to the Chairman, Bangalore Development Authority, vide letter dated December 17, 1986, by my clients and in the letter dated December 26, 1986, addressed to the Commissioner, Bangalore Development Authority, my clients are in the process of securing the lands legally in compliance with the provisions of all laws applicable in the matter." (emphasis applied)
9. In support of his submissions, the learned counsel relied upon a Full Bench Judgment of the Madhya Pradesh High Court in Ramdayal Umraomal v. Pannalal Jagannathji, AIR 1979 MP 153, to the effect that the issue relating to jurisdiction could be tried as a preliminary one only if it could be disposed of without recording any evidence. The learned counsel also relied upon a judgment of the Punjab and Haryana High Court in Hardwari Lal v. Pokhar Mal, AIR 1978 P&H 230, to the effect that a court must pronounce judgment on all the issues except when the case or any part thereof could be disposed off on an issue of law only, with the further limitation that the issue to be tried as a preliminary issue must relate to the jurisdiction of the court or a bar to the suit created by any law.
10. The learned counsel for the respondent did not dispute the aforesaid proposition of law. The sum and substance of his contentions are as follows:--
(i) The Civil Procedure Code has no application to proceedings before the Monopolies and Restrictive Trade Practices Commission. Hence, Sub-rule (2) of Rule 14, Civil Procedure Code, is not a bar to the deciding of the issue already framed as a preliminary one.
(ii) The trade or business of the respondent relates to immovable property. The Monopolies and Restrictive Trade Practices Act has no application to immovable properties and applies only to trade or business relating to goods which are movable properties. In the present case, the business, of the respondent is purchasing of land, dividing the same into residential plots or sites and then selling the same to different persons. Hence the Monopolies and Restrictive Trade Practices Commission has no jurisdiction.
(iii) The Commission, once having decided to hear and decide the issue as a preliminary one, is debarred from hearing and deciding the question whether the aforesaid issue can be treated as a preliminary one or not.
11. The Code of Civil Procedure has been made applicable for regulating the procedure before the Commission and its Benches by virtue of regulation 15(2) of the Monopolies and Restrictive Trade Practices Regulations, 1974, framed by the Commission under Section 18 of the Monopolies and Restrictive Trade Practices Act. Regulation 15(2) reads as under :
"Subject to the provisions of Sub-section (1) of Section 12 of the Act, where no specific provision has been made in these regulations, the Code of Civil Procedure, 1908 (5 of 1908), to the extent as may be deemed expedient by the Commission shall apply to the proceedings."
12. The argument of the learned counsel to the effect that the Commission has now no power to refuse to decide the issue framed as a preliminary one, has no force, in view of Sub-rule 5 of Rule 14, Civil Procedure Code, which empowers a court to amend, to strike out or to frame any additional issue or issues before the passing of a decree or final order. Hence, the Commission has all the power to call upon the respondent to file a reply to the notice of enquiry, to frame additional issues and then after recording evidence to decide the issue already framed along with the other issues.
13. The learned counsel seems to have wrong notions that the Monopolies and Restrictive Trade Practices Act has no application whenever the business of a person relates to an immovable property. The word " trade " has been defined in Section 2(s) of the Monopolies and Restrictive Trade Practices Act, which reads as under :
" ' Trade ' means any trade, business, industry, profession or occupation relating to the production, supply, distribution, or control of goods and includes the provision of any services, (emphasis applied)
14. It is apparent that trade is not confined to a business relating to goods only but also includes the provision of any services. The word, "service" has been defined in Section 2(r) of the Monopolies and Restrictive Trade Practices Act. It means service of any description available to potential users but does not include the rendering of service free of charge or under a contract of personal service. Therefore, any service to potential users of even immovable properties is a service within the meaning of Section 2(r) provided it is neither free nor under a contract of personal service and thus rendering of such service is a trade within the meaning of Section 2(s) of the Monopolies and Restrictive Trade Practices Act.
15. In this respect, the following observations of M.G. Investment and Industrial Co. Ltd. v. New Shorrock Spinning and Mfg. Co. Ltd. [1972] 42 Comp Cas 145, 155-156, are very pertinent:
"It would appear from the definition that amusement and recreational services, repair workshops, hotels, rooming houses, medical and health services, legal services, motion pictures and non-profit members' organisations, architectural accounting, auditing and book-keeping services, research and development laboratories would be covered by the definition. I must, however, make it clear that I am not called upon to decide whether these are services and I do not propose to do so. I am giving these by way of illustrations that these would be services made available to potential users for remuneration."
16. Obviously, hotels and rooming-houses are immovable properties. There can be "services" relating to the same which come within the definition of trade.
17. The learned counsel for the respondent contended that the aforesaid authority has no application because in that case, mere user of the hotels or rooming houses was observed to be a service within the meaning of Section 2(r) of the Monopolies and Restrictive Trade Practices Act while in the present case, it was not the user but plots of land which were to be handed over to the people against payment of price. But this argument can be worthy of consideration only if the respondent alleges and proves by producing evidence that the said firm has some immovable property, in the shape of plots of lands which can be sold. The contention of the Director-General is that the respondent does not own any immovable property but is merely booking the building sites by receiving money from different people. The Director-General has even relied upon a statement of the respondent showing an admission of the respondent to the effect that it has no land and will procure land in a letter dated January 23, 1987, written by the respondent to the Bangalore Development Authority. The relevant words in that letter have already been reproduced. In that letter, the respondent had stated that it was in the process of securing the lands legally which mean tthat till then, the respondent had not secured any land. There is no doubt that the respondent can still allege and prove that the alleged admission was wrong, but that alleging can be only by way of filing a reply to the notice of enquiry and application of the Director-General. That being so, the issue regarding the jurisdiction cannot be decided without recording of evidence.
18. The learned counsel for the respondent made a passing reference to the effect that the respondent had a good track record as a builder. But this is irrelevant, being a narration of past history which itself needs factual scrutiny. Here we are concerned with the question whether the present activity of booking of building sites is a service or not within the meaning of the Monopolies and Restrictive Trade Practices Act.
19. In the application for framing a preliminary issue, the respondent stated that "admittedly" it was dealing in purchase and sale of immovable properties. But there is no admission to that effect. Rather the Director-General denies and relies upon the admission of the respondent to the effect that the latter has yet to acquire land and has, therefore, no land at present which means that the respondent is not dealing in any immovable property.
20. The net result is that it is impossible to decide the present issue without obtaining the pleas of the respondent on facts and without recording of evidence. Under the above circumstances, the aforesaid issue is not decided and will be decided along with the other issues. Befor.e the remaining issues can be framed, it is absolutely necessary that the respondent must file a complete reply on facts and law. The aforesaid reply must be filed on or before July 21, 1987.
21. The learned counsel for the respondent did not utter even a single word at the time of argument against the continuance of the temporary injunction order. It appears that reliance of the respondent was on the only plea that the Commission had no jurisdiction to entertain the present proceedings. Prima facie it has been seen that the Commission has jurisdiction because, as the indications are, the respondent is merely booking the building sites without owning or possessing any land which can be or has been divided into such sites. Thus, it prima facie appears to us, that the respondent is rendering a service which is a trade within the meaning of the Monopolies and Restrictive Trade Practices Act. That being so, the Commission has prima facie jurisdiction to entertain and decide the present proceedings. Reasons for grant of injunction had already been mentioned in our detailed order dated April 9, 1987. Hence the injunction already granted is made absolute until the pendency of the enquiry, but in the interests of justice, we give liberty to the respondent to make an application giving reasons for vacating the injunction already issued and then that application (if filed) will be decided in accordance with merits. With the above observations, the application for grant of temporary injunction stands disposed of.