Monopolies and Restrictive Trade Practices Commission
Registrar Of Restrictive Trade ... vs Atul Products Ltd. And Ors. on 22 April, 1977
Equivalent citations: [1979]49COMPCAS781(NULL)
ORDER
H.M. Jhala, Member
1. This is an application by the Registrar of Restrictive Trade Agreements (hereinafter referred to as "the Registrar ") seeking to amend his application dated March 7, 1975, under Section 10(a)(iii) of the Monopolies & Restrictive Trade Practices Act, 1969 (hereinafter referred to as " the Act "). The application is said to be made under regulation 72 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter referred to as " Regulations "), read with Order 6, Rule 17, of the Civil Procedure Code. The respondents are limited companies doing business in the manufacture of pharmaceutical and/or intermediates. An enquiry under Sections 10(a)(iii) and 37 of the Act was started against the respondents on the basis of an application by the Registrar. According to the Registrar an agreement was entered into between respondent No. 1 and respondent No. 2 and respondent No. 3 for the manufacture of and/or supply by respondent No. 3 of sodium salts of certain salphanamides (such as sulpha thiazole, sulphasomidine, sulphaphenazone) and their intermediates and such other products as may from time to time be mutually agreed Upon between respondent No. 2 and respondent No. 3 ; and sodium salts of sulphadiazine and sulphamethazine and such other products as may from time to time be mutually agreed upon between respondent No, 1 and respondent No. 3.
2. The Registrar drew the attention of the Commission to the following provisions in the agreement between the parties :
" 2. Before the beginning of a serai-annual production period, CIBATUL, Atul and Ciba India Ltd. will by mutual agreement draw up a manufacturing programme, this programme being prepared according to the following rules :
(a) CIBATUL will give first priority to the manufacture of CIBA products.
(b) After the requirements of CIBA products have been met second priority be given to the manufacture of ATUL products.
(c) CIBATUL will not manufacture CIBA products or ATUL products in excess of the manufacturing programme except as provided in Sub-clause (d).
(d) In the event of there being any non-utilised capacity, CIBATUL will inform CIBA India in writing so that they can investigate whether the surplus capacity could be absorbed and for what products. To the extent that CIBA India agrees to absorb such surplus capacity, goods manufactured by CIBATUL in accordance therewith will be purchased by CIBA India at prices to be mutually agreed between CIBA India and CIBATUL having regard to the market conditions.
To the extent that CIBA India does not absorb the surplus capacity then ATUL shall be invited to offer to undertake to absorb such surplus capacity and purchase it from CIBATUL on the same basis as mentioned above for the case of CIBA India. In the event that thereafter there is still surplus capacity which CIBATUL decides to utilise, it will first offer the production resulting therefrom for sale to CIBA India. If CIBA India declines to purchase all or any of the products concerned they may then be offered to ATUL at the same price and failing purchase by either CIBA India or ATUL then CIBATUL shall be at liberty to sell the surplus production to third parties provided that the prices fixed will be at least of the same level as those paid by or offered to CIBA India or ATUL and provided further that CIBATUL shall not manufacture sodium salt of sulphapbenazole in such surplus production so long as patents in connection therewith belonging to CIBA India and/or CIBA Limited. Basle, continue to be in force.
6. A(iii) In case of CIBA products whicb are of CIBA standard other than a sodium salt of sulphanamide CIBA India shall pay to CIBATUL such ex-factory Bulsar price as may be mutually agreed upon between the parties.
(iv) CIBATUL shall purchase raw materials and packing material on a competitive basis and in suitable qualities. Atul's and CIBA India's supplies of raw materials to CIBATUL (if any) shall be made at prices which shall not exceed the delivered price to CIBATUL from any other supplier."
3. According to the Registrar, by virtue of the agreement as a whole, and in particular, the clauses reproduced earlier, the respondents were indulging in the following restrictive trade practices, viz., (i) limiting, restricting and withholding the output and supply of products ; (ii) restricting persons from whom the goods are bought ; (iii) mutually agreeing, in case of supplies to parties other than the respondents Nos. I and 2, to supply only on such terms and conditions as would have the effect of eliminating, competition. These trade practices, according to the Registrar, attracted Clauses (a), (g) and (h) of Section 33(1) of the Act. The Registrar further alleged that the trade practices set out were indulged in by the respondents and prevented, distorted and restricted competition or tended to prevent, distort or restrict competition and to obstruct the flow of capital and resources in the stream of production and to bring about manipulation of prices and conditions of delivery and to affect the flow of supplies in the market and impose on the consumers unjustified costs and restrictions. It was further alleged that the practices were prejudicial to public interest.
4. All the respondents filed their replies to the notice of enquiry. Respondent No. 1 in its reply, inter alia, made the following submissions :
" The various clauses of the aforesaid agreement referred to in paragraph 2 of the Registrar's application do not per se constitute restrictive trade practices as defined by Section 2(o) of the Act. It is submitted that the application is misconceived and ought to be rejected. The various clauses of the agreement referred to in the Registrar's application also do not attract Clauses (a), (g) & (h) of Section 33(1) of the Act as alleged in paragraph 4 of the Registrar's application. None of the clauses of Section 33(1) of the Act referred to by the Registrar is applicable to the aforesaid agreement and the agreement does not in any event constitute restrictive trade practice within the meaning of Section 2(o) of the Act. Satisfaction of the conditions set out in Section 2(o) of the Act is a condition precedent for initiation of an enquiry under Section 37 of the Act. The application of the Registrar is, therefore, misconceived and ought to be rejected. The Registrar in his application has merely referred to certain clauses of the agreement without ascertaining or stating any further facts as to how the agreement operates and no facts have been stated on the basis of which it is alleged that the same results in restrictive trade practice. Certain clauses of the aforesaid agreement are merely set out by the Registrar without reference to any facts and _ certain clauses of Section 33(1) of the Act are merely stated without any specific reference to any particular clause of the aforesaid agreement. The application filed by the Registrar in this manner is misconceived and is not maintainable and ought to be dismissed with costs."
"The Registrar's application purportedly filed under Section 10(a)(iii) of the Act is not in accordance with the mandatory requirements of regulation 55 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974. Any application which is not in accordance with the aforesaid regulation ought to be rejected. Before the Hon'ble Commission can take cognizance of any application filed by the Registrar, it must be such as containing facts which constitute the alleged restrictive trade practice and if the alleged practice relates to any agreement, in addition to setting out such facts, it is incumbent upon the Registrar to set out in the said application such portions of the agreement as may be necessary to bring out the facts complained of. In the present application, the Registrar has not set out any facts which have been purported to constitute the alleged restrictive trade practice. On the contrary, the Registrar has merely reproduced certain clauses of the aforesaid agreement without avering as to how the said clauses or the operation thereof, as a matter of fact and practice, constitute restrictive trade practice within the meaning of Section 2(o) of the Act. The Registrar's said application is, therefore, bad in law and not maintainable,"
" In the Registrar's application, after reproducing certain clauses of the aforesaid agreement in paragraph 2 of the application, certain inferences alleged by the Registrar are set out in paragraph 3 of the application. These inferences which are sought to be made on the basis of the clauses of the agreement reproduced in paragraph 2 of the application are misconceived and are arrived at on a total misconception and misreading of the provisions of the agreement. This inference set out in paragraph 3 of the Registrar's application which are alleged to constitute restrictive trade practices are wholly misconceived and the reproduction of the various clauses of the agreement do not justify any such inference and as such the Registrar's application ought to be rejected with costs. "
"In paragraph 4 of the Registrar's application Clauses (a), (g) and (b) of Section 33(1) have only been referred to. The various clauses of the aforesaid agreement referred to in paragraph 2 of the Registrar's application are not of the type as contemplated in Clauses (a), (g) and (h) of Sub-section (1) of Section 33 of the Act. As the Registrar's application is based only on the basis of the aforesaid clauses of Section 33(1) of the Act, the same is liable to be rejected. Moreover, as no averment at all has been made by the Registrar with regard to the satisfaction of the conditions contemplated under Section 2(o) of the Act, the Registrar's application ought to be rejected in any event. "
5. Respondent No. 2 made the following submissions, inter alia, in its reply to the notice of enquiry :
" This respondent submits that there are no sufficient facts in the application of the Registrar to bring the case within the meaning of Section 2(o) of the said Act nor are there submissions of facts to show now and in what manner conditions of the said Section 2(o) of the said Act are fulfilled. In paragraph 4 of the application, the applicant has stated that the alleged restrictive trade practices set out in paragraph No. 3 fall, inter alia, within the ambit of Clauses (a), (g) and (h) of Sub-section (1) of Section 33 of the said Act. In the premises this respondent submits that no case has been made out by the applicant and the application has no cause of action and/or is liable to be dismissed."
"This respondent further submits that Section 2(o) of the said Act cannot apply to a case where there is a statutory control as to pricing as in the case of products of the respondent and the products which are the subject-matter of the Sulpha agreement..... "
" This respondent says that price and price list in respect of the formulations manufactured by this respondent of the raw materials supplied under the Sulpha agreement have been approved by the Central Government. The prices of the intermediates manufactured by respondent No. 3 and supplied to this respondent under the Sulpha agreement have been fixed by the Central Government under the aforesaid Control Order with effect from 19th April, 1974. In view of the facts set out hereinabove and in view of the complete control exercised by the Central Government on the prices of the products which are the subject-matter of the Sulpha agreement as well as the products sold by this respondent, this respondent submits that there is no question of any restrictive trade practice within the meaning of the said Act."
6. The respondent No. 3 has made the same submissions as respondent No. 1 and also the following submissions :
" The prices at which the intermediates manufactured by this respondent are supplied under the Sulpha Commercial Agreement are fixed under the Drugs (Prices Control) Order, 1970, framed under Section 3 of the Essential Commodities Act, 1955. Since the prices fixed by a Control Order issued under Section 3 of the Essential Commodities Act necessarily provide for fixation of 'fair, prices', it cannot even be suggested that the prices at which the said products are supplied by this respondent are not fair and that in respect of such supplies any Restrictive Trade Practice exists. When supplies are made at fair prices, it is not open to the applicant to even allege restrictive trade practices and supply at such prices cannot restrict or distort competition within the meaning of Section 2(o) of the Monopolies & Restrictive Trade Practices Act. It may be mentioned here that before fixing a fair price, the Central Government is duty bound to investigate into the relevant matters relating to the fixation of price and it is only after ascertaining the relevant facts as existing in the trade and industry that fair prices are fixed."
" In view of the fact that the supplies of the products covered by the aforesaid Sulpha Commercial Agreement are at prices fixed under the aforesaid Control Order, no allegation of a restrictive trade practice on the basis of such supplies can be made. "
7. The Registrar filed his answers (as they were called at that time) to the replies given by each of the three respondents. In the answer in respect of the reply by the first and third respondent, the Registrar made the following submission :
"Save what are matters of record and excepting the admissions regarding existence of operation of the impugned arrangement/agreement, the rest of the allegations are denied and paras 2, 3, 4 and 5 of the application are reiterated. The Registrar submits that Section 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as "the Act"), seeks to set down the characteristics of the restrictive trade practices complained of in general terms and the categories embodied in Section 33(1) of the Act are illustrative examples of well-known restrictive trade practices which ipso facto fall within the ambit of Section 2(o) of the Act. The Registrar contends that the mandatory provisions of law have duly been complied with by him. Regulation 55 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter referred to as "the Regulations "), requires that an application under Sub-clause (iii) of Clause (a) of Section 10 of the Act by the Registrar shall contain the facts which constitute restrictive trade practices and if it is in relation to any agreement registered with him, shall set out such portions of the agreement(s) as may be necessary to bring out the facts complained of. An agreement under Section 2(a) of the Act includes any arrangement or understanding whether or not it is intended that such an agreement shall be enforceable by legal proceedings. The Registrar's application, which is based on the agreement entered into between the respondents and registered with the Registrar very clearly and unambiguously sets out the relevant portions of the agreement relating to restrictive trade practices as required under the law. Further, the Registrar's application clearly brings out the restrictive trade practices being indulged in by the respondents and the nature thereof as contemplated under the provisions of law. The operation of the terms and conditions flowing from the impugned agreement between the respondents is a fact sufficient to constitute restrictive trade practices complained of by the Registrar in his application. The Registrar contends that the facts set out in his application and admitted by the respondent in its reply do constitute restrictive trade practices within the meaning of the Act and the Hon'ble Commission has undoubted jurisdiction to inquire into restrictive trade practices complained of by the Registrar and the inquiry under Section 37 of the Act is competent and has been rightly and properly ordered by the Hon'ble Commission. The assertions made by the respondent in the paras under reply, that no inquiry can be initiated in respect of the impugned agreement admittedly being followed by the respondents, are unfounded, misconceived and untenable. The Registrar submits that his application under Section 10(a)(iii) of the Act discloses valid cause of action and inquiry under Section 37 of the Act has been ordered by the Hon'ble Commission on the basis of prima facie case established by the Registrar. The practices complained of by the Registrar emanating from different terms and conditions of the impugned agreement admittedly being followed by the respondents amount to restrictive trade practices falling under different clauses and in particular Clauses (a), (g) and (h) of Section 33(1) read with Section 2(o) of the Act. Application under Section 10(a)(iii) of the Act does comply with the statutory provisions of law. The requirements of law and regulation 55/57 of the Regulations have duly been complied with. The assertions made by the respondent that Section 2(o) of the Act cannot apply to a case where there is a statutory control as to pricing as in the case of products which are the subject-matter of the agreement, is highly misconceived and untenable. In any case, the Registrar's application does not relate to restrictive trade practice relating to resale price maintenance/pricing. "
8. In his answer to the reply by respondent No. 2, the Registrar, i'nter alia, made the following submissions:
"The assertions made by the respondent that Section 2(o) of the Act cannot apply to a case where there is a statutory control as to the pricing as in the case of products which are the subject-matter of the agreement, is highly misconceived and untenable. In any case, the Registrar's application does not relate to restrictive trade practice relating to resale price maintenance and/or pricing. "
9. After the Registrar had filed his rejoinders, he applied for directions. Each of the respondents thereafter made applications praying that certain issues be determined and tried as preliminary issues and also praying for certain directions. The Commission by its order dated September 5, 1975, issued the directions both to the Registrar and to the respondents and also held that the question of trying any issues as preliminary issues will be considered when the issues were framed. After the compliance was made by both the sides with the Commission's order the Registrar applied for further affidavits of documents from the respondents with reference to certain documents specified by the former. The Commission by its order dated the 2nd April, 1976, ordered discovery of documents and records relating to manufacturing programme drawn up by the respondents. The respondents thereafter filed further affidavits of documents as required by the Commission's order, and the Commission by its order dated July 23, 1976, framed the following issues ;
(1) Whether the enquiry is maintainable in view of the objections raised in paragraphs 1 to 8, 1 to 11 and 1 to 8 of the replies of respondents Nos. 1, 2 and 3 respectively.
(2) Whether the terms and conditions of the impugned agreement referred to in para. 2 of the Registrar's application relate to restrictive trade practices.
(3) Whether the respondents are indulging in the restrictive trade practices alleged.
(4) If the answer to issues Nos. 2 and 3 is in the affirmative whether the said practices are not prejudicial to the public interest.
(5) Whether the respondents or any of them and if so which of them are entitled to the benefits of Clause (a), (b), (c) or (h) of Section 38(1) of the Act and the balancing clause of Section 38(1) of the Act.
(6) General including relief and costs.
10. The respondents thereafter filed applications praying that certain issues out of the issues framed by the Commission by its order dated March 2, 1976, be treated and tried as preliminary issues. The Commission by its order dated December 31, 1976, ordered that certain issues, viz., 4 issues, will be tried as preliminary issues and the other questions raised would remain to be considered as issues other than preliminary issues to be disposed of at the time of final hearing in case the decision on the preliminary issues went against the respondents,
11. The Registrar thereafter filed the application dated March 15, 1977, which is the subject-matter of the present order. According to the application, while reserving the right to make the submissions with regard to the preliminary issues and on the basis of the unamended application dated March 7, 1975, the Registrar sought the permission of the Commission to amend his application by inserting three additional paragraphs 3(a), 3(b) and 3(c) after paragraph 3 and before paragraph 4 of the original application. The proposed amendments by way of paragraphs 3(a), 3(b) and 3(c) read as under :
" 3(a) Both the respondents Nos. 1 and 2 are monopolistic units in the; end products of sulphanamides. May and Baker are the only other unit producing sulphadiazine, based on imported raw materials. As a joint venture, both the respondents established respondent .No. 3 with equity participation by respondent No. 1, respondent No. 2 and Ciba Geigy of Basle of 65%, 5% and 30%, respectively, for the manufacture of the intermediates. As a result of the sulpha commercial agreement, the respondents formulate the manufacturing programme and the prices at which respondent No. 3 is to sell the products to respondent No. 1 and respondent No. 2 and third parties and they also determine the products that respondent No. 3 is to manufacture. Respondent No. 3 manufactures the following penultimate intermediates of bulk drugs, (i) sulpha phenazole sodium, (ii) sulpha somidine sodium, (iii) sulpha thiazole sodium, (iv) acetyl sulphadiazine, (v) sulpha methyle phenazole. In the aforesaid products, the respondents have a monopoly.
3(b) By and as a result of the aforesaid agreement/arrangement, referred to in para. 2 hereinabove and in the purported implementation of, inter alia, the aforesaid provisions of the said arrangement/agreement relating to the sale of surplus production, which the first and the second respondents decline to purchase, the third respondent has been restrained from selling or is not at liberty to sell the same to parties other than respondents Nos. 1 and 2 without offering it, in the first instance, to respondents Nos. 1 and 2. On the contrary, the third respondent is obliged to sell the said surplus production to other parties only at prices at which the commodity is offered by the third respondent to the first and the second respondents and only in the event of refusal by the said respondents. The said agreement/arrangement as also the trade practices prevailing between the respondents and the manner of their implementation have brought about or tend to bring about manipulation of prices in such manner as to impose on the consumer unjustified costs.
3(c) By and as a result of the aforesaid agreement/arrangement and in particular under the provisions of the same relating to the manufacturing programme, absorption of the non-utilised capacity of the plant, utilisation of the said non-utilised capacity/balance capacity, the products that could be procured/manufactured as a result of utilising the said capacity of the plant, the sale of the same to the 1st and 2nd respondents and to third parties, the respondents have been acting in a manner and have been indulging in trade practices which has brought or tends to bring about manipulation of prices. The third respondent has been disabled from laying down a manufacturing programme of its own and/or has been disabled from determining reasonable prices for its products as a result of the aforesaid agreements/arrangements/trade practices, which has brought about or tends to bring about manipulation of prices so as to impose on the consumers unjustified costs. The said agreements/arrangements/trade practices and the manner of their implementation tend to affect or have affected the flow of supplies in the market relating to the said goods that the said plant could produce and in such a manner as to impose on the consumers unjustified costs or restrictions. The said agreements/arrangements/trade practices and the manner of their implementation pursued by the three respondents relating to manufacturing programme, price fixation and supply have further resulted in creation of a highly artificial, arbitrary and inflated selling price of the products manufactured by the third respondent, without having any nexus or relationship to the cost of production and other relevant facts, thus bringing about manipulation of prices, or conditions of delivery or affecting the flow of supplies in the market relating to the said goods in such manner as to impose on the consumers unjustified costs or restrictions. "
12. According to the Registrar these proposed amendments gave necessary facts/features and these facts and features read together with the impugned provisions of the agreement, the facts already stated in the unamended application, the facts/information/documents that have already been placed on the record of the Commission would show and establish that the respondents have been indulging in restrictive trade practices within the meaning of Section 2(o) of the Act. The information would also establish that as a result of the impugned provisions of the agreement, the manner of implementation of the same and the practices and procedures adopted by the respondents-had affected the flow of supplies in the market of the goods in question in such a manner as to impose on the consumer costs which were wholly unjustified and that had the result of restricting, preventing and distorting competition. It was emphasised that this application is by way of abundant caution, that no prejudice would be caused to the respondents if amendments were allowed, that there was no impermissible delay on the part of the Registrar in making the application and that the application had been necessitated because of the judgment of the Supreme Court in TELCO's case [1977] 47 Comp Cas 520 (SC). It was also claimed that great prejudice would be caused if the amendments were not allowed because the amendments were necessary for the purpose of determining the real questions in controversy between the parties.
13. In its reply to the application, respondent No. I apart from giving extracts from its replies to the earlier notice and from the rejoinder of the Registrar stated that the application of the Registrar was liable to be dismissed on ground of delay and laches, that the Registrar was seeking by the proposed amendments to introduce a totally new and inconsistent case and the application was made at a very late stage of the proceedings.
14. The respondents Nos. 2 and 3 also replied on the same lines apart from quoting extracts from the replies and the rejoinders to the replies by the Registrar which are given earlier.
15. The learned counsel for the Registrar in support of his application contended that strictly speaking the amendment application was not at all necessary, that it was being made out of abundant caution, that the original application by the Registrar clearly disclosed the cause of action, at any rate it disclosed a partial cause of action and that all that the application for amendment sought was filling in certain more details. She pointed out that there was no question of limitation involved, that there was continuing restrictive trade practice, that there was nothing to stop the Registrar from filing a new application and that, therefore, there should have been no objection to the amendment being allowed, since no right was vested in the respondent by reason of the passage of time as would be the case, in case of election petitions where the time limit of 45 days was advisedly imposed. She went through the whole application for amendment and contended that all that the proposed amendment aimed at was furnishing of more particulars. She pointed out that the original application did refer in paragraph 5 to the exact requirements of Section 2(o) and it could not, therefore, be suggested that the cause of action was lacking. She referred to Section 10 of the Act and contended that whereas Section 10(a)(i) specifically referred to the complaint containing facts constituting restrictive trade practice, there was no such reference either in Section 10(a)(ii) or Section 10(a)(iii). According to her, this was significant because while the consumers would know the exact grievance which had arisen by reason of the restrictive trade practice, it will not be possible for the Government or the Registrar to know all the facts relating to the trade practice. She in this connection referred to regulation 27 and regulation 29 and contended that the Registrar had to form his opinion from the information available with him from the agreement that restrictive trade practices prevailed in respect of certain goods and services and this information, according to her, could only be limited to the agreement details of which have been incorporated in the register. She went on to contend that the Act did not visualise the Registrar to indicate any facts and contended that this aspect of the matter was not brought to the notice of the Supreme Court. She also emphasised that regulations could not possibly go beyond the requirements of the Act and the regulations have necessarily to be read subject to the provisions of the Act. She went on to contend that the Supreme Court can be taken to have interpreted regulation 55 in the TELCO's case [1977] 47 Comp Cas 520 (SC), that the interpretation had necessarily to be read in the context of the Act which did not give any power to the Registrar to gather information and he could not, therefore, be expected to give detailed facts. She also contended that ultimately the liability of the Registrar would depend on the tacts of each case, that is to say, on the details of the agreement and pointed our that the agreement in the present case was a very comprehensive one and did not require any elaboration. She also contended that enquiry before the Monopolies and Restrictive Trade Practices Commission was different from proceedings before a civil court and some of the formalities of the Civil Procedure Code had, therefore, to be excluded from their application. She also contended that the ultimate objective of the amendment was to help in determining the issue before the Commission and that in furthering those objectives all amendments should be allowed, especially when, as in the present case, amendment did not alter the cause of action. She referred to the decisions in AIR 1969 SC 1267 (Jai Jai Ram Manohar Lal v. National Buildings Material Supply), AIR 1967 SC 96 (A. K. Gupta & Sons v. Damodar Valley Corporation), AIR 1975 SC 349 (V.Nagaraj v. R. Dayanand Sagar), AIR 1966 SC 997 (Nichhalbhai Vallabhai v. Jaswantlal Zinabhai) and AIR 1953 Mys 43 (Muniyappa v. Hamimantha). She also referred to the decisions of the Commission in Restrictive Trade Practices Enquiry No. 8 of 1972 (Registrar oj Restrictive Trade Agreements v. Baroda Rayon Corporation Ltd. [1976] 46 Comp Cas 149), RTPE No. 1 of 1971 (Registrar of Restrictive Trade Agreements v. Incheck Tyres [1976] 46 Comp Cas 187), RTPE No. 3 of 1974 (Registrar oj Restrictive Trade Agreements v. Bata India Ltd. [1976] 46 Comp Cas 441) and also the decision of the Delhi High Court in Premier Tyres Lid. v. Monopolies and Restrictive Trade Practices Commission [1976] 46 Comp Cas 297.
16. The learned counsel for respondents Nos. 1 and 3 contended that the application should be rejected on several grounds, the first ground being that the application was too late in the day, having come nearly three years after the application was filed. Secondly, according to him, there was complete lack of bona fides on the part of the Registrar in the sense that there was a patent lack of due care and diligence on his part in bringing forward the amendment. He referred to the replies of the respondents to the original application by the Registrar and pointed out that, notwithstanding the position taken up by the Registrar and the decision given by the Commission regarding the relevance of Section 33(1) in determining the restrictive nature of the trade practice, the respondents had clearly stated their objections to put the Registrar on guard and their objections had been upheld by the Supreme Court in TELCO's case [1977] 47 Comp Cas 520. According to the learned counsel, the Registrar should have mapped out his strategy knowing fully well that the respondents had taken up the position which ultimately was vindicated by the decision of the Supreme Court. According to him when the Registrar had taken a deliberate stand, he should have taken the necessary steps to buttress his stand in the light of defence made by the respondents. He emphasised that the attitude of the Registrar was both obstinate and obdurate. He also contended that the amendment could not be allowed just because another court had come to a finding in another pending litigation for which the applicant wanted to make allowance. According to him, if this was allowed there would be no finality about the pleadings and the dispute borne out by these pleadings. He relied in this connection on the decisions in AIR 1961 Pat 302 (State of Biftar v. Ramgarh Farms and Industries Ltd.), AIR 1953 Orissa 39 (Kani Bewa v. Krishna Behara), AIR 1961 Pat 298 (Chandu Modi v. State of Bihar), AIR 1944 Bom 245 (Tejilal Narayandas v. Godubai Ramckandra), AIR 1940 Mad 29 (Thirugnanavalli Ammal v. Venugopala Pillai).
17. He contended that the application of the Registrar was essentially an application for amendment and it could not be supported on the ground that it was an application only for further and better particulars because, according to him, power to permit an amendment was an extraordinary power and such a power could not be invoked except in extraordinary circumstances. He next contended that the decision of the Supreme Court in TELCO [1977] 47 Comp Cas 520, left no room for doubt about the obligation of the Registrar to give facts in his application. According to him, Section 10 could not possibly contemplate different standards to be applied to different sources from which the enquiry before the Commission could emanate. He then referred to regulation 55 and contended that in clear terms it required the Registrar to ensure that his application contained the facts which constitute a restrictive trade practice and that if the application was in relation to any agreement the portions of the agreement had to be set out in order to bring out the facts complained of. According to him facts were the essence of regulation 55 and Section 10 and, if there was an agreement, these facts were to be underlined, so to speak, by reference to the relevant portions of the agreement. He then emphasised the word " application " and contended that, in the nature of things, the application pre-supposed the facts constituting restrictive trade practice and accordingly there was nothing in regulation 55 which went beyond the requirements of Section 10. S. 10 read with Section 2(o) in the light of the Supreme Court decision in TELCO's case [1977] 47 Comp Cas 520, clearly required statement of material facts constituting the restrictive trade practice and this, in his submission, required the basic facts, the final effect on competition of these facts, and the manner in which the effect was brought about by these facts. He emphasised that the manner in which the facts had anti-competitive effect was an important aspect which required to be stated in the application of the Registrar. In simple cases, according to him, the test laid down in Section 2(o) may not be difficult to apply but in the present case all the three steps had necessarily to be indicated before an allegation of the restrictive trade practice could be made. He went on to contend that agreement in no case by itself could provide a sufficient cause of action and the cause of action in an enquiry under the Act could be only restrictive trade practice which had to be spelt out in the three essential steps indicated earlier. He referred to the decisions in AIR 1967 SC 96 (A. K. Gupta and Sons Ltd. v. Damodar Valley Corporation), AIR 1969 SC 1267 (Jai Jai Ram Manohar Lal v. National Building Material Supply), AIR 1975 SC 349 (Nagaraj v. Dayanand Sagar), quoted by the learned counsel for the Registrar, andxontended that the party praying for amendment was not allowed to set up an altogether new case based on new facts and that the nature of amendment sought for might determine the decision whether the amendment should be permitted or not. According to him, in the present case, had there been no Supreme Court decision, there was no warrant for permitting any amendment and the announcement of the Supreme Court decision did not justify the amendment because finding by a court in any other litigation was not a good ground for amendment and also because in the present case the respondent had taken just the ground which TELCO [1977] 47 Comp Cas 520 (SC) had taken from the beginning about the inadequacy of the application in the light of regulation 55 and, notwithstanding the stand taken by the respondent, the Registrar persisted in not changing or modifying his strategy. He also pointed out that by virtue of the proposed amendment the Registrar wanted to bring into enquiry practices, which he had precluded himself from raising by his earlier pleadings. He referred in this connection to (1) Hollis v. Burton [1892] 3 Ch 226 (CA), (2) Morel Brothers & Co. Ltd. v. Earl of Westmorland [1903] I KB 64 (CA), (3) AIR 1960 Punj 265 (sic) and Mulla's Commentary on Civil Procedure Code, pages 706, 731, He also contended that there was no question of a partial disclosure of cause of action or a part of the restrictive trade practice. The cause of action was an integral whole and failure to disclose any part of it would result in total failure to disclose the cause of action.
18. The learned counsel for respondent No. 2 while adopting in general the arguments of the learned counsel for respondents Nos. 1 and 3 made certain additional contentions. Firstly, according to him, the proposed amendments by the Registrar tried to set up a case which was totally inconsistent with the original case and in a way completely opposed to it. Secondly, according to him, the proposed amendment was absolutely useless and vague and did not in any manner satisfy the requirements of regulation 55 as interpreted by the Supreme Court in TELCO's case [I977] 47 Comp Cas 520. Thirdly, according to him, both the original application and the application for amendment left the charge against the respondent quite vague since they lacked material facts and as such violated the principles of natural justice. He also contended that the application was not bona fide because there was complete lack of due care and diligence on the part of the Registrar. He went then through the original application and printed out that it was essentially confined to the intermediate products with which the agreement between the respondents was concerned and that there was no mention therein to the end products. He doubted the relevance of the charge contained in para. 3(ii) and also pointed out that in the whole of paragraph 3 there was no reference to any pricing. He then referred to the reply of respondent No. 2 dated April, 1975, and pointed out that in paragraph 5 the respondent had sought to raise the question of statutory control of prices and that in paragraphs 6 and 7 it had specifically raised the question of inadequacy of facts in the application by the Registrar, especially in the light of the requirements of regulation 55. He next referred to the rejoinder by the Registrar to respondent No. 2 and particularly the observations which have already been extracted in paragraph 8 of the present order. He next referred to the reply of the Registrar dated December 8, 1976, to the application by respondent No. 2 for treating certain issues as preliminary issues with particular reference to paragraph 7 of the Registrar's reply which stated as under :
" ...the applicant submits that in the application filed by him under Section 10(a)(iii) of the Act, the applicant has not alleged indulgence by the respondents of restrictive trade practices relating to resale price maintenance and/or pricing and, therefore, no question could arise in the present inquiry for deciding of an issue which is not involved in the present proceedings. "
19. He also pointed out that in the list of documents on which the Registrar of Restrictive Trade Agreements relied, there was no suggestion of any enquiry about manipulation of prices. He then referred to the application of respondent No. 2 dated June, 1975, and particularly interrogatories Nos. 18, 19, 22, 25 to 37 and 45 and pointed out that the replies of the Registrar particularly to interrogatories 25 to 37 were that the interrogatories were vague, hypothetical and irrelevant for the purpose of the present enquiry. He weat on to contend that, in view of the position taken up by the Registrar, he had shut himself out for further enquiry into these aspects and it was these very aspects which were sought to be inserted by the proposed amendment. This according to him showed complete lack of bona fides on the part of the Registrar. It also showed that toe proposed amendments were completely inconsistent with and opposed to the subject-matter of enquiry as found by the Registrar himself. He then went to the amendment proposed and emphasised that in the proposed paragraph 3(a) it was averred that respondents Nos. 1 and 2 were monopolistic units in the end products of sulphanamides. At the end of the proposed paragraph 3(a) it was also stated that in certain products the respondents had a monopoly. The grievance of the learned counsel was that the end products were completely out of the pale of enquiry as indicated by the original notice and by no stretch of imagination the end products could be dragged into the enquiry. In regard to para. 3(b) he submitted that in the later portion of that paragraph there is reference to the trade practices prevailing between the respondents and the manner of their implementation and contended that nowhere in the original notice was any reference to any trade practices prevailing between the respondents de hors the agreement. He also pointed out that the whole, thrust oi this paragraph was at manipulation of prices -in such manner as to impose on the consumer unjustified costs and this allegation was not spelt out in the original notice and as a matter of fact the Registrar had specifically stated that he was not concerned with resale price maintenance or pricing. In regard to paragraph 3(c), the learned counsel referred to the allegation that the third respondent had been disabled from determining reasonable prices of its products and once again contended that there was no question about reasonable prices raised in the original notice. He also pointed out that at several places in the same paragraph there has been a reference to trade practices which suggested that these trade practices were in addition to the trade practices earlier referred to. He also referred to the allegation that the said agreements/arrangements/trade practices had resulted iu creation of a highly artificial, arbitrary and inflated selling price of the products manufactured by the third respondent, without having any nexus or relationship to the cost of production and other relevant facts. He vehemently contended that there was no indication of this allegation of the artificial, arbitrary and inflated selling price or its absentce of relationship to the cost of production. He also objected to the reference to the other relevant facts without these facts being specified. He contended that the main object of the pleadings was to narrow down the parties to the aspects of the dispute and the main object of the plaint was to let the other side know the case it has to meet, so that it is not taken by surprise when the trial begins. He contended that the original application was vague and did not define the material facts necessary for letting the other party know what the dispute was about in the light oi the decision of the Supreme Court in TELCO [1977] 47 Comp Cas 520 and the proposed amendment suffered from the same defects in that there were no material facts relating to the trade practices alleged in the original notice. He also contended that the principles of natural justice also required that there should be full disclosure of material facts and that neither the original application nor the proposed amendments satished these requirements. The application was, therefore, vague and also it was not made on bona fide reasons. He referred in support of his arguments to Philips v. Philips [1878] 4 QBD 127 at 138 (CA); Gopalakrishnayya Garu (Adusttmilli) v. Province of Madras [1947] LR 74 IA 182; New Samundri Transport Co. (P.) Ltd. v. State oj Punjab AIR 1976 SC 57 and Mulla's Commentary on Civil Procedure Code, page 728.
20. The learned counsel for the Registrar in her reply pointed out that enquiry before the Commission was not in the nature of a trial, that Section 2(o) itself envisaged situations in which the effects to be gauged were in the realm of probability and that in such circumstances the rigid test of the Civil Procedure Code could not be applied. She referred to the decision of the Commission dated July 24, 1975, in Restrictive Trade Practices Enquiry No. 32 of 1974 (In re Graphite India Ltd. [1976] 46 Comp Cas 422) and contended that it was not an authority for the proposition that Order 7 of the Civil Procedure Code applied wholly to the proceedings before the Commission. She referred to the, decision of the Commission in Raymond Woollen Mills Ltd. (RTEP No. 27 of 1974) [1976] 46 Comp Cas 395, where it was held that an inquiry into the restrictive trade practice, and more particularly a suo motu inquiry, was not an adversary proceeding and there could be no statement of facts on which the party pleading relied for his claim. She also referred to the unreported decisions of the Bombay High Court in the cases of Raymond Woollen Mills and Crompton Greaves and on the strength of these decisions contended that the object of enquiry was to go from the known to the unknown facts and it was never the intention of the legislature to narrow down the enquiry to original facts. She referred to the wide powers enjoyed by the Commission under regulation 35 of the 1974 Regulations and contended that such wide powers could not have been for no purpose and the whole idea was to make the enquiry meaningful. She also pointed out that the original notice in TELCO's case [1977] 47 Comp Cqs 520 (SC) which went to the Supreme Court did not mention Section 2(o) at all. She also pointed out that the Supreme Court decision was not at all concerned with preliminary issues and that it did not lay down any general principles that the application had to be examined in the light of the principles of the Civil Procedure Code. According to her, all that the Registrar had to say was how the alleged clause constituted restrictive trade practice in the context of facts and from that point of view, according to her, application in the present case was not at all deficient and the application for amendment was out of abundant caution. She also contended that regulation 55 could not be read in isolation and independently of regulation 29 and that all that could be expected of the Registrar under regulation 55 was what he could gather under regulation 29. She referred to the deliberate stand taken by the Registrar about the relation between Sections 33(1) and 2(o) and contended that in view of the decision of the Commission itself accepting the position taken up by the Registrar there could be no allegation of lack of bona fides or lack of due care and diligence since soon after the decision of the Supreme Court was announced the application for amendment was made. She pointed out that the amendment in the application only sought to add a few more facts, that it was nobody's case that there was anything wrong with pricing, that statutory price control laid down only the maxima and was not concerned with prices below the maxima and the charge which the Registrar wanted to bring home was regarding manipulation of prices. She referred to interrogatory No. 10, in the list of interrogatories enclosed with the Registrar's application dated June 19, 1975, and pointed out that the Registrar had pursued this line of inquiry. She went on to contend that even on the assumption that the Registrar wanted to put forward a new cause of action, there was no bar to the Commission allowing the same since there was no time limit and the multiplicity of proceedings could be avoided.
21. The learned counsel for respondents Nos. 1 and 3 made grievance of the fact that the learned counsel for the Registrar had raised the question regarding the distinction between an enquiry and a trial at the stage of her reply. It was, however, pointed out to him that in reply to his submission regarding applicability of certain provisions of the Civil Procedure Code and the decisions relating thereto, she was quite justified in making the submission. The learned counsel thereafter pointed out that regulation 35, to which the reference was made by the learned counsel for the Registrar, had no relevance whatsoever to the controversy before the Commission. He relied on the decision of the Delhi High Court in the case of Premier Tyres [1976] 46 Comp Cas 297, on which the learned counsel for the Registrar also relied. I have heard the counsel on both sides. I have studied the authorities quoted by them carefully and also weighed the arguments with great care. The first question to be considered is whether enquiry before the Commission under Section 37 is so fundamentally different from a civil suit as to obviate substantially the application of the Civil Procedure Code or even the salutary principles underlying the application of certain rules thereunder which can be invoked without any conflict with the Act and the regulations. On the question whether the enquiry under the Act is different from a suit, there are strong authorities to support the view canvassed for by the learned counsel for the Registrar that an enquiry under the Act is different from a suit. The Commission's own decision in RTPE No. 27 of 1974 (In re Raymond Woollen Mills Ltd. [1976] 46 Comp Cas 395) and the decision of the Bombay High Court in that very case are in point, but none of the authorities exempt the Registrar or the director, as the case may be, from setting out what are called the constituent facts, i.e., the facts which constitute the allegation of restrictive trade practice. It is possible that in the course of enquiry more facts may be brought to light which may fortify the allegation already made or indicate restrictive trade practices other than the restrictive trade practices alleged, whether based on facts originally alleged or additional facts brought to light. Powers taken by the Commission under regulation 35 may help in the process of collection of facts but regulation 35 has no bearing on the Registrar's obligation under Section 10(a)(iii) or regulation 55. The liability to set out the constituent facts is always there and is in no manner abridged by any of the authorities or by any of the regulations, viz., regulation 35 or 29.
22. The matter is also put beyond doubt by the Supreme Court decision dated 21st January, 1977, in TELCO's case [1977] 47 Comp Cas 520. It will not be out of place to appreciate the exact scope of the decision of the Supreme Court at this stage, not only to dispose of the question whether difference between the nature of enquiry under the Act and the nature of a civil suit had any effect on the liability of the Registrar to disclose facts constituting the allegation of the restrictive trade practice. It is also relevant for disposal of many of the issues raised in the course of arguments on the present application. It is well to remember that the Supreme Court was concerned in that case with the question whether, on the facts and in the circumstances of the case, certain practices could be taken to be restrictive in character and the Supreme Court took the view that the two trade practices alleged' against TELCO [1977] 47 Comp Cas 520 (SC) in that case, viz., territorial restrictions and exclusive dealings, were not restrictive in character. In coming to this conclusion the Supreme Court laid down certain principles derived from the provisions of the Act. It held that the restrictive nature of a. trade practice was not to be determined by applying the provisions of Section 33(1), that, the categories mentioned in Section 33(1) were not statutory illustrations of the restrictive trade practices and that the restrictive nature of the trade practice had to be determined by application of the rule of reasons, contained in Section 2(o) of the Act and that this rule could be applied by a. certain methodology which took into account conditions of the relevant trade before and after introduction of the trade practice, the history of the trade practice and the effect of the trade practice. The ratio of that decision, with respect, is that before the Registrar could succeed in establishing his allegations that the particular trade practice was a restrictive trade practice, he had to establish according to the methodology indicated by the Supreme Court that the trade practice in question had some injurious effect on the relevant area of effective competition. Since the Supreme Court was concerned in that case with the application of the Registrar based on an agreement, the Supreme Court also observed that before registration could be insisted upon, restrictive nature of the impugned clauses had to be shown by the Registrar. Once again, two aspects have to be remembered. Firstly, the question of registration and its propriety or validity was not before the Commission or the Supreme Court. Secondly, under the provisions of the Act, enquiry into a restrictive trade practice could be embarked upon by the Commission even when the agreement whose clauses relate to restrictive trade practices was not registered or for that matter even when there was restrictive trade practice without any agreement. The Supreme Court and the Commission were concerned only with the enquiry into the restrictive trade practice and in that background the ratio laid down by the Supreme Court meant that in the enquiry into the restrictive trade practice, the initial responsibility would be on the Registrar to show that the trade practices to which the impugned clauses related was restrictive in character by reason of the injury caused by it to the competition. It was only if this responsibility was discharged that the Commission could embark on the central issue in the enquiry under Section 37(1), viz., whether restrictive trade practice was not prejudicial to public interest. There was no suggestion either directly or by necessary implication that every enquiry into restrictive trade practice should have two water-tight compartments, one relating to the restrictive nature of the trade practice and the other relating to the prejudice to public interest by reason of that trade practice, much less was there any suggestion that the Act contemplated two enquiries, viz., (i) anterior to an enquiry under Section 37(1) which was confined to the restrictive nature of the trade practice, and (ii) the real enquiry" under Section 37(1) relating to prejudice to public interest.
23. The central issue under Section 37 was no doubt the question of prejudice to public interest. But in the course of that enquiry it was certainly open to the respondent to deny the very restrictive nature of the trade practice alleged and call upon the applicant to show or establish that the trade practice was really restrictive in character. While, therefore, there was no iron, curtain between two aspects of the same enquiry, there were certainly two steps or two stages with clearly denned and distinct burdens of responsibility. In the first stage or first step it was for the complainant or the Registrar or the Director of Investigation to show that the trade practice was in existence and that it was restrictive in character. Here again, the responsibility was very limited. It was only confined to the effect or probable effect of injury to competition in an approximately defined area of competition in.the trade concerned. The degree of competition was not in question as far as the complainant, Registrar or the Director was concerned. In some cases even actual effect need not be indicated, but effect on grounds of probability could be indicated. On the other hand, the respondent, if he had to succeed at that stage, i.e., first stage, had to establish that competition remained unaffected whatsoever by the trade practice. If the Registrar did not succeed in discharging his limited responsibility or if the respondent succeeded in establishing that there was no possible chance of injury to competition, the enquiry must come to an end. If, however, the Registrar was successful in showing that competition was likely to be affected injuriously in however small a degree, the enquiry would enter the second stage and the responsibility would be on the respondent to show that the trade practice in question did not work against public interest. At that stage.the degree of effect on competition would also be relevant because if the effect on competition was negligible or marginal, the respondent would be able to claim gateway under Section 38(1)(h). The decision of the Supreme Court had, really speaking, only emphasised two aspects of the enquiry under Section 37(1) and it had also set out the methodology by which the Registrar could discharge the burden of his responsibility in regard to the first step of the enquiry.
24. While laying down the ratio of the decision as outlined above, the Supreme Court had made observations on regulation 55 and its exact implications. It is clear from its observations that in its view regulation 55 required that in addition to making reference to clauses of the agreement and setting out the allegation that the clauses constituted restrictive trade practices, facts or features had to be set out to show or establish as to how the alleged clauses constituted restrictive trade practices in the context of facts. It followed that, according to the Supreme Court, an application by the Registrar to be complete under regulation 55 had to make not only reference to the clauses of the agreement, but had also to show facts or features showing or establishing as to how the alleged clauses of the agreement constituted restrictive trade practices in the context of facts. It was, however, no part of the decision of the Supreme Court that any omission to give any constituent parts of the application would render it a nullity or that it would automatically fail to disclose the cause of action or that enquiry was liable to be terminated merely by reason of the fact that it did not contain some of the essential components of an application as required under regulation 55 as interpreted by the Supreme Court. Nor did the Supreme Court lay down that the allegation of restrictive practice was in the nature of an allegation of misconduct and in consequence or failure of the applicant to give all the material facts at the time of the application, the application was liable to fail. All that the Supreme Court did was to spell out the exact requirements of regulation 55 but it refrained from spelling out the consequences of the failure to satisfy the requirements so spelt out for the simple reason that the matter had come before it after a finding was given at the end of a full scale enquiry.
25. It will also be pertinent at this stage to refer to the second decision of the Supreme Court, i.e.. Civil Appeal No. 680 of 1976 (Hindustan Lever Ltd. v. MRTP Commission [1977] 47 Comp Cas 581) to get the complete picture of law as declared by the Supreme Court. The Hindustan Lever decision was a decision on an enquiry under Section 10(a)(iv). The agreement impugned in the enquiry was an agreement between Hindustan Lever and their re-distribution stockists, and the two clauses of the agreement earmarked for enquiry were Clauses 5 and 9, which it was alleged, related to restrictive trade practices of resale price maintenance, full line forcing and territorial restrictions. The Commission had held that Clause 5 of the agreement should be so modified as to remove the restrictive trade practices of resale price maintenance and full line forcing and Clause 9 of the agreement was declared void by the Commission, On appeal to the Supreme Court, the decision of the Commission was confirmed, and while confirming the decision the Supreme Court laid down that in certain cases the very introduction of certain clauses in an agreement might constitute a restrictive trade practice if on a reasonable and natural interpretation of the clauses of the agreement and their reasonable possible effects it was found that the introduction of the clauses conferred wide powers which may be used to impose restrictions. The rule of reason in such cases was to be applied, firstly, by determining, according to law, the meaning of the impugned clause or clauses in an agreement and, secondly, by determining the possible effects of such a clause upon competition in the trade to be regulated. According to the Supreme Court, in some cases the effect was given primarily by the language used in the clauses which were alleged to infringe the law. The meaning of these clauses must be examined from the point of view of what could be done by the manufacturer under them. If what might be done under the clauses could be restrictive trade practices as defined by the Act it was enough to vitiate the clauses. In such cases the terms of the agreement did not require to be explained by the facts to which they were meant to be applied. If the clauses were capable of being used undoubtedly to restrict trade on a meaning which appeared unambiguously from them, the intention to so use them to restrict trade could reasonably be inferred without any difficulty. In short, if the introduction of a clause in itself was a trade practice and could be used to prevent, distort or restrict competition in any manner, it might be struck down. The Supreme Court had no occasion to consider regulation 55 in the decision or the adequacy or otherwise of the notice of enquiry. What the Supreme Court laid down was that, in certain cases, clauses of the agreement unmistakably show that they represented restrictive trade practices by reason of the probable effects which they were expected to have on competition. But there was no suggestion that the responsibility of the Registrar to disclose basic facts was in any manner relaxed. Even in the kind of agreement which came up for the scrutiny of the Supreme Court in Hindustan Lever [1977] 47 Comp Cas 581, the Registrar had necessarily to indicate facts or features showing how the impugned clauses resulted or were likely to result in restrictive trade practices. In other words, the relevant area of competition had to be approximately denned and the manner in which, according to their plain and natural meaning, the clauses would bring about deterioration in the competitive situation, had to be indicated. It was not enough merely to set out the clauses. It was also not enough or necessary to invoke any of the clauses of Section 33(1). All that was necessary was an indication of the manner in which the clauses, according to their meaning, were likely to have or did have injurious effects on the relevant competitive situation. That would also help in bringing out the meaning of the clauses as the Registrar understood them and as he wanted the respondents to explain.
26. This position as declared by the Supreme Court will dispose of some of the contentions raised by the parties. The difference in the nature of proceedings between the enquiry before the Commission and the civil suit will not in any manner reduce the Registrar's responsibility to disclose constituent facts. The responsibility of the Registrar in this regard is not unlimited but it is not limited to the setting out of the clauses he seeks to impugn. He has to indicate in an unmistakable manner his projections about the possible consequences of the clauses. He has to spell out the power contained in the impugned clauses and the probable consequences of that power. He must not only set out the clauses of the agreement which constitute the major premises of his allegations, he must also spell out the middle term of the syllogism which will show how the clauses result in the injury to the competition which make the trade practices contained in the clauses restrictive. In the kind of case referred to by the Supreme Court in its Hindustan Lever decision [1977] 47 Comp Cas 581, the Registrar has only to spell out the implications of the impugned clauses and their probable effect on the relevant field of competition. In other cases, where clauses of the agreement are not so decisive or conclusive, he may have to undertake a factual exercise, but the limited exercise required was not beyond his powers whether under the Act or the Regulations. He has necessarily to define the field of competition affected and the possible manner in which effect is brought about. If the trade practice was in an incipient stage or if the implications of the agreement were sufficiently clear, this exercise would be based on probabilities. If the trade practice had been in force for some time and particularly if the clauses of the agreement were vague, the broad features had to be indicated. Without indicating the broad features, it was difficult to see how the Registrar or anybody else could spell out the restrictive trade practice in such a manner as to leave the other party in no doubt about the case he has to meet. The only basic requirement whether of a complaint under Section 10(a)(i) or reference under Section 10(a)(ii) or application under Section 10(a)(iii) and/or charge sheet under Section 10(a)(iv) was that the charge of restrictive trade practice should be spelt out with sufficient precision so that the other party knew what was alleged against it and was not taken by surprise about the nature of his burden. It was this minimum requirement that was necessary to be satisfied by all sources from which an enquiry could start, and the Registrar cannot be put in a privileged position as compared to other sources so as to exempt him from this minimum requirement.
27. The minimum requirements to be satisfied when making a complaint, a reference or an application must be strictly distinguished from the more serious requirement to be satisfied when the issue is to be resolved finally. At that stage a detailed analysis had to be undertaken about the effect of the trade practice on the competitive situation and it was at that stage that the methodology indicated by the Supreme Court in its decision in TELCO [1977] 47 Comp Cas 520 had to be adopted. According to that methodology, facts peculiar to the business in which the trade practice was introduced had to be considered. Secondly, conditions before and after the introduction of trade practice in that business had to be examined. Finally, the exact nature of the trade practice and its actual and probable effects were to be ascertained. This methodology, however, became imperative when the issue was to be decided finally. When the enquiry was just initiated, whether by complaint or reference or an application, all that was necessary was to set out a prima facie case but that prima facie case must indicate the grievance of the complainant or the referor or the applicant about the damaging effect on competition of the trade practice. The source must indicate the constituent facts only and these facts comprise the fact which constitutes the cause that brings out the effect on competition, the facts which show the process or chain of causation and the facts which represent the effect on competition. In many cases facts may give place to probabilities, especially where future effects have to be gauged. The definition of restrictive trade practice in Section 2(o) clearly allows for this. All that was necessary was to give constituent facts which would convince the Commission that an enquiry was called for, because all the three factual aspects alleged by the source were plausible.
28. From this point of view, it was not possible to say that in present case, the original application of the Registrar was completely blank. I would confine myself to the provisions of the M.R.T.P. Regulations, 1974, rather than examine the application of any provisions of the Civil Procedure Code. The question is whether the original application of the Registrar in the present case satisfied the requirements of Regulation 55 as interpreted by the Supreme Court in TELCO's case [1977] 47 Comp Cas 520 and the answer to that question was that in the present case the failure of the Registrar to satisfy the requirements of Regulation 55 was at worst partial. It was not possible to accept the contention put forward by the learned counsel for respondents Nos. 1 and 3 that cause of action was an integrated whole and that there could be no such thing as partial failure to disclose the same. As stated earlier, it would not be correct to superimpose the concepts of Civil Procedure Code in matters where M.R.T.P. Regulations had provided for a sufficiently complete set of rules and Regulation 55 has laid down requirements which were self-sufficient. It was true that the Delhi High Court had held in the Premier Tyre's case [1976] 46 Comp Cas 297, that complaint under Section 10(a)(i) ought not be acted upon by the Commission if with or without the investigation by the Director, the Commission came to the conclusion that it did not disclose sufficient cause for the Commission to proceed further. But it is very clear from that decision that the question was to be decided by the degree of sufficiency. It followed that if there was a gap or, a deficiency or a missing link, the enquiry could not be dropped if the restrictive practice was indicated although in a cryptic or laconic manner and if the sufficiency could be achieved by the procedure permitted by the Regulations of the Commission. The applicant might apply for amendment of the notice of enquiry, the respondent might apply for further particulars or the Commission on its own might ask for-supplemental pleadings. But the lack of sufficiency would not be fatal to the start of enquiry unless lack was so vital as to leave the allegation without any meaning or purpose.
29. The Regulations formulated by the Commission have made provisions for amendment of the notice of enquiry and pleadings, etc. Regulation 72(1) provides that the Commission may at any "time amend any defect or error in any proceeding including notice of enquiry and all necessary amendments shall be made for the purpose of determining the real question or issue raised by or dependent on such proceedings. Regulation 72(2) provides that the Commission may at any time or stage of the proceedings allow any party to alter or amend his reply to the notice of enquiry rejoinder, pleading or supplemental pleading in such manner and on such terras as may be just and all such amendments shall be made as may be necessary for the purpose of determining the real questions in controversy. The Commission has moreover considered the question of amendments either in the application of the Registrar or the notice of enquiry which is based on it in several cases and a brief reference to them may help in evolving the guidelines.
30. In RTPE No. 1 of 1971 (Registrar of Restrictive Trade Agreements v. Inchek Tyres Limited [1976] 46 Comp Cas 187) the respondents who were manufacturers of tyres had entered into an agreement between themselves called " general code of conduct ". In the original application filed by the Registrar before the Commission objection was taken to certain clauses of the " general code of conduct" and to the credit policy and trade practices covered by the general code of conduct. The application for amendment filed by the Registrar sought to add several other restrictive trade practices alleged to arise from the same general code of conduct. The Commission allowed the amendment reiterating its view expressed in Bata India Ltd's case [1976] 46 Comp Cas 441 that the word "pleadings " covered an application under Section 10(a)(iii). It, however, made it clear that the amendment sought arose from the same general code of conduct from which the restrictive trade practices initially alleged in the main application flowed, that what the Registrar was seeking to do was to add some more practices arising from the same general code of conduct and that although he was setting out a new case in respect of the added restrictive trade practices, it was not an inconsistent case (emphasis* mine).
31. In RTPE No. 8 of 1972 (RRTA v. Baroda Rayon Corporation Ltd. [1976] 46 Comp Cas 149) also, there was an application by the Registrar for amendment of his original application. The amendment application, inter alia, stated that the original application had given only one instance of coarse denier and that what the Registrar wanted to say was that the pattern of production was devised to maximise profits by reducing the production of coarser deniers and increasing the production of finer deniers. The Commission once again allowed the application and it pointed out that the proposed amendment did not attempt to travel outside the agreement, that the agreement itself was the subject-matter of the original application and continued to be so and the restrictive trade practices, whether alleged originally or later, flowed from the agreement.
32. In RTPE No. 3 of 1974 RRTA v. Bata India Ltd. [1976] 46 Comp Cas 441) also, the Registrar had applied for amendment of his original application. In the original application he had alleged that the respondent brought footwear manufactured by small-scale entrepreneurs and marketed the same through its own retail and wholesale outlets and that, in addition, the respondent had entered into arrangement with some manufacturers of PVC footwear. In the application for amendment he stated that he had subsequently gone into the agreements/arrangements and understandings entered into or arrived at between the respondent and the different manufacturers whose products were purchased and marketed by the respondent under the brand names of Bata or BSC and that they revealed that the respondent was indulging in restrictive trade practices which were set out in the application for amendment. The Commission allowed the application for amendment holding that the application by the Registrar was a pleading and fell under Regulation 72(2), which provided that the Commission might, at any time or stage of the proceedings, allow amendment of any pleadings. It also pointed out that once facts leading to the restrictive trade practices were averred in the main application, no injustice would be done, if the facts were sought to be amplified or particulars given and relief sought. , It made it clear that there was no question of changing the character of the main application. There was merely a question of seeking relief in respect of restrictive trade practices which had been averred in the main application but of which no particulars were offered.
33. In RTPE No. 32 of 1974 (In re Graphite India Ltd. [1976] 46 Comp Cas 422), the Director of Investigation had applied for amendment of the notice of enquiry issued to the respondent. The original notice was confined to graphite electrodes and the Director wanted that the notice should be so amended as to mention not only graphite electrodes but also anodes and pastes so as to cover the entire range of production of the respondent. The Commission rejected the application of the Director on the ground that graphite electrodes as commercially understood did not include anodes and carbon pastes. The restrictive trade practices in respect of which allegations had been made had been confined to graphite electrodes and the amendment was, therefore, not justified on the facts and circumstances of that case.
34. In RTPE No. 5 of 1975 (In re Andhra Pradesh Paper Mills Ltd. [1977] 47 Comp Cas 252), there was an enquiry under Section 10(a)(iv) in which there was an application by the Director of Investigation to the Commission for the amendment of notice of enquiry by adding the words " in concert or otherwise ". In the original notice, the main restrictive trade practice alleged was that of so changing the pattern of production of paper as to adversely affect the flow of supplies in the market relating to ordinary white printing and writing paper, and the amendment sought to suggest that this change was brought about in concert or otherwise. In this case, the Commission allowed the application and amended the notice and it relied on Regulation 72(1) which provided that the Commission might at any time amend any defect or error in any proceedings including notice of inquiry and the necessary amendments shall be made for the purpose of determining the real question or issue raised by or depending on such proceedings.
35. The case of Inchek Tyres [1976] 46 Comp Cas 187 (MRTPC), referred to earlier, went up to the Delhi High Court in the course of a writ and the High Court confirmed the decision of the Commission, although on somewhat different grounds. It held that the power of amendment of the complaint was given to the Commission by Regulations 72(1) and 72(3), that each restrictive trade practice might be connected with another or might be quite different from the others, that the disparate nature of restrictive trade practices was like separate causes of action, that just as separate causes of action could be joined in one civil suit similarly different allegations of restrictive trade practices could also be made in one complaint and that such allegations could be introduced by an amendment of the original complaint just as they could be introduced by an amendment of the plaint or an application and a reference was made to the decision of the Delhi High Court in Smt. Abnash Kaur v. Dr. Avinash Nayyar, ILR [1974] 2 Delhi 133 ; AIR 1975 Delhi 46 [FB]. The High Court also pointed out that the original application and the additional application could be considered by the Commission inasmuch as these were restrictive trade practices arising out of the same code of conduct alleged against the same set of respondents.
36. It is, therefore, clear that the Commission has got ample powers to permit amendments in the application filed by the Registrar or in the notice of inquiry issued by the Commission itself. The application by the Registrar is taken to be a pleading covered by Regulation 72(2). At any rate according to the Delhi High Court decision, the allegations contained in the application could be treated as part of the notice issued by the Commission and amended under regulation 72(1) or 72(3). The Delhi High Court has also held that allegations about, additional trade practices could be introduced by the amendment of the original complaint when all the restrictive trade practices whether originally alleged or subsequently alleged arise from the same code of conduct alleged against the same set of respondents. It may, how ever, be pointed out that the Commission in the said order made it clear that while the Registrar was setting out a new case in respect of the added restrictive trade practices, he was not putting out an inconsistent case. It followed that amendments had to be allowed for the purpose of determining the real question or issue raised by or dependent on the proceedings.
Amendments could be allowed even if they introduced new restrictive trade practices if the agreement from which the new restrictive trade practices flowed was the same which was the basis of the original application and from which the original restrictive trade practices were alleged to flow.
But the object of the amendment was only to determine the real question in dispute between the parties. That question or issue may have been raised in the beginning or it may have been raised by or dependent on the proceedings. And the amendment could bring out the real or full import of the same. The amendment, however, could not be allowed to introduce a totally new or different case as contrasted with the case originally raised. This indeed is a very delicate matter. This rules out basic alteration of the subject-matter or substituting one question or issue for another. In other words, the amendment asked for must not be such as would destroy the identity of the subject-matter originally proposed. Nor should the amendment be such as would be completely incongruous with the issue originally raised. The amendment could not be allowed to support a claim that the applicant has precluded himself from raising or reintroducing a claim that he had abandoned. This does not rule out addition of a new case on the same set of facts, as for example, referring to an additional restrictive trade practice flowing from the same agreement or code of conduct as in the Tyre's case [1976] 46 Comp Cas 187 (MRTPC) referred to above. Nor did it rule out refinement or fortifying of the same issue as had been raised originally by certain additional facts. In other words, no collection of facts or particulars was barred in respect of a restrictive trade practice which was already canvassed for. The distinctive character of inquiry proceedings, where we have to tread from the known facts to the unknown facts, was duly taken care of by this approach.
37. But the amendment could not be permitted to enlarge the scope of the enquiry in such a way as to include issues or questions which had not been raised either in the beginning or throughout the proceedings, which required an altogether separate set of facts in support thereof, or which were not at all consistent with the issue raised originally or in the course of subsequent proceedings. These principles hold good both for the civil suit and for an enquiry under the Act. As the Supreme Court has pointed out in AIR i960 SC 368 (S.M. Banerjee v. Sri Krishna Agarwal), within the limits prescribed by the decisions of the Supreme Court, the discretionary jurisdiction of any Tribunal for the approval to amend pleadings was as extensive as that of a civil court and the same well-settled principles in the matter of amendments to pleadings in a suit should also regulate the exercise of the powers of amendment by a Tribunal. While, therefore, the provisions of the Civil Procedure Code should not be superimposed in respect of a matter for which the provisions of the MRTP Act and Regulations were clear and sufficient, the principles underlying certain procedures laid down by the Civil Procedure Code hold good when similar procedures had to be followed under the provisions of the MRTP Act and the Regulations. Nor did the difference between an enquiry under the Act and a civil suit call for any difference in this regard. It was as imperative in respect of an enquiry as it was in the case of a civil suit that the party alleged against should know with a reasonable degree of precision the charge it had to meet and that it was not taken by surprise at the turn which the enquiry took in regard to the target of the enquiry. Considerable stress was laid in the course of the arguments on the absence of limitation in the proceedings before the Commission and also on the continuing nature of the restrictive trade practice. But this was an argument which worked both ways. If it was open to the Registrar to take action against the respondent at any time in respect of any new matter there was no reason why there should be anxiety to tag on that enquiry to an existing one. The considerations of avoiding multiplicity of proceedings no doubt stand on a somewhat different footing. In respect thereof, probably balance of convenience or balance of inconvenience might be the determining factor in case the, amendment was permissible. But the question of multiplicity of proceedings would not be strictly relevant when one was considering whether an enquiry unconnected with the original facts and unconnected with the original issue should be tagged on to the original enquiry. The question will be relevant when on the basis of the same facts additional restrictive trade practices are canvassed for by the Registrar. It will also be relevant when in respect of the same restrictive trade practice which is originally canvassed for, some additional facts are sought to be put in. But when the basic facts sought to be introduced by amendment were independent of the facts originally set out and gave rise to an, issue which was different from the issue originally raised, it could not plausibly be suggested that the proposed amendment was for determining the issue raised originally or in the proceedings. The same was the case when on the same facts which were originally canvassed for, an issue was raised which ran counter to or was in conflict with an issue originally raised. The amendment in that case was not for determining the issue raised but for replacing that issue by another issue, for jettisoning the old issue and setting up a new issue in sits place. The argument in favour of avoiding multiplicity of proceedings will not hold good in the latter contingencies. In fact, in such cases, there was no question of multiplicity of proceedings in respect of the same issue arising from the same set of facts. The facts were different and the issues were also different, and the proceedings, therefore, in the fitness of things, must be separate from the other proceedings. It was not permissible to telescope the two proceedings by permitting amendment in the original proceedings. It was all the more so in the case of an enquiry where the respondent had to face allegations of restrictive trade practices based on a certain set of facts. He could very well face allegations of other restrictive trade practices based on the same set of facts. He might also be faced with additional facts supporting the same restrictive trade practices. But if amendments were allowed which would introduce new restrictive trade practices supported by new facts, there would be no finality about enquiries in respect of specific restrictive trade practices. These matters no doubt will have to be decided not only on balance of convenience but also on the nature of the restrictive trade practices alleged and the facts on which they were based. If restrictive trade practices were traced to an agreement, so long as the agreement was the same, as many restrictive trade practices as emanate from that agreement could be alleged. If on the other hand restrictive trade practices were alleged in respect of specific goods, restrictive trade practices in respect of other goods could not reasonably be alleged by way of amendment. If, on the other hand, in respect of a restrictive trade practice already alleged more facts were brought to light, the same could reasonably be allowed by way of amendment. Everything would turn on the original allegations and the course that the enquiry had taken before the application for amendment.
38. Before examining the application of the Registrar in the light of these considerations it was necessary to dispose of some other objections. The delay or laches on the part of the applicant for amendment was of no consequence if the amendment was necessary to bring out the question or issue in controversy between the parties. The Registrar also could not be accused of lack of bona fides just because he adhered to his original position that the trade practices which fell into the categories of Section 33(1) were automatically restrictive trade practices especially when the Commission had fallen in with his submissions. It is the decision of the Supreme Court in TELCO'S case [1977] 47 Comp Cas 520 which gave him the jolt and declaration of law made by the Supreme Court gave him adequate justification to make an application for amendment. The decision of the Supreme Court as a question of law must stand on a different footing from a decision of any other court on a question of fact because such a decision on a point of law enlightened a party about his obligations. These objections are accordingly overruled.
39. Coming to the amendments proposed, I see no valid objection to the introduction of paragraph 3(a) being allowed by way of amendment. It is stated in the paragraph that both respondents Nos. 1 and 2 were monopolistic units in the end products of sulphanamides and May & Baker were the only other unit producing sulphadiazine, based on imported raw materials. But that statement was essentially in the nature of a claim relating to the end products of the intermediates which were the subject-matter of the impugned agreement. The end products were not the subject-matters of the agreement but it was premature to predict the inferences the Registrar would want to draw in respect of intermediates on the strength of the allegation that respondents Nos, 1 and 2 were monopolistic units in the end products of sulphanamides. Similar was the position with the last sentence in this paragraph, viz., that in the penultimate intermediates of certain bulk drugs, the respondents had a monopoly. What exactly the implication of this allegation was on the ultimate outcome of the allegations made in the application was a matter which can be clarified only at the close of the enquiry, but there was nothing in either of these statements which amounted to an allegation of new restrictive trade practice apart from those alleged in the original notice and emphasised in the pleadings. The two additional facts were apparently advanced to support the Registrar's original allegation. Whether in the final analysis the allegation would be sustained it was premature to say. But the claim that the respondents or two of them had monopoly power either in the end products or in the penultimate intermediates would certainly have some relevance in the efficacy of the trade practices alleged in the original notice. The introduction of paragraph 3(a) as requested for by the Registrar was, therefore, permitted by way of amendment.
40. In regard to paragraph 3(b), the position is somewhat different. The first portion of paragraph 3(b) only elaborates the allegations made in the original notice. It was ostensibly made to meet the requirements of Regulation 55 as interpreted by the Supreme Court in its decision in TELCO'S case [1977] 47 Comp Cas 520. No exception can, therefore, be taken to that portion of paragraph 3(b).
41. But in respect of the last sentence of paragraph 3(b) the objections taken on behalf of the respondents were well founded. The last sentence reads as under:
" The said agreement/arrangement as also the trade practices prevailing between the respondents and the manner of their implementation have brought about or tend to bring about manipulation of prices in such manner as to impose on the consumer unjustified costs."
42. It clearly referred to trade practices prevailing between the respondents which were separate from and independent of the agreement/arrangement. There was also the allegation that along with the said agreement/arrangement the trade practices had brought about or tended to bring about manipulation of prices in such manner as to impose on the consumers unjustified costs. The original notice referred to the following restrictive trade practices " (i) limiting, restricting and withholding the output and supply of products.
(ii) restricting persons from whom the goods are bought.
(iii) mutually agreeing, in case of supplies to parties other than the respondents 1 and 2 to supply only on such terms and conditions as would have the effect of eliminating competition."
43. There is no reference in these restrictive trade practices about the manipulation of prices. Paragraph 5 of the application does refer to manipulation of prices but it was referred to only as a side effect of the distortion of competition which was referred to in the earlier paragraph. If no further development had taken place the reference to manipulation of prices in the notice might perhaps have been given a different meaning. But the subsequent conduct of the Registrar clearly showed that he was concerned only with the restrictive trade practices set out in paragraph 3 and reference in paragraph 5 to manipulation of prices was a mechanical repetition of the provisions of Section 2(o).
44. All the respondents in their replies had specifically stated that in view of the fact that the products manufactured by them were subject to drug price control, there was no question of any manipulation of prices on their part. In his answer to the replies by the respondents, the Registrar stated that the objections of the respondents were highly misconceived and untenable and that, in any case, the Registrar's application did not relate to restrictive trade practices relating to resale price maintenance/pricing. In course of further proceedings respondent No. 2 had delivered certain interrogatories to the Registrar, one of which read as under :
" Is it not a fact that the prices of intermediates as well as bulk drugs and formulations thereof are fixed under the Drugs (Prices Control) Order, 1970, under Section 3 of the Essential Commodities Act, 1955 ? "
45. The answer of the Registrar to this question was that this interrogatory was vague, hypothetical and irrelevant for the purpose of the present inquiry and, therefore, it did not call for any reply. In the Registrar's reply dated December 8, 1976, to the application by respondent No. 2 to dispose of certain issues as preliminary issues, the Registrar in paragraph 7 stated that he had not alleged indulgence by the respondents in the restrictive trade practices relating to resale price maintenance and/or pricing and, therefore, no question could arise in the present inquiry for deciding an issue which is not involved in the present proceedings.
46. It followed that the only thrust of the Registrar's application was in respect of the three restrictive trade practices alleged in paragraph 3 of his application and that he did not want any enquiry regarding pricing or resale price maintenance. The learned counsel for the Registrar tried to distinguish between pricing and price manipulation but I am unable to accept her contention. Pricing is a genus of which price manipulation is a species and if pricing is ruled out of the enquiry, price manipulation cannot be dragged in by way of amendment. Price manipulation presupposes interference with the mechanism of pricing and if pricing was not the objective of the Registrar's application for enquiry a fortiori price manipulation could not be. It was pointed out by the learned counsel for the Registrar that the price control only fixed maximum prices and that left ample room for manouvre on the part of the respondents. On the other hand she also stated that the Registrar was not interested in examining pricing so much as price manipulation. It is not possible to accept this plea because if pricing was eliminated, price manipulation could not be brought into the picture. If what the learned counsel suggested was really the case of the Registrar, there was no point in the Registrar making averments at three different stages that he was not interested in pricing. Reference was made to interrogatory No. 10, among the interrogatories delivered to the respondents by the Registrar, which read as under :
" Is it not a fact that respondents have agreed to supply the products to other parties at such prices as would have the effect of eliminating competition between respondents Nos. 2 and 1 on the one hand and other parties on the other ? If not, please state the prices at which supplies were/are made to respondents Nos. 2 and 1 and other parties by respondent No. 3 during the years 1972, 1973 and 1974."
47. The answer to this question was in the negative and the matter was not pursued further. Suffice it to say that the first portion of this question also was in regard to the impact on competition of the practice alleged. It would, therefore, appear that the restrictive trade practices alleged in paragraph 3 of the Registrar's' application were the only restrictive trade practices in which the Registrar was interested and these were the only issues which arose between the Registrar on the one hand and the respondents on the other. Against this back ground it was not possible to allow the Registrar to bring in the issue of manipulation of prices as also the effect on this of the trade practices prevailing between the respondents de hors the agreement/arrangement. The last sentence of paragraph 3(b) is accordingly not allowed to be introduced in the Registrar's application by way of amendment.
48. Same consideration will apply with greater force for the whole of paragraph 3(c). The first sentence of that paragraph states at the end that the respondents had been acting in a manner and had been indulging in trade practices which had brought or tended to bring about manipulation of prices. The second sentence alleges that the third respondent had been disabled from laying down a manufacturing programme of its own and/or had been disabled from determining reasonable prices for its products as a result of the aforesaid agreements/arrangements/trade practices which had brought about or tended to bring about manipulation of prices so as to impose on the consumers unjustified costs. The sentence, inter alia, refers to trade practices apart from agreements/arrangements. The fourth sentence states in its later part that the agreements/arrangements/trade practices have further resulted in creation of a highly artificial, arbitrary and inflated selling price of the products manufactured by the third respondent, without having any nexus or relationship to the cost of production and other relevant facts, thus bringing about manipulation of prices, or conditions of delivery or affecting the flow of supplies in the market relating to the said goods in such manner as to impose on the consumers unjustified costs or restrictions. Once again the reference to manipulation of prices is impermissible in view of the definite stand taken by the Registrar in his pleadings. Reference to trade practices apart from agreement/arrangement also introduces new facts which are not borne out by the original notice and which relate to trade practice which has not been clearly alleged in the original notice and which has been abandoned in the pleadings. There is also reference to reasonable prices which does not at all square with the Registrar's stand that he was not concerned with pricing in this enquiry. There is also the reference to the creation of highly arbitrary selling prices which suffers from the same infirmity. Same is the case with reference to the nexus or relationship to the cost of production. Emphasis on other relevant facts was also equally out of place. The whole of paragraph 3(c) seemed to resurrect the issue of pricing which was deliberately given up by the Registrar in his pleadings and the resurrection was sought to be supported by allegation of basic facts which were in addition to agreement or arrangement referred to in the original notice. Paragraph 3(c), therefore, could not be allowed to be introduced by way of amendment of the original application. Accordingly, the Registrar is allowed to amend the application only by introducing the whole of paragraph 3(a) as proposed by him and the following portion of paragraph 3(b) :
" By and as a result of the aforesaid agreement/arrangement, referred to in para. 2 hereinabove and in the purported implementation of, inter alia, the aforesaid provisions of the said arrangement/agreement relating to the sale of surplus production, which the first and the second respondents decline to purchase, the third respondent has been restrained from selling or is not at liberty to sell the same to parties other than respondents Nos. 1 and 2 without offering it, in the first instance, to respondents Nos. 1 and 2. On the contrary, the third respondent is obliged to sell the said surplus production to other parties only at prices at which the commodity is offered by the third respondent to the first and the second respondents and only in the event of refusal by the said respondents."
49. The Registrar's application in regard to introduction of remaining portion of para. 3(b) and the whole of para. 3(c) is rejected.
50. The respondents will be served with the notice of enquiry including the amendments allowed in the Registrar's application and they will be free to file their amended replies, if they so desire, within one month from the date of this order.
51. The Registrar will pay to the respondents costs determined at Rs. 300 to be distributed among the three respondents equally.