1. The Director General (Investigation and Registration) [hereinafter referred to as 'the DG'] has filed an application under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as 'the Act') alleging that the respondent M/s. Boomi Bottling Gas Company Private Limited has indulged in the restrictive trade practices in so far its agreement executed with dealers contains certain clauses which are prohibitive in nature. The respondent Company is engaged in the business of sale and distribution of L.P.G. under the parallel marketing system of the Govt. of India. It appointed dealers for the purpose of marketing liquefied gas, accessories, goods etc. The agreement entered into with the dealers contained two clauses, namely 17 and 21 relating to exclusive dealing and non-provision of interest on deposit of Rs. 50,000/- stated to be covered under Sections 33(1)(c) and 2(o)(ii) of the Act respectively.
It is submitted that such clauses not only adversely affect the competition between suppliers/manufacturers but also by manipulation of prices or conditions of delivery of goods impose unjustified cost on the dealers. It is, therefore, prayed that the respondent be directed to delete/amend the impugned clauses of the agreement at the same time awarding cost to the complainant.
2. Pursuant to the Notice of Enquiry, the respondent while denying the allegations of restrictive trade practices stated that all that Clause 17 of the agreement stipulates is that the dealer is not to market LPG cylinders made by other companies from the premises where the respondent's cylinders are stored. This is to ensure safety of respondent's cylinders as well to avoid the storage of spurious cylinders of other parties. It is also required in terms of the permission given by the Department of Explosives for storing cylinders at a particular place. The act of the respondent to avoid possible injury or damage to the consumers can in no manner be dubbed as unreasonable. Clause 21 of the agreement on the other hand only relates to advance of Rs. 50,000/- as a performance guarantee for ensuring that the dealer carries out its obligations under the agreement. The aforesaid advance is to be adjusted against the recoveries when the contract comes to an end; In view of acceptance of the aforesaid clause by the dealer the charge of manipulation of prices or condition of delivery of goods so as to impose unjustified cost is uncalled for.
3. Both sides tendered their evidence by way of affidavits. Documents enclosed with the complaint included copy of agreement executed with the dealers by the respondent and Memorandum of Agreement made by the Indian Oil Corporation Limited (Marketing Division) with its distributors. In his deposition Mr. U.K. Menon appearing on behalf of the respondent while emphasising the need for exclusive storage of the respondent's cylinders attributed the margin of profit allowed to the dealers for non-payment of interest on the deposits.
4. I have carefully considered the rival submissions. Clause 17 of the agreement executed with the dealers reads as under : "Clause 17 : The dealer shall not market any other similar goods from the business premises used for storing/marketing the goods of BBG to prevent any spurious cylinders etc., the BBG shall not be responsible or answerable to anyone including the consumers and dealers in such event of unauthorized marketing of spurious cylinders etc. by the Distributor or Dealer." 5. What the clause prohibits is the storing/ marketing of the goods of other manufacturers from the same premises where the goods of the respondent are stored. The prohibition is only to the place where the respondent's goods are to be kept or marketed. It is neither in respect of the sale of the products of other parties nor qua the purchaser or seller other than the respondent. Prohibition in terms of Clause (c) of Sub-section (1) of Section 33 of the Act as it reads is total in regard to the goods other than those of the seller or any other person. As stated, this is also in accordance with the requirement of the Department of Explosives for storing the products, at a particular place for which the permission is to be sought. Otherwise too one cannot possibly find fault with the reason that it is to avoid storing of spurious cylinders. Keeping the nature of the goods in question, undue care is required and safety measures to be adopted to avoid any mishap. The reasons given in the clause clearly reflect the intention of the respondent that the measures have been taken for the safety of the public and the consumers in general. It is not the contention of the learned Counsel for the DG that the condition imposed is unreasonable rather the same is necessary having regard to the character of the goods to protect the public against injury and squarely falls within the ambit of Section 38(a) of the Act. Thus even for the sake of argument, if it is taken that the same is covered under Section 33(l)(c), the respondent successfully passes through the gateway available under Section 38(a) of the Act.
6. Clause 21 only provides for interest free deposit towards performance security. Suchlike clauses are not exclusive to the agreement in question. As stated, incorporation of the aforesaid clause is to ensure the recoveries from the dealers/distributors when the agreement comes to an end. It in no way affects the public interest or the interest of the consumers. It is not the case of the DG that the non-payment of the interest on the deposit has led to the increase in the price of product increasing the burden of the consumer in turn.
This apart, the DG has not shown that the aforesaid practice has the effect of preventing, distorting and restricting competition before it could be said that the provisions of Section 2(o)(ii) can be invoked.
This is in view of the judgment of the Hon'ble Supreme Court in case of Rajasthan Housing Board v. Smt. Parvati Devi etc., reported in HI (2000) Consumer Protection Judgments 9 (SC)=VII (2000) Supreme Laws Today 50-JT 2000 (6) SC 237. Even in the latest judgment of the Hon'ble Supreme Court rendered in case of Principal, Apeejay School v. M.R.T.P.Commission and Anr., reported in VII (2001) Supreme Laws Today 197=(2001) 8 Supreme Court Cases 702, their Lordships have held that unless the material on record establishes that the practices adopted by the appellant in any manner has the effect of preventing, distorting or restricting competition, question of applying Section 2(o) of the Act does not arise. Therefore, the prerequisite condition of Section 2(o) not fulfilled, the same cannot be brought within the ambit of Section 2(o) of the Act.
In view of the above, no case is made out in support of the charges framed in the Notice of Enquiry and as such Notice of Enquiry deserves and is directed to be discharged. There shall be no order as to the costs.