1. This is an application dated November 8, 1976, filed by the respondent in R.T.P.E. No. 45 of 1976. The respondent is a public limited company doing business in the manufacture of liquor and beer.
2. A notice under Sections 10(a)(iv) and 37 of the Monopolies and Restrictive Trade Practices Act (hereinafter referred to as " the Act ") was issued on 29th September, 1976, to the respondent because on the basis of the information available with the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as " the Commission ") it appeared to the Commission that the respondent was indulging in the following trade practices as pointed out in the notice: " (a) Exclusive dealership: in other words the respondent is asking its sole selling agents not to sell products of other manufacturers ; (b) Area restriction: the sole selling agents are not permitted to sell goods outside the territory assigned to them ; and (c) differential breakage allowance which is being given to different distributors." 3. The respondent by its letter dated October 13, 1976, filed its memorandum of appearance authorising Shri V.N. Koura, advocate, -for service of processes, etc.
4. By an application dated November 8, 1976, the respondent prayed for an order quashing and discharging the notice of enquiry dated 29th September, 1976. According to the respondent, in order to invoke the jurisdiction of the Commission under Section 10(a)(iv) of the Act, two conditions must be fulfilled, viz., that, (i) there must exist a trade practice which is restrictive, and (ii) the Commission must have actual knowledge or information of its existence. It was also contended that the enquiry under Section 37 of the Act could only be held in the present case if the matter had come before the Commission for enquiry pursuant to its jurisdiction under Section 10(a)(iv) of the Act. It was submitted that the notice of enquiry in question neither alleged the actual existence of a restrictive trade practice, nor did it allege that the Commission had any actual knowledge or information of its existence so as to invoke the jurisdiction of the Commission under Section 10(a)(iv) of the Act.
5. It may be pointed out that by another application dated November 8, 1976, the respondent had requested that it should be furnished with particulars of the facts referred to in the notice of enquiry, viz., that the Commission had perused certain unspecified agreements and data and that the said agreements were alleged to have been entered into by the respondent with its sole selling agents and distributors. This request was made, according to the respondent, so that it should be able to comment upon or submit a reply to the said notice. By reference to this application, the Commission clarified on December 9, 1976, that the agreements referred to in the notice under Section 37(1) dated September 29, 1976, were agreements enclosed with the respondent's letter dated January 19, 1976, addressed to the Secretary of the Commission. The time for filing the reply to the notice was also extended by four weeks from December 17, 1976.
6. The learned counsel for the respondent in support of the application under present consideration contended that in actual fact there should be a restrictive trade practice indulged in by the respondent and that the Commission should have knowledge or information of this restrictive trade practice before the Commission could assume jurisdiction to start an enquiry. It was not possible to accept this wide proposition in view of the clear provisions of the Act. Section 10(a) empowers the Commission to enquire into any restrictive trade practice and Section 10(a)(iv) empowers the Commission to do so Upon its own knowledge or information. Section 37(1) also empowers the Commission to enquire into any restrictive trade practice which may come before it for enquiry. It will be pertinent to examine the scheme of Section 10(1) in this connection. Section 10(a)(i) refers to the enquiry by the Commission upon receiving a complaint of facts which constitute such practice from any trade or consumers' association. Section 11 provides that in cases covered by Section 10(a)(i), the Commission shall before issuing any process requiring the attendance of the person complained against, cause a preliminary investigation to be made by the director for the purpose of satisfying itself that the complaint requires to be inquired into. It is, therefore, clear that at the start for an enquiry under Section 10(a)(i) what is required is a complaint of facts which according to complainant constitutes restrictive trade practice and satisfaction by the Commission on a report by the Director of Investigation that the complaint requires to be enquired into. The outcome of the enquiry cannot be predicted or prejudged from the beginning. The trade practice may or may not turn out to be restrictive in character. If it turns out to be restrictive in character it may or may not be prejudicial to public interest. The ambit of enquiry is, therefore, necessarily quite wide. It covers firstly the enquiry whether such a trade practice exists and whether it is restrictive in character and, secondly, whether it is prejudicial to public interest.
The nature of enquiry cannot be different in cases of enquiry under Sections 10(a)(i) and 10(a)(iv). It, therefore, follows that even in an enquiry under Section 10(a)(iv) initiated on Commission's own knowledge or information, the enquiry has got two branches, viz., one relating to the existence and restrictive nature of the trade practice and the other relating to the prejudice to the public interest. It cannot, therefore, be suggested that existence or restrictive nature of the trade practice must be a condition precedent for the start of the enquiry. It will amount to prejudging of the first issue which could never have been the intention of the law.
7. Moreover, as the Commission has pointed out in its decision dated February 25, 1975 in [1976] 46 Comp Cas 395 (MRTPC) in the matter of Raymond Woollen Mills Ltd. (J.K. Engineering Division) Sections 10 and 37 of the Act referred to an "inquiry" into restrictive trade practices. There is a material difference between an " inquiry " and a " trial ". The literal meaning of the "inquiry" is investigation as against the literal meaning of the " trial" which is " judicial examination and determination of issues between parties by a judge ".
In case of a trial, the facts on which the parties pleading rely for the claim or defence, as the case may be, are known to them. One party asserts such facts and the other party denies them. This raises issues between parties for determination, and the judge judicially examines and determines the issues between the parties. An inquiry into the restrictive trade practice, and more particularly a suo motu inquiry, is not an adversary proceeding. There can, therefore, be no statement of facts on which the party pleading relies for its claim. In fact, in the inquiry the facts have to be found as a result of the inquiry. It is for this reason that the Regulations provide only for facts " which constitute a restrictive trade practice ". Even Section 10(a)(i) as discussed earlier requires only a complaint stating facts. That is to say, the provision is only for the constituent facts or ingredients of a restrictive trade practice alleged against the respondent.
8. In this particular case, the Commission has referred to certain agreements which the respondent had entered into with its sole selling agents and distributors. It is also now clarified that the agreements referred to were the agreements enclosed with the respondent's letter dated January 19, 1976, addressed to the Secretary of the Commission.
On the basis of this information or knowledge the Commission has referred to certain trade practices flowing from the agreements which appeared to it to be restrictive in character. These trade practices have been set out in paragraph 2 earlier. Whether the trade practices really existed or not, whether they were really restrictive in character or not, and whether they were really prejudicial to public interest or not are matters in respect of which a definite answer can be given only after the enquiry is concluded. At this stage there is only necessity for prima facie satisfaction of the Commission about basic or constituent facts which appeared to represent or constitute trade practices which were restrictive in character. This prima facie satisfaction may turn into a judicial inference after the enquiry is concluded and the judicial inference may be that the trade practice existed and was restrictive in character. It may also be that the trade practice did not exist or that at any rate it was not restrictive in character. It may also be found that although the trade practice existed and was restrictive in character, it was not prejudicial to public interest or it may also be found that not only was the trade practice existing but it was restrictive in character and prejudicial to public interest. All these are possibilities but which is the possibility that will be crystallised in a judicial determination by judicial enquiry can be stated only at the end of the enquiry. To base the jurisdiction of the Commission on the actual existence of a restrictive trade practice or on the definite knowledge of the Commission that such a restrictive trade practice existed would be like putting the cart before the horse and would amount to destroying the basic nature of the inquiry. It would deprive the public of a judicial examination of an allegation which may or may not stand the judicial scrutiny, I am, therefore, unable to uphold the contentions set out on behalf of the respondent in the application. The application is accordingly rejected.