Judgment:
1. This is an enquiry under Section 37 read with Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969, instituted pursuant to an application filed by the Director-General of Investigation and Registration (hereinafter referred to as "the applicant") against M/s. Coromondal Prodorite Limited (hereinafter referred to as " the respondent"). It is alleged that the respondent has appointed distributors on terms and conditions contained in the agreement executed by the said distributors with the respondent. A copy of the specimen agreement entered into with them by M/s. Kaypee Chem, is on the file as annexure "A". M/s. Kaypee Chem is the sole distributor for the sale of products of the company and for procuring contracts in the State of Maharashtra. By virtue of the agreement dated August 25, 1984 (annexure "A"), M/s. Kaypee Chem was appointed as sole distributor for the period between August 2, 1984, to August 1, 1986.
The applicant has impugned Clauses 2(b) and 6(b). These Clauses read as follows : "2(b). The term ' TERRITORY ' shall mean the whole area of the State of Maharashtra.....
6(b). The sole distributors shall be at liberty to sell the products purchased from the company to any person or use the products for carrying out any contract entered into by the sole distributors with any person for any construction within the territory. The sole distributors shall not sell the products to any person outside the territory or use the same for any contract for construction outside the territory." In this way, it is submitted that the respondent company is resorting to the restrictive trade practice in the nature of restricting the area within which the distributor will operate. Accordingly, the agreement relates to restrictive trade practice under Clause (g) of Sub-section (1) of Section 33 of the Monopolies and Restrictive Trade Practices Act. Clause (g) reads as follows: "Any agreement to limit, restrict or withhold the output or supply of any goods or allocate any area or maket for the disposal of the goods. " 2. The applicant, therefore, prays that a "cease and desist" order be passed in terms of Section 37(1) of the Monopolies and Restrictive Trade Practices Act, restraining the respondent from indulging in the restrictive trade practice of confining the activities of the distributor to a particular area.
3. A notice of enquiry was issued in terms of regulation 58 of the Monopolies and Restrictive Trade Practices Act. The respondent was called upon to file a reply to the notice of enquiry. On October 29, 1986, because of failure to file the reply, further time till today was granted, subject to depositing costs in the sum of Rs. 300. The respondent, however, moved an application under Section 31(1) of the Monopolies and Restrictive Trade Practices Act. The application is accompanied by an affidavit of Shri M.A. Murugappan, director of the respondent company. It is that M/s. Kaypee Chem is the sole distributor but that agreement expired on August 1, 1986. The respondent, however, has entered into a separate agreement with a stockist, namely, M/s.
Indian Agencies Corporation, New Delhi, containing the area restriction clause. There is no other similar agreement with anybody else in the country. The respondent unequivocally undertakes not to engage itself in the alleged restrictive trade practice with anybody in future. The respondent further says that it will cease and desist from indulging in the restrictive trade practice and will not repeat the same in future with anybody. In view of this categorical statement, we feel that the object of this enquiry is achieved. Not only that, the respondent submits that the enquiry be disposed of on such terms and conditions as the Commission may deem fit to impose in the circumstances of the case.
This being so, under Section 37(1) of the Monoplies and Restrictive Trade Practices Act, we hereby hold that Clauses 2(b)and 6(b) of the agreement dated August 25, 1984, with M/s. Kaypee Chem relate to restrictive trade practice within the meaning of Clause (g) of subsection (1) of Section 33 of the Monopolies and Restrictive Trade Practices Act and are declared to be void. The respondent is directed not to resort to restrictive trade practice in the nature of area restriction in future with M/s. Kaypee Chem or with anybody else for the purpose of the sale of its products or for procuring business. We are informed that costs have just been paid.