1. This order shall dispose of an application of the Director-General of Investigation 2nd Registration under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969.
2. It is stated by the Director-General that the respondents are engaged in the business of ayurvedic and pharmaceutical preparations ; that respondent No. 1 has furnished to the Director-General the agreement relating to its marketing arrangement and the copy of this agreement is annexed and marked as annexure "A". The Director-General has taken exception to the following Clause in the agreement: "11. The firm shall allow the company a discount or rebate on the list price as mentioned in Clause 10 hereof at the following rates : 3. The contention of the Director-General in his application is that the aforesaid Clause 11 in the agreement is violative of Clause (e) of Section 33(1) of the Monopolies and Restrictive Trade Practices Act and as such constitutes a restrictive trade practice.
4. Finding a prima facie case, a notice of enquiry, dated April 4, 1988, was ordered to be issued returnable on June 8, 1988, calling upon the respondents to meet the allegations made in the application of the Director-General and the notice of enquiry.
5. Respondent No. 1 sent a reply to the notice of enquiry by post but he was not present on the date of hearing and as such ex parte proceedings were ordered against him. Respondent No. 2 was also not present on the date of hearing in spite of service and as such ex parte proceedings were ordered against him. The Director-General was directed to file ex parte evidence on November 30, 1988.
6. I have gone through the reply filed by respondent No. 1 to the notice of enquiry in which he has controverted the allegations made in the notice of enquiry and the application of the Director-General. The Director-General has filed an affidavit in support of his case to tender in evidence a copy of the agreement dated May 19, 1985, entered into between respondents Nos. 1 and 2.
7. I have gone through the aforesaid agreement and impugned Clause 11 of the agreement. This Clause clearly violates Clause (e) of Section 33(1) of the Monopolies and Restrictive Trade Practices Act as it allows discriminatory discount depending upon the quantity purchased by the dealers from him. With effect from August, 1984, every agreement falling within one or more of the categories enumerated under Section 33(1) of the Monopolies and Restrictive Trade Practices Act is deemed to be an agreement relating to restrictive trade practices for the purpose of this Act. The case of the Director-General stands proved by the production of the aforesaid agreement containing the impugned Clause 11.
8. I, therefore, hold that the respondents are and have been indulging in restrictive trade practices.
9. Section 38 of the Monopolies and Restrictive Trade Practices Act further provides that a restrictive trade practice shall be deemed to be prejudicial to the public interest unless the Commission is satisfied of any one or more of the circumstances enumerated therein.
In the instant case, the respondents have neither pleaded any of the circumstances enumerated under Section 38 nor any one of them stand proved. So, the restrictive trade practice shall be deemed to be prejudicial to the public interest.
10. In view of the above premises, I hold that the respondents have been indulging in the restrictive trade practice and the same is prejudicial to the public interest.
11. I, therefore, hold that Clause 11 of the agreement is void and shall stand deleted from the agreement.
12. The respondents are directed to delete the aforesaid Clause from the agreement and modify the agreement accordingly and furnish a copy of the modified agreement to the Commission within two months from the receipt of this order.