| SooperKanoon Citation | sooperkanoon.com/53138 |
| Court | Monopolies and Restrictive Trade Practices Commission MRTPC |
| Decided On | Sep-06-1989 |
| Judge | G Luthra, H Gupta |
| Reported in | (1990)68CompCas153NULL |
| Appellant | Director-general of |
| Respondent | Sahara India Saving and |
The partners of respondent No. 2, Sahara India, as disclosed, vide a writing dated October 6, 1988, under the directions of the Commission, are the following : 3. Respondent No. 1 floated a scheme under the name "Gold Leaf Cas(sic) Certificate". It issued advertisements to promote that scheme. It also distri- buted printed application forms on the back of which terms and conditions are contained. The Director-General attached photo copies of two advertisements released by the respondents in respect of the aforesaid scheme in the Hindustan Times dated August 14, 1987, and the Deccan Herald dated September 1, 1987. The Director-General also attached a copy of the application form distributed by the respondents along with his application under Section 36B(c) of the Monopolies and Restrictive Trade Practices Act.
4. According to the Director-General, as alleged in the aforesaid application, the respondents were indulging in unfair trade practices by making the following false and misleading claims : (a) Regarding large number of members / saharians and number of branches : "On the eve of Great Independence, 30,000 saharians extend their , gratitude to Reserve Bank of India for extending credibility and respectability to our savings and investment activities in the sphere of banking." "30,000 family members of sahara India invite you to rejoice the great moments of. launching its prestigious savings and investment schemes on Tuesday, September 1, 1987, at 6.00 p. m." (b) Regarding maturity payment through designated bank advertisement dated August 14, 1987, in the Hindustan Times : (c) Regarding 'activities' and 'manufacturing lines' of the company in advertisement dated September 1, 1987, in Deccan Herald ; "Our activities: Finance, housing, industrial, marketing, export, courier service, mass communication, children welfare, advertising, printing." Production starting so-on : High quality jute and polyoropelene, (sic)ended products, welding electrodes, stamping (lamination).
(d) Regarding Reserve Bank approval and security of deposits in advertisement dated August 14, 1987, and August 1, 1987, in the Hindustan Times : "Your deposits and interest totally secured in guaranteed securities as per Reserve Bank's directives and approval." (e) Regarding return on investment on Gold Leaf Cash Certificate (claimed in condition No. 4 of terms and conditions) (Annexure III).
"4. The maturity value of certificate is according to the chart given below : 5. In an order dated December 18, 1987, it was held by this Commission (consisting of the Bench of Chairman and Shri S.D. Manchanda) that prima facie the aforesaid claims were false and misleading and that the respondents were indulging in unfair trade practices within the meaning of Clauses (ii) and (iv) of Section 36A(1) of the Monopolies and Restrictive Trade Practices Act. Vide that order, an ex parte temporary injunction restraining the respondents from advertising or in any "manner publicising the high sounding claims referred to in the preceding paragraph till further orders was issued and the respondents were directed to show cause as to why the aforesaid injunction be not made absolute for the duration of the enquiry.
6. Respondent No. 1 filed an application under Section 12A(2) of the Monopolies and Restrictive Trade Practices Act read with Rule 4 of Order 39, Civil Procedure Code, for vacating the injunction. That application was contested by the Director-General. The Commission decided that application as well as the application of the Director-General under Section 12A(1) of the Monopolies and Restrictive Trade Practices Act by means of an order dated June 3, 1988.
7. While dealing with the claims of the respondents, the claim mentioned at (d) in the preceding paragraph was split into two and was described as(sic) the second and third claims. The second claim was taken as using the(sic) name of the Reserve Bank of India and its approval regarding the "Gol(sic) Leaf Cash Certificate" scheme. The third claim was mentioned as an assu(sic) ance to the public in the impugned advertisements in the following words : "Regarding Reserve Bank approval and security of deposits in advertisement dated August 14, 1987, in the Hindustan Times" : "Your deposits and interest totally secured in guaranteed securities as per Reserve Bank's directives and approval." 8. The claims given in Sub-paragraphs (a), (b), (c) and (e) of the preceding paragraph in this order were described as the first, fourth, fifth and sixth claims respectively. All the five claims were held to be false and misleading even in the order dated June 3, 1988, while, in respect of the sixth claim, i.e., regarding the return on investment on Gold Leaf Cash Certificate, it was held that the percentage of return, which represented the maturity value of the amount deposited, was arithmetically wrong and that actually the percentages were 150, 197, 205 and 300 instead of 250, 300, 350 and 400 as claimed in the impugned advertisements. But the explanation of the respondents that the actual worked out return (i. e., 150 per cent, 197 per cent., 205 per cent, and 300 per cent, for the deposits given in the chart reproduced in the preceding paragraph) was within the reach of the claim of respondent No. 1 was accepted. Accordingly, the injunction already issued ex parte on December 18, 1987, in respect of the five claims was made absolute while, in respect of the sixth claim, it was modified to the extent that the correctly worked out return was within the reach of the claim of respondent No. 1.
9. The contention of the Director-General in the present application is that the respondents are making the same claims in the impugned adver-tisement dated July 20, 1988, in the Hindustan Times which were found as false and misleading and were prohibited by the injunctions issued ex parte on December 18, 1987, and made absolute on June 3, 1988, and that thus there was a serious violation of the injunction.
The Director-General also urges that there is not only violation of the injunction but also there was aggravation of that contravention by way of using the words "M.R.T.P. Commission acknowledges Sahara India's Deposit Schemes totally secured", in the advertisement.
10. The Director-General has also taken exception to the following portion of the advertisement which, according to him, violates the injunction already issued : "Our activities : -- Finance, housing, industrial, courier services, mass communication, marketing, child welfare, advertising, printing.
We manufacture : --Fans, textiles, pharmaceuticals, steel hardwares, jute blended with polypropelene products, stamping (lamination)".
11. The Director-General explains that, in the orders dated December 18, 1987, and June 3, 1988, it was made clear that the mention of various activities other than mere deposits gave a misleading impression to the public that Sahara India Savings and Investment Corporation Limited was carrying on all the activities like manufacture of fans, textiles, marketing, advertising and printing, etc., which was not the correct position and that, therefore, the same prima facie amounted to unfair trade practice and as such should not be mentioned in future advertisements, but that the respondents, by way of mentioning again the same activities and the undertakings of the manufacturer (reproduced already), had clearly contravened the injunction. The Director-General reproduced in his application, the following words occurring in paragraph 24 of order dated June 3, 1988.
"The fifth impugned claim is that the respondent is involved in wide-ranging activities such as finance, housing, export, etc., and that it is manufacturing or is about to manufacture various products such as textiles, fans, welding electrodes, etc. Actually, this claim relates to Sahara India group of companies, but this aspect has not been made clear beyond doubt in the advertisement as it was worded and thus could give the impression that the respondent is. a 'multi-division' and 'multi-product' company. Even in the proceedings after the issue of the Commission's order of ex parte ad interim injunction, specific information in regard to these activities of the so-called Sahara India group of companies has not been furnished." 12. A notice was issued to the respondents to show cause against the application of the Director-General and as to why the respondents be not proceeded against by way of their prosecution under Section 50 of the Monopolies and Restrictive Trade Practices Act or under Rule 2A of Order 39, Civil Procedure Code, read with Section 12A of the Monopolies and Restrictive Trade Practices Act. The respondents contested and put in a reply. They stated that, on account of the modification of the injunction order relating to the sixth claim, they were under a bona fide belief that their claim as to the return worked out by the Director-General was correct and hence they were entitled to believe that the Commission had acknowledged that Sahara India's Deposit Schemes were totally secured. They explained that their business was seriously hampered by the issue of press releases in various newspapers which did not give a full picture of the injunction order but only highlighted those portions which were against the respondents on account of which it was absolutely necessary for them to explain the position and that is why they had inserted the words that "Monopolies and Restrictive Trade Practice Commission acknowledges Sahara India's Deposit Schemes totally secured." 13. The respondents also held out an assurance to the Commission that they will never violate the injunction orders and stated that in fact they never had any intention to do so. They also undertook that if the Commission ordered, after scrutinising the impugned text of advertisement, that such advertisement should not be issued in future, that will be done.
14. The Director-General has rightly stated that there is a contravention of the injunction as stated in paragraph 10 of this order. In the impugned advertisement, the respondents gave a misleading impression to the public that Sahara India Savings and Investment Corporation Limited and Sahara India were carrying on all the activities of housing, courier services, etc., and manufacture mentioned against the words "our activities and we manufacture". The impugned advertisement does not mention the names of the companies which were included in the Sahara India Group. The entire observations contained in the order dated June 3, 1988, a portion of which has been reproduced in paragraph 10 of this order, are applicable to the impugned advertisement. Hence, the impugned advertisement is viola-tive of the prohibition contained in the injunction order.
15. The modification of the injunction in respect of the sixth claim, vide order dated June 3, 1988, did not have any effect on the prohibition relating to the fifth claim. Therefore, the respondent could not take the shelter of modification of the injunction in respect of the sixth claim for giving the impugned advertisement.
Notwithstanding that modification, it is necessary for the respondent to make it clear in the advertisements that respondent No. 1 is having business of only deposit of amounts and giving some facilities in respect thereof. The respondents need not mention about the other activities relating to manufacture of some products by other companies unless and until the names of those companies with details about their activities separately are given and also as to how those companies have connection with the Sahara India Group is to be indicated. In fact, it is always proper that whenever there is an advertisement, it should be separate in respect of the separate business, otherwise the consumers are bound to be misled.
16. Further, the use of the words "Monopolies and Restrictive Trade Practices Commission acknowledges Sahara India's Deposit Scheme totally secured" was not only totally uncalled for but also intended to mislead the public at large for promotion of the deposit schemes. The contention of the respondents that the same was done in good faith and on account of a bona fide belief in its truth arising out of the modification of the injunction order relating to the sixth claim is absolutely baseless. Relevant portion of the order dated June 3, 1988, relating to the sixth claim reads as under ; "The last impugned claim is in regard to the 'percentage of return' on deposits of various maturity periods in a chart appearing on the back of the application form for 'Gold Leaf Cash Certificate' Scheme. The Commission was satisfied that the 'percentage of return' worked out by the Director-General was correct and it differed materially from what had been shown in the chart and, therefore, considered this claim as misleading. For ready reference, the chart is reproduced below : The respondent has not explained the arithmetical inaccuracy. It appears to us that the 'percentage of return' is actually the percentage of maturity value to the amount deposited. In any case, as things stood and even stand today, the chart is definitely misleading. We, however, accept the respondent's explanation that the return as worked out by the Director-General is within the respondent's reach considering that the periods of maturity ranged from 7 years to 10 years and the interest thereon has to be compounded annually. In fact, even the return on long-term fixed deposits and approved Government securities in which 80% of the deposits are required to be deposited by the respondent is pretty high.
We, therefore, modify our order of injunction in regard to the impugned claim now under consideration to the extent that the return worked out by the Director-General is within the respondent's reach." 17. It is absolutely clear from the aforesaid order that the same was only in respect of the scheme of deposits of respondent No. 1 alone. It never referred to other schemes, if any, of the so called Sahara India Group. Yet, the Monopolies and Restrictive Trade Practices Commission is stated to have acknowledged the deposit schemes (the word used is in plural) of Sahara India as totally secured. Could there be any existence of bona fides or good faith oa the part of the respondents in such circumstances. It is absolutely clear that they had a motive to mislead the people at large with a view to promote all the schemes of the so called Sahara India Group.
18. Further, the aforesaid observations (reproduced already) in the order dated 3rd June, 1988, do not give any indication that the deposit scheme of respondent No. 1 was totally secured. It is merely stated that the respondent had wrongly calculated the "percentage of return" and that, actually, the "percentage of return" was as calculated by the Director-General and that such percentage (calculated by the Director-General) could be reached by respondent No. 1. Hence, on that account also, it was wrong on the part of the respondent to have stated that the "MRTP Commission acknowledges" the deposit schemes of respondent No. 1 as secured.
19. Learned counsel for the respondents contended that the word 'acknow-ledgcs' merely means knowledge and does not mean admit or uphold and in that way it could be said that the respondents bona fide believed that the Monopolies and Restrictive Trade Practices Commission had the knowledge about the seem ity of deposit schemes of respondent No. 1.
20. No doubt, the dictionary meaning of the word "acknowledge", inter alia, is to have knowledge but its meaning also is to "own as true, or genuine" or "to own with gratitude or with thanks". In common parlance, the word "acknowledge" is always taken as knowing the fact to be true or admitting a fact. The Supreme Court in Lakhanpal National Ltd. v.MRTPC [1989] 66 Comp Cas 519 as well as while dealing with the interpretation of the definition of unfair trade practice as given in Section 36A of the Monopolies and Restrictive Trade Practices Act made the following observations (page 524 of 66 Comp Cas) : ''Does it lead a reasonable person in the position of a buyer to a wrong conclusion The issue cannot be resolved by merely examining whether the representation is correct or incorrect in the literal sense. A representation containing a statement apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly, a statement, which may be inaccurate in the technical literal sense, can convey the truth and sometimes more effectively too than a literally correct statement.
It is, therefore, necessary to examine whether the representation complained of contains an element of misleading the buyer. Does a reasonable man on reading the advertisement form a belief different from what the truth is ?" (emphasis supplied) 21. It is apparent from the above that, according to the view of the Supreme Court, it is the reasonable belief of the common man which is important. A common man always takes the meaning of "acknowledges" as admitting or accepting the truth of a particular fact. The Monopolies and Restrictive Trade Practices Commission has, as already stated, never admitted or accepted the factum of any deposit scheme of the respondents as totally secured. Even if it is taken for granted that the word 'acknowledges' means mere knowledge, the case of the respondent does not improve. It cannot be said from any circumstances that the Monopolies and Restrictive Trade Practices Commission had knowledge of the total security of any deposit scheme of the respondents.
22. Learned counsel for the respondents (Shri S.S. Kumar) relied upon a judgment of the Gauhati High Court in Sudhir Namasudra v. Purnendu Kumar Das, AIR 1980 Gauhati 1, where it was, inter alia, held that establishment of violation of the order of injunction, being punitive proceedings, require stricter proof than civil actions. Learned counsel contended in the present case that there was necessity of stricter proof that there was clear contravention of the injunction order and there were no bona fide or good faith on the part of the respondents.
23. We have already held that not only there were no bona fides or good faith on the part of the respondents but they had intentionally contravened the injunction with a view to deliberately mislead the people at large motivated by promotion of deposit schemes of the so called Sahara India group and respondent No. 1.
24. It is thus clear that the respondents have violated the injunction order in respect of the prohibition relating to the "sixth claim" by way of alleging that the deposit schemes of Sahara India group were totally secured and that the Monopolies and Restrictive Trade Practices Commission had acknowledged the same.
25. Before making any final order as to what action should be taken against the respondents and directors of respondent No. 1 and partners of respondent No. 2, we feel it necessary to hear learned counsel for the parties in respect of the following two courses open to the Commission : 1. Directing of filing of a complaint under Section 57 of the Monopolies and Restrictive Trade Practices Act by the secretary, deputy secretary or administrative officer of the Commission for commission of offences punishable under Section 50 read with Section 13 of the Monopolies and Restrictive Trade Practices Act; or 2. Taking proceedings under Rule 2A of Order 39, Civil Procedure Code, read with Section 12A(2) of the Monopolies and Restrictive Trade Practices Act and either directing the detention in civil prison of directors of respondent No. 1 and partners of respondent No. 2 for a term not exceeding three months, or imposing fine, realisation of which can be by way of attachment and sale of the properties of the respondents if the payment is not made within the time fixed by the Commission. It may be mentioned that in case detention in civil prison is ordered, the Director-General will have to deposit the diet money in accordance with the rules of the Central Jail at Tihar, which can be enquired.
26. Learned counsel for the respondents relied upon the judgment of the Supreme Court in Rama Dayal Markarha v. State of Madhya Pradesh, AIR 1978 SC 921 (relevant paragraph 11) for taking a lenient view. That will be taken into consideration for the purpose of deciding the aforesaid points which are being fixed for arguments.
27. Announced in open court today, the sixth day of September, 1989, at 2.30 p.m.