Holding

Causation of loss or injury to consumers is an essential condition for invoking the provisions of Section 36A(3)(b) of the MRTP Act.

Summary

Colgate Palmolive (India) Ltd ran a newspaper contest that required consumers to purchase two toothbrushes to enter, offering various prizes. A complaint was filed with the MRTP Commission alleging that the contest was an unfair trade practice under Section 36A(3)(b) of the Monopolies and Restrictive Trade Practices Act, 1969, because it promoted sales and allegedly caused loss or injury to consumers. The Commission held the contest to be unfair, interpreting the provision to not require actual loss or injury. The Supreme Court examined whether causation of loss or injury is a necessary element of an unfair trade practice under Section 36A. The Court held that the literal meaning of the statute demands that the trade practice must cause loss or injury to consumers, and that the Commission erred in omitting this requirement. Consequently, the appeals were allowed and the Commission’s findings set aside, with no order as to costs.

Issues considered

Whether Section 36A(3)(b) of the Monopolies and Restrictive Trade Practices Act, 1969 requires that a contest or similar practice cause loss or injury to consumers to be classified as an unfair trade practice.
Whether the MRTP Commission correctly interpreted the statutory language of Section 36A(3)(b).

Legislation cited

Monopolies and Restrictive Trade Practices Act, 1969s. 2(u), s. 36A

Subjects

unfair trade practiceSection 36AMRTP Actconsumer protectionliteral interpretationmischief ruleadvertising contestcausation of losscompetition restriction

Judgment

• COLGATE PALMOLIVE (INDIA) LTD . A
r.
M.R.T.P. COMMISSION AND ORS.

NOVEMBER 20, 2002

[G.B. PATTANAIK, CJI AND S.B. SINHA, J.] B

Monopolies and Restrictive Trade Practices Act, 1969; Section 36A-
Unfair trade practices-Principles-Invoking of-Held, since no causation of
loss or inju1y to the consun1er, principles of unfair trade practices could not
be invoked-No anomaly or absurdity in literal meaning of the provision-
c
Must be assigned its plain meaning- 'Mischief Rule' to be resorted to-
Interpretation of Statutes.

Appellant announced a contest apparently for the purpose of
educating the families for inculcating good habit of taking care of dental D
health but the object of the contest .in the advertisement seems to be of
giving publicity and to increase sale of its product. On a complaint to the
Monopolies and Restrictive Trade Practices Commission, Full Bench of
the Commission, vide impugned Judgment, held the advertisement issued
for the contest to be an unfair trade practice within the meaning of Section
36A of the M.R.T.P. Act. Hence this appeal. E
The question which arose in these appeals was regarding
interpretation of Section 36A of the Monopolies and Restrictive Trade
Practices, Act, 1969.

It was contended for the appellant that since no loss or injury was F
~
caused to the consumer by the advertisement announcing the contest,·
Commission misread and misrepresented the provision of Section
36A(3)(b) of the M.R.T.P. Act in arriving at the decision.

Allowing the appeal, the Court
G
HELD: l.l. Causation of loss or injury is a sine qua non for invoking
• the principles of Section 36A of the M.R.T.P. Act. It is a well settled
principle of law that a literal meaning should be assigned to a statute unless
the same leads to anomaly or absurdity. The terminology used in the
provisions is absolutely clear and unambiguous. In terms of the provisions
'
~ 219
H
220 SUPREME COURT REPORTS [2002] SUPP. 4 S.C.R.

A of law not only a trade practice is resorted to for the purpose of promoting
sale or use or supply of any goods or services, as specified therein but
thereby loss or injury to the consumers of such goods or services must be
caused. The word 'thereby' must be assigned its plain meaning for
interpretation of the provision of law. The Commission committed a
B manifest error in holding that actual loss or injury is not an essential
ingredient of the unfair trade practice. 1225-B-EI

1.2. An amendment in the Act has been made whereby the words
"causing loss or injury to the consumer" were omitted in the Act, which
also goes to show the law as it stood thence, 'loss or injury to the consumer'
C was a pre-requisite for attracting the provisions of Section 35A(3)(b) of
the Act. In interpreting the said provision of law, the "Mischief Rule"
should be resorted to. (225-F, G]

H.M.M Ltd. v. Director General, Monopolies & Restrictive Trade
Practices Commission, (1998) 6 SCC 485, relied on.
D
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 891 of
1993.

From the Judgment and Order dated 19.6.1991 of the MRTP.
Commission New Delhi in U.T.P.E. No. 41 of 1984.
E
WITH

C.A. No. 2446/93 and 2965 of 1989.

Ashok H. Desai, R. Narain, Aditya Narain and Rajan Narain, for the
F Appellant.

Ms. Shashi Kiran, S.N. Terdol and P. Parmeswaran, for the Respondents.

The Judgment of the Court was delivered by

S.B. SINHA, J. Interpretation of Section 36A of the Monopolies and
G Restrictive Trade Practices Act, 1969 ('the M.R. T.P. Act') is in question in
this batch of appeals which arise out of the judgments and orders passed by
the Monopolies and Restrictive Trade Practices Commission ('the
Commission'), New Delhi whereby and where-under advertisements issued
by the appellant herein announcing a contest was held to be an unfair trade
H practice within the meaning thereof.
;
COLGATE PALMOLIVE (INDIA) LTD. v. M.R.T.P. COMMISSION [SINHA. J.J22 J

The fact of the matter is being noted from Civil Appeal No.891of1993 A
Colgate Palmolive {India) ltd. v. Monopolies & Restrictive Trade Practices
Co11unission and Ors.

The appellant had inserted an advertisement in several newspapers in
September, 1984 announcing a contest known as "Colgate Trigard Family
Good Habits Contest". 'Trigard' is the name of tooth-brush manufactured by B
the appellant. By reason of the said advertisement, a contest apparently for
the purpose of educating the families for inculcating good habit of taking
care of dental health was announced.

The brief particulars of the contest are as under:-
c
As a condition precedent to participating in the contest each prospective
participant was required to send two upper portion of the cartons in which the
Trigard Tooth-brushes were sold. These two upper portions of the carton
were to be sent along with each entry form which was required to bear the
dealers' name and address duly rubber-stamped on the form. Obviously this D
necessitated the purchase of two Trigard Colgate brushes by a prospective
participant in the contest. The entry form contained four questions, each with
two alternative answers which were also printed. The contestant was required
to tick mark the correct answ'er.

By way of illustration the appellant had already ticked the correct E
alternative in the case of first question which was as follows :-

"Brush in the morning;

(a) only in the morning;
F
(b) in the morning and after every meal"

In the form alternative (b) had been ticked.

There were similar three questions with alternative answers. Anyone
with an ordinary knowledge of dental health could tick mark the correct G
answer to those questions. But this was not enough. In additio.n to answering
the questions as mentioned above, each contestant had to write a sentence not
exceeding ten words describing as to why the contestant's family used Colgate
Trigard Tooth-brush. The best entry in this regard would win the first prize.
There were several other prizes for second, third and fourth winners. In all
there were fifty prizes. H
222 SUPREME COURT REPORTS [2002] SUPJ;>. 4 S.C.R.

A Appellant further offered 825 consolation prizes of Rs. I 00 each and .... -
1200 early bird prizes of Rs. 50 each to be awarded to those 100 entries
which were received first every week. The last mentioned prizes were
irrespective of whether the answers to the questions were correct or not and
irrespective of the merit of the slogan which was to be provided by the
B contestant.

A complaint was made to the Commission alleging that the said contest
which was organised by the appellant for the purpose of promotion of sale
of its product was in its own interest and prejudicial to the interest of the
consumer generally as a result whereof serious injury or loss to the consumer
C concerned was caused. The complainant alleged that such contests fell withjn
clause (b) of paragraph 3 of Section 36A of the M.R.T.P. Act.

On receipt of the said complaint, an investigation was directed to be
made, pursuant whereto and in furtherance whereof, upon an enquiry, a
preliminary investigation report was submitted by the Director General, who
D also came to the conclusion that the said contest was covered by Section
36A(3)(b) of the M.R.T.P. Act.
\

In terms of the recommendations made by the Director General, a
notice of enquiry dated 3rd December, 1984 was issued, the relevant portion
whereof reads thus :-
E
"AND WHEREAS on perusal of the above-said complaint and
preliminary investigation report submitted by the Addi. Director
General, it appears to the Commission that ~he Respondent is.indulging
in the Trade Practice of conducting a contest (Colgate Trigard Family
Good Habits Contest) for the purpose of. promoting the sale of its
F product (Tooth Brushes) and also for the purpose of indirectly
promoting its business interest;

AND WHEREAS it appears to the Commission that such trade
practice is an unfair trade practice causing injury and loss to the
consumers (of tooth brushes);
G.
AND WHEREAS it appears that the said contest is arbitrary in
nature and eliminates competition among the manufacturers of tooth
brushes and thus amounts to a re!.trictive trade practice:"

The appellant herein filed his reply pleading, inter a:ia, that such contest
H did not cause loss or injury to the consumers by eliminating and restricting
COLGATE PALMOLIVE (INDIA) LTD. v. M.R.T.P. COMMISSION [SINHA. J.]223

competition or otherwise. It was contended that the contest was educative A
inasmuch as by inducing the users of the tooth-brushes to think upon the
questions of the ·contest, they would be made aware of the necessity to keep
good dental health. It was pointed out that the best answer to the question
was to be judged by three eminent persons from different fields being the
Editor of Illustrated Weekly, the Editor of Eves Weekly and a T.V. personality B
and thus there was no element or chance of arbitrariness in the selection of
the winning slogan.

A Bench of the Commission consisting of Mr. H.C. Gupta and Mr.
D.C. Aggarwal heard the said enquiry. Mr. Gupta came to the conclusion that
there was no loss or injury caused to the consumers; whereas Mr. Aggarwal C
differed from the said view holding that the loss or injury was inherent in the
case of trade practices mentioned in paragraph 3 of Section 36A of the
MRTP Act.

As the members of the Division Bench of the Commission did not
formuiate any question to be decided by a third member, the matter was D
directed to be heard by a Full Bench. By reason of the judgment under
appeal, the Commission, inter alia, agreed with the following findings of Mr.
Aggarwal :

"........ and thereby causes loss or injury to the consumers are words
of description which indicate that the trade practice described in E
Section 36A of the Act are vehicles of loss or injury."

It was further held :

" ......... The contest ceases to be innocent if it is held for the purpose
·of promoting the sale or the business interests of the organiser of that F
,. contest: Some of the features of the contest under examination may
be noted. The contest induces the consumer to buy minimum two
tooth brushes to enable him to participate in the contest. If he wants
to send more entries he is naturally required to purchase
proportionately greater number of tooth brushes; There is no ceiling G
on the number of entries to be sent by the contestant. An obnoxious
feature of this contest is about the prizes which were awarded to the
persons whose entries were received early in the week. This aspect of
the contest has nothing to do with the skill and was based totally !JD
chance. The number of losers in terms of money in this part of the
contest cannot be insignificant. The early bird aspect of the contest H
224 SUPREME COURT REPORTS [2002) SUPP. 4 S.C.R.

A was purely in the nature of lottery."

Mr. Ashok Desai, learned Senior Counsel appearing on behalf of the
appellant would, in support of the Appeal, urge that the Commission committed
a manifest error of law in arriving at the aforementioned conclusion by
misreading and misinterpreting the provisions of Section 36A(3)(b) of the
B M.R.T.P. Act. The learned counsel pointed out that the Commission did not
find any actual loss or injury caused to the consumers by reason of the said
advertisement nor any allegation in that behalf had been made. It was submitted
that in a case of this nature even no public interest was involved. In support
of-this contention, the learned counsel has placed strong reliance upon a
C judgment of a Division Bench of this Court in H.M.M. Ltd. v. Director
General, Monopolies·& Restrictive Trade Practices Commission, [1998] 6
sec 485, (wherein one of us Hon. G.B. Pattanaik, CJI. was a member).
Section 36A(3)(b) as it stood at the relevant time reads as under :

"36A. Definition of unfair trade practice. In this Part, unless the
D context otherwise requires, "unfair trade practice" means a trade
practice which, for the purpose of promoting the sale, use or supply
of any goods.or for the provision of any services, adopts one or more
of the following practices and thereby causes loss or injury to the
consumers of such goods or services, whether by eliminating or
E restricting competition or otherwise, namely :-

xxx xxx xxx xxx

3(b) the conduct of any contest, lottery, game of chance or skitt, for
the purpose of promoting, directly or indirectly, the sale, use or supply
F of any product or any business interest;"

A bare perusal of the aforementioned provision would clearly indicate
that the following five ingre.dients are necessary to constitute an unfair trade
practice :

I. There must be a trade practice (within the meaning of section
G 2(u) of the Monopolies and Restrictive Trade Practices Act);
2.. The trade practice must be employed for the purpose of promoting
the sale, use or supply of any goods or the provision of any
services;
H 3. The trade .practice should fall within the ambit of one or more of
COLGATE PALMOLIVE (INDIA) LTD. v. MR T P COMMISSION [SINHA. J ]225

the categories enumerated in clauses (I) to (5) of Section 36A: A
4. The trade practice should cause loss or injury to the consun1ers
of goods or services;
5. The trade practice under clause ( l) should involve 1naking a
"statement" whether orally or in \Vriting or by visible
representation. B

Causation of loss or injury thus is a sine qua non for invoking the
principles of Section 36A of the M.R.T.P. Act. The Commission, in our
considered opinion, committed a manifest error in holding that the actual loss
or injury is not an essential ingredient of the unfair trade practice.
c
It is now a well-settled principle of law that a literal meaning should
be assigned to a statute unless the same leads to anomaly or absurdity. The
terminology used in the provisions is absolutely clear and unambiguous. As
noticed hereinbefore, in terms of the aforementioned provisions not only a
trade practice is resorted to for the purpose of promoting sale or use or D
supply of any goods or services, as specified therein but thereby loss or
injury to the consumers of such goods or services must be <aused. The word
'thereby' must be assigned its plain meaning for int·orpretation of the
aforementioned provision.

In H.M.M. Ltd's case (supra), this Court has clearly held that for holding E
a trade practice to be an unfair trade practice, it must be found that it had
caused loss or injury to the consumer.

We may notice that on or about 1993 an amendment has been made
whereby the words "causing loss or injury to the consumer" were omitted
which also goes to show the law as it stood thence, 'loss or injury to the F
consumer' was a pre-requishe for attracting the provisions of Section 36A(3 )(b)
of the Act.

In interpreting the '"id provision, the 'Mischief Rule" should be resorted
to.
G
For the view, we have taken, the impugned judgments cannot be
sustained, which are set aside accordingly. The appeals are allowed but in the
facts and circumstances of the case, there will be no order as to costs.

S.K.S. Appeals allowed.
H