Holding

Proof of actual loss or injury to the consumer is an essential condition for invoking Section 36-A of the MRTP Act, and the MRTP Commission’s order was set aside.

Summary

Mis Taj Rubber Industries ordered a rubber mixing machine from Mis Premier Engineers in 1980, but the machine was delivered only in 1990 and was alleged to be defective, fitted with second‑hand parts and lacking an oil system. The respondent filed an application under Section 12‑B of the Monopolies and Restrictive Trade Practices (MRTP) Act, claiming an unfair trade practice under Section 36‑A. The MRTP Commission held the appellant guilty, ordering a refund of Rs.1,04,164 with interest and a Rs.5,000 compensation for mental agony. On appeal, the Supreme Court examined whether a complaint under Section 36‑A must demonstrate actual loss or injury to the consumer. Relying on the decisions in *Colgate Palmolive (India) Ltd. v. MRTP Commission* and *Hindustan Ciba Geigy v. Union of India*, the Court held that proof of loss or injury is a sine qua non for invoking Section 36‑A. Consequently, the Commission’s order was set aside and the appeal was allowed, with no costs awarded.

Issues considered

Whether a complaint under Section 36-A of the MRTP Act must allege and prove actual loss or injury to the consumer.
Whether the MRTP Commission erred in finding an unfair trade practice without such proof.
Whether the amendments to the MRTP Act of 1984 have retrospective effect on contracts entered before that date.
Whether lack of privity of contract bars the respondent’s application.
Whether the dispute falls within the jurisdiction of the MRTP Commission or a civil court.

Subjects

unfair trade practiceSection 36-AMRTP Actloss and injuryconsumer protectiondelay in supplycontract breachjurisdiction

Judgment

MIS. PREMIER ENGINEERS A
v.
MIS. TAJ RUBBER INDUSTRJES AND ANR.

AUGUST 12, 2005

[ASHOK BHAN AND S.B. SINHA, JJ.) B

Monopolies and Restrictive Trade Practices Act, I 960.

Sections 2(u), I 2-B, 36-A-Unfair Trade Practice-Complaint filed
alleging unfair trade practice--Cryptic application lacking particulars-
Complaint not disclosing any actual loss or injury caused to con1plainant-
c
Held, to plead and prove actual loss or i1y·ury caused to consumer is sine
qua non for invoking the provisions of Section 36-A-ln the facts, order of
commission awarding con1pensation set aside.

Respondent no. I through its predecessor-in-interest company placed D
an order with appellant in December, 1980 for supply of one rubber
mixing machine of size 14" x 36" which was required to be fitted with
certain input components to be supplied by respondent no. I. Due to
certain reasons, the machine could not be supplied till May, 1990 and "'8S
ultimately supplied in October, 1990. Respondent filed application under
Section 12-B of the Monopolies and Restrictive Trace Practices Act, 1960 E
against the appellant alleging unfair trade practice under Section 36-A(I)
of the MRTP Act on the ground that the machine was supplied after
considerable delay; that it was defective, non-working and old/second
hand machine fitted with old/second hand parts; and that 'oil system' was
not fitted in the machine. MRTP Commission held appellant guilty of F
unfair trade practice as there was abnormal and unconscionable delay
in supplying the machine by almost 10 years and that the machine did
not work even for a single day and was defective and directed appellant
to refund Rs. 1,04,164 to the respondent with interest@ 18% per annum
and also awarded Rs. 5000 by way of compensation for mental agony and
harassment suffered. Hence this appeal. G

Allowing the appeal, the Court

HELD : I. To aver as well as prove that actually any loss or injury
was caused to the consumer is the sine qua non for invoking the provisions H
597
598 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A of Section 36-A of the Monopolies and Restrictive Trade Practices Act,
1960. (602-F-G)

Colgate Palmolive (India) Ltd. v. MRTP Commission & Ors., (2003) 1
SCC 129 and Hindustan Ciba Geigy v. Union ofIndia & Ors., (2003) 1 SCC
134, relied on.
B
2. In the application filled by the applicant/respondent apart from
saying that the defective machinery fitted with old/second hand parts had
been supplied after considerable delay the respondent did not say a word
regarding the actual loss and injury or a notional loss caused to the
C respondent. There is nothing on the record to suggest that any actual loss
or injury was caused to the respondent. The application filed by the
applicant/respondent was not only cryptic but lacked in particulars to fall
within the definition of unfair trade practice as defined in Section 36-A
read with Section 2(u) of the MRTP Act. The MRTP Commission has also
not recorded any finding as to whether any actual loss or injury or a
D notional loss was caused to the respondent. (602-C-E)

CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3640of1998.

From the Judgment and Order dated 16.5.97 of the Monopolies and
Restrictive Trade Practices Commission, New Delhi in Compensation
E Application No. 53 of 1993.

Sanjay Parikh, A.N. Singh and A.K. Mishra for the Appellant.

Irshad Ahmad for the Respondent No. I.

F Ashok Bhan, Ms. Sunita Shanna, D.S. Mahra, P. Panneswaran for the
Respondent No. 2.

The Judgment of the Court was delivered by

BHAN, J. : This appeal by grant of leave is directed against the order
G dated 16.5.1997 passed by the Monopolies and Restrictive Trade Practices
Commission [for short "the MRTP Commission"] in Compensation Application
No. 53 of 1993 wherein it has allowed the application for compensation under
Section 12-B of the Monopolies and Restrictive Trade Practices Act, 1960
lfor short "the MRTP Act"] filed by the Respondent No. I and has directed
H the appellant to refund to the first respondent a sum of Rs. 1,04, 164 with
MIS. PREMIER ENGINEERS v. MIS. TAJ RUBBER INDS. [BHAN, J.] 599

interest @ l 8% per annum plus compensation of Rs. 5,000. A

Shortly stated the facts are:

Mis N.A. Rubber Industries through its partner Shri Nasiruddin, a
partner of the applicant firm - respondent as well, placed an order in
December, 1980 for the supply of one rubber mixing machine of size 14" B
x 36". Appellant agreed to supply the said machine to the respondent by its
letter dated 10.12.1980. In terms of acceptance, the appellant was to supply
the said machine for Rs. 55,000 ex-factory price by May 1981 and the
respondent was to supply certain input components like electric motor,
reduction gear box and fluid coupling to be fitted to the machine by the c
appellant as these input components were not manufactured by the appellant.
Respondent paid a sum of Rs. 2,000 for which a receipt was given by the
appellant. Later on a sum of Rs. 5,000 was also paid by the respondent on
16.3.1981. N.A. Rubber Industries was closed and thereafter respondent firm
M/s Taj Rubber Industries was started in its place. On 2 l .2. I 985 the appellant
informed the respondent that the machine would be ready and supplied within D
a week. The respondent thereafter paid Rs. 50,000 in May I 985 and
approached the appellant for taking delivery of the machine. Due to certain
reasons which were accepted by both the parties the machine could not be
supplied till May l 990. Ultimately, the machine was supplied in the month
of October, 1990. According to the respondent the aggregate amount of Rs. E
80, 184 was paid by it to the appellant. It was alleged that the respondent had
paid Rs. 23,980 for procuring and supplying the electric motor, fluid
coupling, reduction gear box etc ..

Respondent filed an application under Section 12-B of the MRTP Act
against the appellant alleging therein that the machine supplied after a F
considerable delay and it was defective, non- working and old/second hand
machine. It was fitted with old and second hand parts and it has failed to fit
the "oil system" and thereby appellant has indulged in unfair trade practice
under Section 36 A (I) of the MR TP Act.
G
, Appellant in its detailed reply apart from replying on merits took five
preliminary objections:

I. That since the order was placed on the appellant in the year 1980
i.e. before the amendment of MRTP Act relating to unfair trade
practice (Section 36-A) and compensation (Section 12-B) which H
600 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A were inserted with effect from 1st August, 1984, the action was
not maintainable as these amendments do not have retrospective
operation and, therefore, the compensation application was not
maintainable.

2. The order of machine in question was not placed by the applicant
B but by the N.A. Rubber i'ndustries. There being no privity of
contract between the applicant and the appellant firm, the
compensation application was not maintainable.

3. There is "not even a single averment disclosing any unfair trade
C practice."

4. The controversy must be adjudicated upon by a civil court, as it
relates to enforcement or breach of contract between the parties ..

5. An earlier application of the applicant had been closed by the
D Commissioner and thus the present application was barred by the
principle of res judicata.

On merits, the allegations made against the appellant were controverted
and the appellant denied its liability to compensate the respondent.

E The MRTP Commission overruled the preliminary objections raised by
the appellant and came to the conclusion that the appellant had indulged in
unfair trade practices as there was abnormal and unconscionable delay in
supplying the machine by almost ten years and that the machine did not work
even for a single day and was suffering from various defects. Allegations
made that old second hand parts had been fitted in the machine were also
F accepted. Based on these findings the MRTP Commission directed the
appellant to refund a sum of Rs. 1,04,164 to the respondent with interest at
the rate of Rs. 18% per annum w.e.f. 16.10.!')90 upto the date of its payment.
Rs. 5,000 was awarded by way of compensation for mental agony and
harassment suffered by the partner of the respondent firm.
G
Aggrieved against the order of MRTP Commission the present appeal
has been filed.

Counsels for the parties have been heard at length.

H Counsel appearing for the appellant reiterated the submissions made on ..-
MIS. PREMIER ENGINEERS v. M/S. TAJ RUBBER INDS. [BHAN, J.] 60I

behalf of the appellant that the order of the MRTP Commission deserve to A
be set aside and the application filed by the respondent under Section 12-
8 dismissed. Without going into the preliminary objections which have been
raised, this appeal deserves to be allowed on another point as in Colgate
Palmolive (India) ltd. v. MRTP Commission & Ors., [2003] l SCC 129, in
which one of us (Justice Sinha] was a member, analysed the Section 36-A B
of the MRTP Act and observed that a bare perusal of Section 36-A would
clearly indicate that the following five ingredients are necessary to constitute
an unfair trade practice:

l. There must be a trade practice [within a meaning of Section 2 (u)
of the Monopolies and Restrictive Trade Practices Act]. c
2. The trade practice must be employed for the purpose of promoting
the sale, use or supply of any goods or the provisions of any
services.

3. The trade practice should fall within the ambit of one or more of D
the categories enumerated in clauses (l) to (5) of Section 36-A.

4. The trade practice should cause loss or injury to the consumers
of goods or services.
E
5. The trade practice under clause (l) should involve making a
'statement' whether orally or in writing or by visible representation."

After having observed so the Court set aside the order of the MRTP
Commission in which the Commission had held that actual loss and injury
are not the essential ingredients of the unfair trade practice. It was observed F
that causation of loss or injury thus is a sine qua non for invoking the
principles of Section 36-A of the MR TP Act.

In Hindustan Ciba Geigy v. Union ofIndia & Ors., (2003] l SCC 134,
again Sinha, J. sitting in a combination of three-Judge Bench held that G
causation of loss or injury to the consumer was a must for attracting the
provisions of Section 36-A of the MRTP Act. The order passed by the
Commission was set aside wherein the Commission had taken the contrary
view. It was observed:

"7. A bare perusal of the aforementioned provision would clearly H
602 SUPREME COURT REPORTS [2005] SUPP. 2 S.C.R.

A go to show that an unfair trade practice would mean 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 the
practices specified therein adopted and as a result thereof loss of
injury has been caused to the consumers of such goods or services,
either by eliminating or restricting competition or otherwise. It
B would furthermore clearly go to show that the two conditions
precedent mentioned therein are required to be read conjunctively
and not disjunctively."

After having said so this Court observed that the Commission had
c committed a manifest error in holding that the actual loss or injury
need not be caused to the consumers.

In the present case, we find that in the application filed by the applicant/·
respondent apart from saying that the defective machinery fitted with old/
second hand parts had been supplied after considerable delay the respondent
D
did not say a word regarding the actual loss and injury or a notional loss
caused to the respondent. There is nothing on the record to suggest that any
actual loss or injury was caused to the respondent. The application filed by
the applicant/respondent was not only cryptic but lacked in particulars to fall
within the definition of unfair trade practice as defined in Section 36-A read
E with Section 2 (u) of the MRTP Act. The MRTP Commission in its order
has not adverted to this fact and has not recorded a finding as to the any actual
loss or injury caused to the respondent.

Since the respondent in the present case failed to aver as well as prove·
that actually any loss or injury was caused to it which was the sine qua non
F
for invoking the provisions of Section 36-A, this appeal is accepted. The
MRTP Commission has also not recorded any finding as to whether any
actual loss or injury or a notional loss was caused to the respondent.
Accordingly, impugned order is set aside and the appeal is allowed. There
shall be no order as to costs.
G
A.K.T. Appeal allowed.