Holding

The price list lacking a maximum‑price indication constitutes a restrictive trade practice of resale price maintenance, and the appeal is dismissed.

Summary

The Monopolies and Restrictive Trade Practices (M.R.T.P.) Commission issued a notice alleging that Raymond Woollen Mills Ltd. engaged in resale price maintenance because its price lists did not state that dealers could charge lower prices. The Commission held that the price lists merely indicated rates per metre and lacked any indication of a maximum recommended price, thereby constituting a restrictive trade practice under Section 33(1)(f) and Section 2(o) of the Monopolies and Restrictive Trade Practices Act, 1969, and issued a cease‑and‑desist order. The appellant contended that the lists were merely recommendatory, relied on the Tata Engineering case, and argued that Section 33 dealt only with registration of agreements. The Supreme Court held that Section 33 applies to agreements relating to restrictive trade practices, that the definition in Section 2(o) is exhaustive, and that the price lists without a maximum‑price clause indeed amounted to resale price maintenance. No further evidence was required, and the appeal was dismissed.

Issues considered

Whether a price list that does not indicate that lower prices may be charged amounts to resale price maintenance under Section 33(1)(f) and Section 2(o) of the Act.
Whether Section 33 of the Act is limited only to the registration of agreements.
Whether the definition of 'restrictive trade practice' in Section 2(o) is exhaustive or inclusive.
Whether the appellant's claim that the price lists were merely recommendatory defeats the allegation of a restrictive trade practice.

Legislation cited

Monopolies and Restrictive Trade Practices Act, 1969s. 2(o), s. 33(1)(f), s. 37(1), s. 38(1), s. 55
Monopolies and Restrictive Trade Practices Commission Regulations, 1974s. Regulation 11, s. Regulation 57, s. Regulation 58, s. Regulation 65, s. Regulation 67, s. Regulation 74

Subjects

resale price maintenancerestrictive trade practiceprice listMonopolies ActSection 33Section 2(o)competition lawcease and desist order

Judgment

RAYMOND WOOLLEN MILLS LTD. A
v.
M.R.T.P. COMMISSIONS AND ANR.

FEBRUARY 26, 1993

[KULDIP SINGH AND S. MOHAN, JJ.] B

The Monopolies and Restrictive Trade Practices Ac~ 1969/The Monop-
olies and Restrictive Trade Practices Commissions Regulation, 1974.

Sections 2(o), 33(1)(/), 37(1) and 55/Regulatii:m 74-Restrictive trade C
practice-Price lists-No indication in price lists that rates prescribed are
maximum recommended rates-Held appellant indulged in restrictive trade
practice-'Cease and desist' order of M.R. T.P. Commission upheld.

The M.R.T.P. Commission issued a notice of enquiry on 10.2.1987
suo motu alleging that the appellant in the appeal was indulging in the D
trade practice of re-sale price maintenance by not mentioning in its price
list that the prices lower than those prices may be charged, and that this
amounted to restrictive trade practices within the meaning of Section
33(1)(1) of the Monopolies and Restrictive Trade Practices Act, 1989. An
application was filed by the appellant on 29.4.1987 for further and better E
particulars seeking directions from the Commission and requesting for a
copy of the Preliminary Investigation Report and in pursuance thereto the
Director- General (I & R) was directed to furnish the specific instances in
support of the allegations in the notice of enquiry.

- A reply was filed by the appellant to the notice of the enquiry on F
5.8.1987 and on 7.10.1987 a rejoinder was filed by the Director General
under Regulation 74 of the Commission's Regulation, 1974 serving inter-
rogatories upon the appellanL

The Commission passed an order on 7.12.1987 upholding the objec- G
lions raised by the appellant and modifying the interrogatories and on
22.4.1988, issues were duly framed by the Commission.

On 3.8.1989 the Marketing Director of the appellant filed an affidavit
rebutting the allegation of re-sale price maintenance and stating that the
price lists issued by the appellant were merely recommendatory in nature H
127
128 SUPREME COURT REPORTS [1993] 2 S.C.R.
~
A and to ensure that the dealers do not re-sale their products at prices
higher than those mentioned in the price lists, and that they have always
been understood by the dealers to be the maximum recommended prices.

On 3.S.1991 the Commission passed an order holding that the ap-
pellant had been indulging in the restricting trade practice of re-sale
B maintenance and consequently passed a cease and resist order against the _A
appellant.

Io the appeal against the aforesaid order to this Court under Section
SS of the Act, it was contended on behalf of the appellant relying on Tata
Engineering & Locomotive Company Ltd. v. R.S. TA., [1977] 2 SCR 685 and
c Mahindra & Mahindra Ltd. v. Union of India, [1979] 2 SCR 1038 at 1074
that the definition of restrictive trade practice in Section 2(o) of the Act
. "'!'
"is a pragmatic and result-oriented definition", and that the legality of an
agreement or regulation does not depend upon whether or not it restrains
competition but the test is whether the restraint imposed is such as merely
D regulates, and perhaps thereby promotes competition or whether it is such
as may suppress or even destroy competition.

Dismissing the appeal, this Court,

HELD: 1. Section 33 deal with agreements relating to restrictive
·y
E trade practices. Therefore, it is not correct to content that this is only for
the purpose of registration of agreements. Exhibits A-2 to A·S are the
copies of price list issued by the appellant. The dealers are required to
display the price list in their show rooms. [134C, G)

2. The price lists indicate the rate per metre of each of the textile
-
F product manufactured. There is nothing to indicate that the dealers could
charge a price lower than those mentioned in the price list. [134H,13SA]

3. The Commission has rightly pointed out that there is not even an
indication in the price list that the rates prescribed are the maximum
G recommended rates. In the absence of the same, the dealers could sell their
products even at lower rates. This will encourage the consumers to ask any
rebate in the rates indicated in the price list. [1358] .~

4. The definition of 'restrictive trade practice' in section 2(o) of the
Act is an exhaustive one and not an inclusive one. It is for the price list,
H not having any indication as to the maximum price, that the charge is made
RAYMOND WOOLLEN MILLS "· M.RT.P. COMMISSION [MOHAN. J.] 129
-..;
in the notice of the Commission dated 10.2.1987 of violation of restrictive A
trade practice under section 33(1) falling under section 2(o)(ii) of the Act.
The whole case depends on the admitted price list issued by the appellant.
lo such a case no further evidence is necessary. [1338]

Tata Engi11eering and Locomotive Co. Ltd. v. R.R. TA., (1977] 2 SCR
l.._ B
685 al 694, not applicable. [1318]

CIVIL APPELLATE Jun,ISDICTION: Civil Appeal No. 4126 of

- 1991.

From the Judgment and Order dated 3.5.91 of the M.R.T.P. Com-
mission in R.T.P. Enquiry No.5186.
c
)- .
Ashok K. Desai, Ravinder Narain, Rajau Narain and Aditya Narain
for the Appellant.

The Judgment of the Court "'"' delivered by D
MOHAN, J. This is an appeal under Section 55 of the Monopolies
and Restrictive Trade Practices Act, 1%9 (hereinafter referred to as the
Act) against the order passed by the Monopolies and Restrictive Trade
T
/ Practices Commission, New Delhi (hereinafter referred to as the Commis-
sion), being a 'cease and desist' order dated 3.5.91 under Section 37 (1) of E
the Act. The :;hort facts leading to this appeal are as under:

On 10.2.87, a notice of enquiry was issued suo motu by the Commis-
sion inter a/ia allegingthat the appellant was indulging in the trade practice
of re-sale price maintenance by not mentioning in its price lists that the F
~ prices lower than those prices may be charged. It amounted to restrictive
trade practices within the meaning of Section 33 (l)(f) of the Act.

On 29.4.87, an application was filed.by.the appellant for further and
better particulars seeking directions from th~ Commission, re9uesting G
therein for a copy of the Preliminary Investigation Report.

On the same date i.e. 29.4.87, an order was passed by the Commi<Sion
directing the Director-General (I & R) to furnish to the appellant specific
instances in support of the allegations in the notice of enquiry. Accordingly, a
copy of the Preliminary Investigation Report was furnished to the appellant. H
130 SUPREME COURT REPORTS [1993] 2 S.C.R.

A On 5.8.87, a reply to the notice of enquiry was made by the appellant.

On 7.10.87, a rejoinder was filed by the Director General (I & R)
along with an application under Regulation 74 of the Commission's Regula-
tion 1974 serving interrogatories upon the appellant.

B On 7.12.87, an order was passed by the Commission upholding the
objections raised by the appellant and modifying the interrogatories.

On 21.4.88, the appellant filed its affidavit in reply to the inter-

C
rogatories.

On 22.4.88, issues were duly framed by the Commission. Director
-
General (I & R) did not produce any witness to prove the allegation of
re-sale price maintenance, but merely relied on the price list furnished by · ·i'
the appellant.

D On 3.8.89, an affidavit of the Marketing Director of the appellant was
filed rebutting the allegation of re-sale price maintenance and stating that
the price lists issued by the appellant were merely recommendatory in
nature and to ensure that the dealers do no resell their products at prices
higher than those mentioned in price lists. It was further stated therein that
the prices mentioned in the price lists issued by the appellant are the
E maximum recommended prices and have always been understood by the
dealers to the maximum recommended prices. The retailers have, in fact,
been selling at prices lower than the maximum recommended prices. These
statements made by the witnesses of the appellant were not controverted
by the Director General (1 & R). -
F On 3.5.91, the impugned order was passed by the Commission inter
alia holding that the appellant has been indulging in the restrictive trade
practice of resale maintenance and consequently passed a cease and resist
order against the appellant.

G It is against this order the appellant has preferred this appeal under
Section 55 of the Act.

Mr. Ashok H. Desai, learned counsel for the appellant would urge
the following for our consideration:

H The definition of restrictive trade practice in Section 2(o) oftheAct "is
RAYMOND WOOLLEN MILLS v. M.RT.P. COMMISSION [MOHAN. J.) 131

-+ a pragmaticc and result-oriented definition". The legality of an agreement or A
', regulation does not depend upon whether or not it restrains competition but
the test is whether the restraint imposed is such as merely regulates, and
perhaps thereby promotes competition or whether it is such as may suppress
or even destroy competition. In this connection, he places reliance on Tata
Engineering and Locomotive Co. Ltd. v.R.R. T.A., (1977] 2 SCR 685 at 694 and
>.. B
Mahindra and Mahindra Ltd. v. Union ofIndia, (1979] 2 SCR 1038 at 1074.

The Director General has to establish:

(1) What facts are peculiar to the business to which the restraint is
applied?
c
(2) What was the condition before and after the restraint is imposed?
•- {3) What is the nature of restraint and what is its actual and probable
effect?
•
D
From this point of view the Director General will have to establish
each of these points. Only when it is proved that there is a restrictive trade
practice the burden shifts to the respondent to prove that it is entitled to
pass through the gateways set out in Section 38(1) of the Act

~ In the present case, the notice of enquiry makes no allegation about E
the facts and features of the trade, about the nature of restraint and its
impact on trade and why it is anti-competitive. The notice only sets out
that there is a price list. There was no evidence led in by the Director
General to the effect that the dealers did not sell the goods of the appellant
below the price in the price list. In any event, the evidence clearly
demonstrates that the dealers understood the price list to mean that the F
~
dealers could charge lower prices and in fact did charge lower prices. The
competition was not affected· in any material degree and the gateway as
under Section 38{1){h) of the Act was fully avilable.

In order to appreciate the above submissions, it is necessary to look G
at the following provisions of the Act.
.J..
Section 2(o) of the Act defines restrictive trade practice. It reads as
under:
"(o) "restrictive trade practice" means a trade practice H
132 SUPREME COURT REPORTS [1993! 2 S.C.R.

A which has, or may have, the effect of preventing, distorting
or 1 restricting competition in any manner and in par-
ticular,-
l

(i) which tends to obs.ruct the flow of capital or resources
into the stream of production, or
B
(ii) which tends to bring about manipulation of prices, or
conditions of delivery to effect the flow of supplies in the
market relating to goods or services in such manner as to

c
impose on the consumers unjustified costs or restrictions." -
(Emphasis supplied)

This definition of restrictive trade practice is an exhaustive one and •
not an inclusive one. No doubt, this court laid down in Tata Engineering .
and Locomotive Co. Ltd. (supra) as follows:
D ."The decision \1hether a trade practice is restrictive or
not has to be arrived at by applying the rule of reason and
nOt on the doctriHe that any restriction as to area or price
will per se be a restrictive trade practice. Every trade
agreement restrr ins or binds persons or places or prices.
E The question is .vhether the restraint is such as regulates
a~.d there by pre motes competition or whether it is such as
m~y suppress o · even destroy competititon. To determine
this question 1- Jree matters are to be considered. First,
what facts arc peculiar to the bu,iness to which the
restraint is ap• •lied. Second, what was the condition before
-
F and after the ·. estraint is imposed. Third, what is the nature
of the restraint and what is its actual and probable effect."

The notice was issued to the appellant in the following terms:

'The Commission has information that the respondent
G
abovementioned, which manufactures and sells textile
goods, has been indulging in the following trade practices:-

(1) indulging in the trade practice of resale price main-
tenance by not mentioning in its price lists that prices
H lower than those prices may be charged; and
RAYMOND WOOLLEN MILLS"· M.R.T.P. COMMISSION [MOHAN. J.] 133

~ (2) induling in the trade practice of discriminatory pricing A
by offering varying rates of bonus linked with the quantity
or material bought by dealers.

It appears to the Commission that the above trade
practices are restrictive trade practices within the meaning
..l of clauses (f) and (e) of section 33(1) of the Monopolies B
and Restrictive Trade Practices Act, 1969. Further they
have got the effect of manipulation of prices of .textile
goods in such a manner as to impose unjustified costs or
restrictions on the consumers and thereby making them
restrictive trade practices within the meaning of Section c
2(o)(ii) of the Monopolies and Restrictive Trade Practices
Act, 1969.

AND THEREFORE, in exercise of the powers under
section lO(a)(iv) and 37 of the M.R.P.T. Act, 1969, the
Commission has ordered that an enquiry be instituted D
against the respondent abovementioned at the Comm-
ission's office in New Delhi to enquire into as to whether:

(a) the said trade practices are restrictive trade practices
as alleged; and
E
(d) the said restrictive trade practices are prejudicial to
public interest;

-· AND NOW THEREFORE a Notice under Regula-
tion 58 of the M.R.T.P. Commission Regulations, 1974 is F
....__ hereby given to the Respondent that if it wishes to be
heard in the proceedings before this Commission it should
file a reply 10 days before the date of hearing to the .Notice
of Enquiry and comply with the provisions of Regulation
11, 57, 65 and 67 copies of which are enclosed herewith
for facility of reference, failing which the enquiry shall
G
proceed ex-pane in the absence of the Respondent.

IT IS FURTHER notified that the case shall come up
before the Commission for a hearing on 23.3.1987 at .11.00
A.M. H
134 SUPREME COURT REPORTS [1993] 2 S.C.R.
·~
A GIVEN under my hand and seal of the Commission
at New Delhi, this the 10th day of February, 1987.

BY ORDER OF THE COMMISSION
SD/-
(S.K. CHATTOPADYAY)
B DEPUTY SECRETARY"

From this, it will be clear that what is alleged against is restrictive
trade practice within the meaning of the above definition under Section

C
2(o)(il). Section 33 deals with agreements .relating to restrictive trade
practices. That inter a/ia says:
-
'
"33. Registerable agreements relating to restrictive trade
practices. -

(1) Every agreement falling within one or more of the
D following categories shall be deemed, for the purposes of
this Act, to be an agreement relating to restrictive trade
practices and shall be subject to registration in accordance
with the provisions of this Chapter, namely-

(a) to (e) ....
E
(I) any agreement to sell goods on condition that the
prices to be charged on resale by the purchaser shall be
the prices stipulated by the seller unless it is clearly stated
that prices lower than those prices may be charged;

F (g) to (I) ....

(Emphasis supplied)

It has to be carefully noted that this Section applies for the purposes
of the Act. Therefore, it is not correct to contend that this is only for the
G purpose of registration of agreement. Exhibits A-2 to A-5 are the copies
of price list issued by the appellant. The dealers are required to display
the price list in their show rooms. In so far as it was admitted by the
appellant that _there are no separate price lists for the Mill's own outlets
and for the dealers. The price lists indicate the rate per metre of each of
H the textile product manufactured. There is nothing to indicate that the
~
'

RAYMOND WOOLLEN MILLS v. M.R.T.P. COMMISSION {MOHAN, J.] 135

dealers could charge a price lower than those mentioned in the price list. A

As rightly pointed out by the Commission there is not even an
indication in the price list that the rates prescribed are the maximum
recommended rates. In the presence of the same, the dealers could sell the
products even at lower rates. This will encourage the consumers to ask any B
rebate in the rates indicated in the price list.

The Commission observes as follows:

"The object of clause (!) of Section 33 is that when
specified rates are mentioned in the price list issued by c
the manufacturer and the sale and purchase including
resale of the products was governed by those rates, there
should be a clear mention in the price list that the dealers
can sell at prices lower than those shown therein so that
the ultimate consumers may not be led or misled by the
fact that the prices mentioned in the price list are final
D
and not subject to negotiation. In this view of the inatter,
the fact that in actual practice some of the retailers might
have sold the products at prices lower than those men-
tioned in the price list would not be material and the
situation would be fully cove~ed by clause (!)." E
y

We are in entire agreement with this finding.

- The submission of Mr. Desai, relying on Tata E11gi11eeri11g and
Locomotive Co. Ltd. case (supra), that no evidence was let in by the
Director General cannot be accepted. It is on the price list, without any F
indication as to the maximum price, the charge is made of violation of
~ .. restrictive trade practice under section 33 (!)falling under section 2(o)(ii)
of the Act. In such a case, we are unable to see as to why evidence is
necessary. The whole case depends on the admitted price list issued by the
appellant. The ruling of Tata E11gi11eering and Locomotive Co. Ltd. (supra) G
has no application to the facts of the present case because that was a case
of distributorship where distributor takes care of the post sale service that
is peculiar to the nature of the trade there, namely, the Locomotives, which
cannot be so in this case, the trade being of textile and nothing peculiar to
this trade. H
~
'
136 SUPREME COURT REPORTS (1993] 2 S.C.R.

A Accordingly, we find no merit in the appeal which is hereby dis-
missed. However, there shall be no orders as to cost.

N.V.K. Appeal dismissed.

,•.'
-