Case Note & Summary
The appeals arose under Section 55 of the Monopolies and Restrictive Trade Practices Act, 1969 against the judgment and order of the Monopolies and Restrictive Trade Practices Commission. The appellant, a marketing company, had entered into agreements with a large number of manufacturers for the distribution of machineries and equipments within different territories of India. Under these agreements, the appellant was appointed as the sole buyer or importer on specified terms and conditions. On 26 November 1986, notices were issued under Section 10(a)(iii) read with Section 37 of the Act, alleging that certain clauses in these agreements amounted to restrictive trade practices under clauses (a) and (c) of Section 33(1). The appellant filed show cause, documents, and affidavits contending that none of the agreements related to restrictive trade practices. The Commission, however, directed the appellant in each of the 15 enquiries to discontinue the restrictive trade practices mentioned in the notices and to delete the objectionable clauses from the respective agreements within eight weeks. The appeals were heard together, with Civil Appeal No. 2252 of 1994 treated as the leading case. That case involved an agreement dated 29 November 1956 between the appellant and Societe Genevoise D, Instruments De Physique, Geneve. The Director General of Investigation and Registration objected to three clauses: clause 2, which prevented the buyer from selling outside the territory; clause 3, which prevented the buyer from dealing in competing goods; and clause 6, which granted exclusive rights to the buyer within the territory and restricted the seller from selling to others. The core legal issue before the Supreme Court was whether such clauses fell within the ambit of Section 33(1) after the 1984 amendment, which introduced a deeming fiction stating that every agreement falling within one or more of the enumerated categories shall be deemed to be an agreement relating to restrictive trade practices and subject to registration. The Court analysed the amendment and observed that Parliament had deliberately substituted the original wording to include a deeming clause. The Court reiterated the well-settled principle that a legal fiction must be given full effect, and one must imagine as real the consequences and incidents which inevitably flow from the deemed state of affairs, unless the fiction is unconstitutional. The Court referred to East End Dwellings Co. Ltd. v. Finsbury Borough Council and several Supreme Court decisions to support this interpretation. The Court was in the process of applying this statutory fiction to the clauses in question when the provided judgment text ended. The final decision of the Supreme Court on the merits of the appeals is not included in the available text.
Headnote
A) Monopolies and Restrictive Trade Practices - Restrictive Trade Practices - Deeming Fiction under Section 33(1) - Monopolies and Restrictive Trade Practices Act, 1969, Sections 2(o), 33(1) - The 1984 amendment substituted sub-section (1) of Section 33 to provide that every agreement falling within categories (a) to (l) shall be deemed to be an agreement relating to restrictive trade practices and subject to registration. The Court examined the effect of this deeming clause and held that Parliament intended to classify such agreements as restrictive trade practices without requiring proof of actual restrictive effect. Held that full effect must be given to the statutory fiction. (Paras 5-7) B) Statutory Interpretation - Legal Fiction - Effect of Deeming Provision - Monopolies and Restrictive Trade Practices Act, 1969, Section 33(1) - The Court relied on East End Dwellings Co. Ltd. v. Finsbury Borough Council and other decisions to state that if a statute bids one to treat an imaginary state of affairs as real, one must also imagine as real the consequences and incidents which inevitably flow from it. The Court noted that the limitation on giving effect to the fiction arises only if it violates the Constitution. Held that the court must give full effect to the statutory fiction introduced by the 1984 amendment. (Para 7)
Issue of Consideration
Whether agreements containing clauses restricting territory, competition, and exclusive distributorship fall under Section 33(1)(a) and (c) of the MRTP Act as restrictive trade practices after the 1984 amendment introduced a deeming fiction; and what is the effect of the deeming provision on the burden of proof.
Law Points
- Section 33(1) as amended by Act 30 of 1984 deems agreements falling within categories to be restrictive trade practices subject to registration
- Court must give full effect to statutory fiction
- Commission may direct discontinuance if practice prejudicial to public interest
- with prejudice presumed unless Section 38 exceptions satisfied
