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Judgment
D.P. Wadhwa, J.
(1) By this petition field under Article 226 of the Constitution the petitioner, a public limited company. engaged in the manufacture of paper seek to have a notice of inquiry issued by the Monopolies and Restrictive Trade Pra.ctices Commission, the second respondent (tor short'' the Commission'') and the further order of the Commission refusing ,to set aside the said notice of inquiry and the proceedings in pursuance thereto quashed.
(2) The facts which are in brief may be set out.
(3) On 3-6-1985 the Commission issued a notice u/s 10(a)(i) and 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (for short'' the Act'') and Regulation 58 of the Monopolies and Restrictive Trade Practices Commission Regulations. 1974 (for short'' the Regulations'') ordering that an inquiry be instituted against the petitioner to inquire into certain trade practices alleged against the petitioner and it those trade practices had or might have the effect of preventing/distorting or restricting competition or having the. effect of imposing unjustified costs or restriction.s on the consumers and if such trade practices were prejudicial to public interest. It was mentioned in the notice of inquiry that a complaint u/s 10(a)(i) of the Act had been received against the petitioner by the Commission and that the Commission had also received information alleging certain restrictive trade practices being indulged in by the petitioner. The complaint and the information were referred to the Director General as defined in Section 2(c) of the Act u/s 11 of the Act for the purpose of investigation and report. The Director General submitted two reports. On examination of the complaint and the reports it appeared to the Commission that the petitioner, a manufacturer of paper and paper products had appointed wholesalers/ stockiest /distributors for the purpose of distribution of its products .It was also found:
(A)That the petitioner was supplying popular varieties of paper to favorite wholesalers or stockists and had denied supply of such variety to other wholesalers .
(B)That the petitioner had also refused to supply even-non-popular varieties to some of its wholesalers.
(C)That the petitioner had permitted its favorite wholesalers/Stoekists to charge prices from the consumers in excess of fair selling prices fixed for its products.
(D)That the petitioner had resorted to discrimination among the wholesalers in the matter relating to the extent of credit facilities granted to them.
(E)That the petitioner had been demanding deposits from wholesalers in a discriminatory manner.
(F)That the petitioner had also demanded in advance blank cheques from some of the wholesaler- for supply of goods.
(G)That the .petitioner discouraged or prevented its wholesalers or distributors from submitting competing quotations without its permission with regard to supply of paper and paper products in response to tenders called for by certain parties.
THE complaint u/s 10(a)(i) was filed by various distributors numbering thirty one who are marketing and selling paper manufactured and supplied by the petitioner. As mentioned in the notice of inquiry, this complaint was sent by the Commission to the Director General for preliminary investigation and report. On receipt of the notice of inquiry the petitioner filed, an application before the Commission praying that. the notice of inquiry be set aside and the proceedings in pursuance thereto quashed. It was submitted before the Commission that issue of notice of inquiry simultaneously under two sub-clauses, namely, 10(a)(i) and10(a) (iv) was void ab initio because all the four sub- clause sot ,, Section 10(a) were exclusive and independent and could not be combined with one and the. other and Therefore, the commission lacked inherent jurisdiction in the matter of initiation of the inquiry and the proceedings, there under, It was submitted that the notice of inquiry could relate only to one of the alternatives as provided u/s 10(a) of the Act .It was also submitted that the complaint by thirty one trades did not satisfy the provisions of Section 10(a)(i) of the Act, the traders not being the consumers and further that some of the signatories had informed the petitioner that their signatures were obtained on a blank sheet of paper on the plea that signatures were required to make representation to the petitioner for increased supply of paper. That being so, it was submitted that in any case the complaint by these traders would fall short of the requisite number of twenty-five and Commission, Therefore, had no jurisdiction to inquire into the restrictive trade practices alleged against the petitioner. All these objections did not find favor with the Commission and the application of the petitioner (I.A. 585)was rejected by the Commission by its order dated 18-2-1986.This led to the filing of the present writ petition.
(4) When this petition was instituted there were three respondents, respondent No. 1 being the Director General, respondent No. 2 the Commission and respondent No. 3- M/s. Ghasita Mal Mela Ram alleged to be the principal complainant who lodged the complaint against the petitioner before the Commission by annexing along with that the names and signatures of thirty other persons and who (respondent No. 3)was allowed by the Commission to participate in the proceedings arising out of the notice of inquiry against the petitioner. Subsequently ,it appears that all the thirty one complainnts were made parties to the petition by amending the same. THE petition was further got amended. By this amendment the petitioner now challenged the validity of Regulation 73(5)whereby it made an informant party to the proceedings before the Commission u/s 10(a)(iv) of the Act as according to the petitioner only those complainants who fulfill the conditions precedent as set out in Section 10(a)(i) of the Act could be made parses to the proceedings before the Commission. Regulation 73(5) and to the extent Regulation 73(2) empowering the Commission to make informant a party to the proceedings u/s 10(a)(iv) were contended to be ultra vires the Act as these provisions enlarged the scope of Section 10(a)(iv) which was. slated to be not permissible in law.
(5) Mr. O. P. Malhotra appearing for the petitioner raised three principal contentions before us, namely, (i) notice of inquiry in so far as it was u/s 10(a)(i) was invalid in as much as there was no complaint by any trade or consumers'' association having a membership of twenty five persons or more and that individual traders of any number could not file a complaint; (ii) Section 10(a)(iv) was unconstitutional as it vested arbitrary and uncanalised powers in the. Coin mission ;and (iii) Regulation. 73(5) was ultra virus the Act as it equated an informant with the parties mentioned in subclasses (i), (ii) and (iii) of Section 10(a) of the Act making the informant to the a deemed party. On the other hand Mr. O. P. Dua appearing on behalf of respondents 1 and 2submitted that provisions of the Act and the Regulations were valid and that the complaint u/s 10(a)(i) by thirty one .traders was also valid. According to Mr. Duaunder this sub clause complaint could be filed by twenty liveor more consumers as well and he said that traders would also be consumers keeping in view the objectives which the Act sought to achieve.
(6) Before we proceed to examine rival contentions of the parties ,it may be appropriate to set out the relevant provisions of law -at this stage.
(7) u/s 2(0) restrictive trade practice is defined to mean trade practice which has or may have the effect of preventing ,distorting or restricting competition in any manner and in particular-
(I)which tends to obstruct the flow of capital or resources into the stream of production , (II)which tends to bring about manipulation of prices or conditions of delivery or to effect the flow of supplies in the market relating to goods or service in such manner as to impose on the consumers unjustified costs or restrictions.''
" RETAILER" u/s 2(p) means "in relation to the sale of any goods, includes every person, or other than a wholesales. Who sells the goods to any other person; and in respect of the sale of goods by a wholesaler, to any person for any purpose other than re-sale includes that wholesaler."
(8) "TRADE" means any trade, business, industry, profession or occupation relating to the production, supply, distribution or control of goods and includes the provision of any services.''[Section 2(s)1.]
(9) "TRADE association" u/s 2(t) means "a body of persons (Whether incorporated or not) which is formed for tire purpose of furthering the trade interests of its members or of persons presented by its members."
(10) "TRADE practice" means "any practice relating to the carrying on of any trade, and includes:-
(I)anything done by any person which controls in-affects the price. charged by, or this method of trading of, any trader or any class of traders.
(II)a single or isolated action of any person in relation to any trade."
(11) "WHOLESALER" in relation to the sale of any goods means "a person who (sells the goods, either in bulk or in large quantities, to any person for the purposes .of resale. whether in bulk or in the same or smaller quantities" [Section 2(x)].
(12) u/s 5 of the Act the .Commission consists of Chairman and member? numbering two to eight. Under subsection (2) of Section 5 the Chairman shall be a person who is, or has been or is qualified, to be .a judge of the Supreme Court or of a High court and the members thereof shall he persons of ability, integrity and standing who have adequate knowledge of experience of or have shown, capacity in dealing with problems relating to economics, law. commerce, accountancy. industry, public affairs or administration. Director General is appointed u/s 8.of the Act for making investigation for the purposes of the .Act and for maintains a Register of agreements and for performing such other functions as or are provided by or under the Act. Section 10 is as under -
" INQUIRY into monopolistic or restrictive trade. practices by Commission -The Commission may inquire into -.
(A)any restrictive trade practice-(i) upon receiving a complaint of facts which constitute such practice from any trade of consumers ''association having a membership of not less than twenty five persons or from twenty five or more consumers, or
(II)upon a reference made to it by the Central Government or a State Government, or
(III)upon an application made to it by the( Director General )or
(IV)upon its own knowledge or incantation ;
(B)any monopolistic trade practice, upon a reference made to to by the Central Government of upon its own knowledge or information."
(13) Section 11 in so far as it is relevant is as under:-
" INVESTIGATION by Director General before issue of process in certain cases-
(1) Where any complaint is received by the Commission under sub-clause (i) of clause (a) of
SECTION 10. it may, before issuing any process requiring the attendance of the person complained against ,by an order, require the Director General to make, or cause to be made, a preliminary investigation in such manner as it may direct and submit a report to the Commission to enable to satisfy itself as to whether or not the complaint requires to be inquired into.
(2)The Director General may, upon his own knowledge or information or on a complaint made to him make, or cause to be made. a preliminary Investigation in such manner as he may think fit to enable him to satisfy himself as to whether or not an application should be made by him to the Commission under sub-clause (iii) of clause(a) of section 10."
under Section 18 the Commission has power to regulate the procedure and conduct of its business, subject, of course to the provisions of the Act. Sub-section (2) of this Section is as under:--
"(2)In particular, and without prejudice to the generality of the foregoing provisions, the powers of the Commission shall include the power to determine the extent to which persons interested on claimed to be interested in the subject-matter of any proceeding before it are allowed to be present or to be heard, either by themselves or by their representatives or to cross- examines witnesses or otherwise to take part in the proceeding."
Under Chapter Vi, which contains Section 37 to 41, the Commission investigates into various restrictive trade practices end passes orders thereon. The Commission has power to frame regulations for the efficient performance of its functions under the Act. This is provided u/s 66 of the Act. The Commission has framed regulations in exercise of its power conferred on it by Sections 18 and 66 of the Act Chapter II of the Regulations deals with the preliminary investigation and report by the Director General. Regulation 19 falling under this chapter is relevant and may be set out as hereunder
-
"19.(1) On receipt of a complaint under sub-clause(i) of clause (a) of section 10 and clause (a) of section 36B) of the Act the Commission shall(before issuing any process) direct the( Director General )to enquire into the complaint and submit a report.
(2)The Commission may order a preliminary investigation by the (Director General).
(A)when a reference is received under sub-clause(ii) of clause (a.) of Section 10 or under clause(b) of Section 10 [or clause (b) of Section 36B].
(B)when the Registrar has an application under sub -clause (iii) of clause (a) of Section 10( or clause (c) of Section 36B and
(C)when the Commission decides to enquire info any restrictive trade practices under sub-clause(iv) of clause (a) of Section 10 of the Act or any monopolistic trade practices under clause(b) of Section 10 [or any unfair trade practice sunder clause (d) of Section 36B] of the Act upon its own knowledge or information.
REGULATION.73, which has been the subject matter of controversy, may also be reproduced as under:-
"73. Joinder of parties
(1)Any parties to the proceedings may at any time apply to the Commission (with 4 additional copies of the application) for an order that any person not already a party be added as a party to the proceedings and shall give notice of the application to all other parties and to the person sought to beaded .
(2)The Commission may at any stage of the proceedings either of its own motion or on the application of any party to the proceedings, on such terms as may appeal to the Commission just and equitable order that the name of any party improperly joined be struck out, and that the name of any person who ought to have been joined or whose presence before the Commission may be necessary in order to enable the Commission effectively and completely to adjudicate upon and settle all questions involved of the proceedings, be added.
(3)Where any party is added or the name of any party is struck out, the pleadings shall, unless the Commission otherwise directs, be amended in such manner as may be necessary.
(4)The provisions or Order I of the CPC ,1908 (5 of 1908) shall apply mutatis mutandis to these proceedings.
(5)Any complainant, applicant, informant or Government authority who makes reference under clause
(A)of Section 10 shall, if he or it is not a party to the proceedings, be deemed to be a party and shall be entitled to be heard in the proceedings. the Secretary may, and if so, directed by the Commission shall, furnish to him or it a copy of the documents filed with him under Regulations 53,54,55, 65, 67. 69 and 72."
(14) The Act was amended by Amending Act 30 of 1984d apart from other amendments part-B was added is Chapter of the Act relating to Unfair Trade Practices. Section 36A defines-unfair trade "practice" meaning 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 practices mentioned in the section and thereby causes loss or injury to the consumers of such goods or services, whether by eliminating or restricting competition or otherwise. The Commission u/s 36-B may inquire into any Unfair Trade Practice and the provisions are same as those given in Section 10(a) of the Act. The Act was further amended bythe Amending Act 74 of 1986 which came into force on1-6-1987. Section 10 of the Principal Act was amended asunder :-
'' IN section 10 of the principal Act, in sub-clause (i)for the words "from any trade or consumers association having a membership of not less than twenty-five persons or from twenty five or more consumers", the wolds "from any trade association or from any consumer or a registered consumers association, whether such consumer is a member of that consumers association or not" shall be substituted."
SECTION 36-B has also been similarly amended." Registered consumer .association" has been defined to mean "a voluntary association of persons registered under the Companies Act, 1956(1 of 1956) or any other law for the time being in force which is formed for the purpose of protecting the interests of consumers generally and is recognised by the Central Governments such association on an application made in this behalf in such from and such manner as may be prescribed." (Section 2(n) ).
(15) At almost the same time Consumer Protection Act 1986(for short ''the Consumer Act'') has been brought into force. The object of this Act is to provide for better protection of the interest of consumers and for that purpose it it makes provision for the establishment of consumers'' councils and other facilities, for the settlement of consumers'' disputes and other related matters Section 2(d.) of the Consumer Act define a "consumer" to mean any person who "buys any "goods for a consideration which has been paid or promised or partly paid and partly promised. or under any system of deferred payment and includes any use of such goods other than the person who buys such goods for consideration paid or promised or partly paid of partly promised, or under any system of deferred payment when such use is made with the approval of such person, but does not include a person who obtains such goods for resale or for any commercial purpose, or (ii) hires any services for a consideration which has been paid or promised or partly paid and partly promised, or under any system of deferred payment and includes any beneficiary of such services other than the person who hires the services for consideration paid or promised. or partly paid and partly promised, or under any system of deferred payment, when such services are availed of with the approval of the first mentioned person." u/s 2(q)"trader" in relation to any good means "a person who sells or distributes any goods for sale and includes the manufacturer thereof ,and where such goods are sold or distributed in package form, includes the packer thereof". Then. u/s 2(r) the expression unfair trade practice would have the same meaning as in section 36A of the Monopolies and Restrictive Trade Practice Act, 1969 (54 of 1969), but shall not include an unfair trade practice adopted by the owner of an undertaking to which Part A of Chapter Iii of that Act applies or by any person acting on behalf of, or for the benefit of such owner. Complainant u/s 2(b) has also been defined to mean(i) a consumer, or (ii) any voluntary consumer association registered under the Companies Act, 1956 (1 uf 1956) or under any other law turn the time being in force, or (iii) the Central Government or any State Government, who or which makes a complaint ,and u/s 2(c) complaint means any allegation in writing made by a complainant that--(i) as a result of any unfair trade practice adopted by any trader, the complainant has suffered loss or damage, (ii) the goods mentioned in the complain: suffer from one or more defects, (lii) the services mentioned in the complaint suffer from deficiency in any respect ,(iv) a trader has charged for the goods mentioned in the complaint a price in excess of the price fixed by or under any law for the time being in force or displayed on the goods or any package containing such goods, with a view to obtaining any relief provided by or under this Act.
(16) We may also note that Section 38 of the Act uses the expression purchasers, consumers and users and sub-section(2)of this section includes persons purchasing, consuming or using for the purpose or in course of trade or business or for public purposes .Then, if reference is made to legal glossary 1983issued by .the Ministry of Law, Justice and Company Atfairs.the Hindi meaning of the word ''consumer'' is Upbuogta.
(17) The first and foremost question that now arises for consideration is if the complaint is valid u/s 10(a)(i) fur the Commission to get jurisdiction to inquire into a restrictive trade practice. Under this sub-clause a complaint of tact Constituting a restrictive trade practice has to be from an association of traders or consumers having a membership of not less than twenty live persons or from consumers numbering twenty live or more. The complaint in the present case is bythe distributors /dealers marketing and selling papers manufactured and supplied by the petitioner. Mr. Dua said that these distributors should be treated as consumers keeping in view the objectives of the Act and in any case he said that since the instant complaint is by thirty one traders, it might betaken to have been submitted by a trade association having a membership of not less than twenty five persons. His argument was that in so far as these distributors./dealers were concerned they were consumers of the paper qua the petitioners. As noted above, Mr. Dua had submitted that trader would include consumer as well. He also referred to a decision of the Supreme Court in Anwarkhan Mahboob Co. Vs. The State of Bombay (Now Maharashtra) and Others, as to the meaning of the expression ''consumption.'' This judgment was rendered with reference to Explanation to Article 286(1) of the Constitution which Explanation has sins been omitted by an amendment to the Constitution. The petitioners in the case before the Supreme Court were carrying on the business of manufacture of bidis in the State of Madhya Pradesh after purchasing raw tobacco from the cultivators in the State of Bombay where the raw tobacco was subjected to process leading to its conversion into bidi patties. That tobacco was then sent to the State of Madhya Pradesh to be manufactured into bidis. The raw tobacco and bidi catties were distinct and different commercial articles. The question was then the tobacco was delivered in the State of Bombay for the purpose of changing it into a commercially different article, viz. bidi patty, was the deliver for the purpose of consumption, though bidis were finally manufactured in the State of MadhyaPradesh The court held that whenever a commodity was so'' dealt with as to change it into another commercial commedity there was consumption of the first commodity within the meaning of Explanation to Article 286. The court then explained the word ''consumption'', though it observed that it was not necessary and indeed inexpedient to attempt and exhaustive defination of the word ''consumption'' as used in the Explanation to Article 286 of the Constitution. The court observed that goods or for the provision, of any services, adopts one or more the act of consumption with which the people were most familiar occurred when they ate, drank or smoked. Thus we speak of people consuming bread, or fish or meat or vegetables, why they eat these articles of food, we speak of people consuming tea or coffee or water or wine, when they drink these articles, we speak of people consuming cigars or cigarettes or bidis, when they smoke these. For some commodities there may be even more than one kind of consumption. Thus grapes may be "finally consumed" by eating them as fruits, they may also be consumed by drinking the wine prepared from grapes. Then .the court observed as under :-
"...-But the fact that there is for each commodity what may be considered ordinarily to be. the final act of consumption ,should not take us forger that in reaching the .stage at which this final act of consumption takes place the commodity may pass through different stages of production and for such different stages ,there would exist one or more intermediate acts of consumption. Thus, the final act, of consumption of cotton may be considered to be the use as wearing apparel of the cloth produced from it .But before cotton has become a wearing apparel, it passes through the hands of different producers, each of whom adds some utility to the commodity received by him. There is first the act of ginning ,sinned cotton is spun into yarn by the spinner, the spun yarn is woven into cloth by the weaver. the woven cloth is made into wearing apparel by the tailor. At each of these stages distinct utilities are produced and what is produced is at the next tags consumed. It is usual and correct to speak of raw cotton being consumed in ginning, of ginned cotton being consumed in spinning, of spun yarn being consumed in weaving, of woven cloth being consumed in the making of wear''sanparel. The final product-the wearing apparels ultimately consumed by men, women and children in using it as dress. In the absence of any words to limit the connotation of the word "consumption" to the final act of consumption, it will be proper to think that the makers used the word to connote any kind of user which is ordinarily spoken of as consumption of the particular commodity."
(18) It is not clear to us as to how this judgment supports .Dua. In the present case the distributors/dealers of paper do not convert the paper into any other commodity but they merely sell the paper to retailers who would again sell the same to purchasers for ultimate consumption. The word'' consumer'' has not been defined in the Act. It is defined in the Consumers Act. Trader has been separately defined in the Consumers Act. To an extent the Act and the Consumers Act have much in common with one another. In a way, they are cognate legislation when it comes to unfair trade practices. They would appear to form one code and should be taKen together as forming one system. It would perhaps be more appropriate to adopt the definition of consumer as given in the Consumer Act. We do not think that Mr. Dua is right when he says that a consumer would be included in the word trader because a trader would normally re-sell the commodity without in any way making the commodity different by any process or otherwise. The Supreme Court decision referred to above would rather support the view which we are taking. If the word is not defined in the Act ,it should be given its ordinary meaning as it is commonly understood .Consumer would thus mean a person who buys and uses goods. It also appears to us that the word'' consumer'' in Section 36B of the Act will have same meaning particularly after the amendment of the Act by the Amending Act 1986 asin the Consumers Act and we are of the opinion that same meaning should hold good for the word ''consumer'' in Section 10(a)(i) of the Act. As noted above, there has been vital change in Section 10(a)(i) after its amendment by the Amending Act,1986 and all this discussion may, Therefore, appear to he rather academic .Nevertheless, it does appear to us that consumer is a separate category apart from the trader either wholesaler or retailer and the complaint in the present case doe? not satisfy the requirement of Section 10(a)(i) and is an invalid complaint it not having been filed by consumers and not having been filed by a trade association having the membership of twenty five persons or more. The agreement of Mr. Dua that the'' complain the taken to have been filed by such an association of traders asIT is signed by thirty one traders is of no relevance. A complaint by a trade association having a membership of twenty persons or more cannot be equated with a complaint filed by twenty live or more persons even though jointly. Trade Association has been defined u/s 2(e) "of the Act to mean a body of persons formed turn the purpose of furthering the trade interests of its members. It is nobody''s case that thirty one persons who have filed the complaint in question, formed any trade association for the purpose of furthering the trade interests of these persons. An association is normally understod to mean a body which brings together people with a common interest or purpose as a trade association defined under the Act .These thirty one persons could at best be described to form a group, but then group has been separately defined in the Act .S-2 (e.f.). They may also be working in association with each other, but they certainly cannot be said to form an association .
(19) But, then the present notice of inquiry has been issused both u/s 10(a)(i) and Section 10(a)(iv) of the Act.Mr. Malhotra, learned counsel for the petitioner, contended thata complaint u/s 10(a)(i) could not be converted into that u/s 10(a)(iv). But, this point stands concluded not only by this court but also by the High Courts of Calcutta and Allahabad. Commission in its earlier orders has also held that an invalid complaint u/s 10(a)(i) could be treated as one u/s 10(a)(iv) to enable the Commission to inquire into any restrictive trade practice. It was of the view that if the Commission proposed to institute an enquiry upon its own knowledge or information such knowledge or information could be derived from a defective complaint made u/s 10(a)(i). [See in re. An Agreement Relating to Nylon Filament Yarn, (1975) 45 Com 646 This view of the Commission was challenged in this court in Nirlon Synthetic Fibres And Chemicals. Ltd. and another v. R. D Saxena.Director of Investigation and others (1976) 46, Com 419 One of the arguments was that a certain trade association had filed a complaint on the basis of which the Commission issued notice without complying with the provisions of Section 11 of the Act. which enjoins upon the Commission to have
" CERTAIN preliminary investigation made before issue of process. the whole proceedings were void ab initio. This court observed as under :---
"...-We see no substance in this argument Section 10 authorises the Commission to inquire into any restrictive trade practice not only upon receiving a complaint but also "upon its own knowledge and information "It is true that the Crimpers Association had filed the complaint but thereafter the Commission has token upon the matter itself and we see no bar to its doing so. This aspect of the matter was fully gone into by the Commission in its order dated 5/03/1974, with which we agree "
CALCUTTA High Court in I.T.C. Ltd. v. M.R.T.P; Commission and Ors. (1976) 46, Com 619 is also of the view that Commission''s jurisdiction to inquire into restrictive trade practices upon its own knowledge or information u/s 10(a)(iv) of the said Act is not restricted only to the information derived from a proceeding u/s 12(3) of the Act. Upon information derived horn an invalid or irregular complaint or even from an anonymous letter or from a complaint made by less than twenty five consumers, the Commission is competent to exercise its jurisdiction u/s 10(a)(iv) of the Act. It also held in this case that provisions-of Section 10(a) were mutually exclusive but that did not mean that any information derived from any source or even from an invalid complaint could not be used by the Commission as its own knowledge and information under clause (iv) and that only limitation was that there could not be any simultaneous inquiry on different alternatives enumerated in Section 10(a). In J. K.Synthetics Ltd. v. R. D. Saxena, Director of investigation and ors. (1977) 47. Com 323 Allahabad (4), it was contended that an invalid complaint could not form the basis of its knowledge or information of the Commission so as to entitle to take action u/s 10(a)(iv). The court held that this was not correct and that there was nothing in Section 10(a)(iv) to restrict the source of information or own knowledge of the Commission which could form the basis of suo motu action. The source and the manner in which this information was conveyed was of no consequence .The Commission could take action u/s 10(a)(iv) even on the basis of an invalid complaint .
(20) Mr. Malhotra then contended that there could not be one notice for cases falling u/s 10(a)(i) and Section 10(a)(iv) and relying on the decision of the Calcutta High Court ,referred to above, he said that there had to be two generate notices of inquiry and separate inquiries held. We unable to subscribe'' to this view. the Commission may inquire into any restrictive trade practice upon receiving a complaint or upon a reference from the Central or State Government or upon an application by the Director General or upon its own knowledge or information. We see no difficulty in holding an inquiry when allegation regarding restrictive trade practices are same and against the same party and it is immaterial which may the Commission assumes jurisdiction. We may also note that Regulation 15(2) provides, that subject to the provisions of subsection (1) of section 12 of Act, where no specific provision has been made in these regulations the Code of Civil Procedure1908, to the extent as may be deemed expedient by the Commission, shall apply to the proceedings. Thus, even if we hold that there was no proper complaint u/s 10(a)(i) the Commission could proceed u/s 10(a)(iv) of the Act.
(21) Then, it was contended by Mr. Malhotra that Section. 10(a)(iv) was unconstitutional and invalid. This ground was not taken either before the Commission or in the grounds in this writ petition. We, however, permitted Mr. Malhotra to raise this argument as the question raised was a pure question of law which could be decided on the basis of the faction record in the case. For this purpose we relied on a decision of the Supreme Court in Town Municipal, Council, Athani Vs. The Presiding Officer, Labour Courts, Hubli and Others etc., . It was submitted that on a complaint received u/s 10(a)(i) the Commission might require the Director General to make or cause to be made a preliminary investigation in a manner as may be directed by the Commission to enable it to satisfy itself as to whether or not the complaint made is to be inquired into. There was no safeguard if the Commission wanted to inquire into any Restrictive Trade practice upon its own knowledge or information. But. then also no preliminary investigation is required when a reference is made by the Central Government or a Slate Government or an application is made by the Director General. Though, when a complaint is made by the Director General he can make Or cause to be made & preliminary investigation for him to satisfy as to whether or not an application should be made u/s 10(a)(iii). Mr. Dua referred to Regulation-19of the Regulations under which the Commission may order a preliminary investigation by the Director General when the Commission decides to inquire into any restrictive trade practice u/s 10(a)(iv). He said that on this account allegation for arbitrariness could not be made against the Commission .This argument was countered by Mr. Nanman who also appeared for the petitioner and supplemented The arguments of Mr. Malhotra to submit that a statute which was otherwise invalid as being unreasonable could not be saved by its being administered in a reasonable manner. He referred to a decision of the Supreme Court in The Collector of Customs, Madras Vs. Nathella Sampathu Chetty and Another, where the court observed as under :-
" THE possibility of abuse of a statute otherwise valid does not impart to it any element of invalidity. The converse must also follow that a statute which is otherwise invalid as being unreasonable cannot be saved by it being administered in a reasonable manner .The constitutional validity of the statute would have to be determined on the basis of its provisions and on the ambit of its operation as reasonably construed. If so judged it passes the test of reasonableness, possibility of the powers conferred being, improperly used is no ground for pronouncing the law itself invalid and similarly If the law properly interpreted and tested in the light of the requirements set out in Part Iii of the Constitution does not pass the test it cannot be pronounced valid merely because it is administered in a manner which might not conflict with the constitutional requirements .In saying this we are not to be understood as laying down that a law which might operate harshly but still be constitutionally valid should be operated always with harshness or that reasonableness and justness ought not to guide the actual administration of such laws "
(22) Mr. Nariman also submitted that Section 10(a)(iv) is violative of the principles of natural justice. He said there was no provision for preliminary investigation and that it could be that the Commission was not fully aware of the authenticity of its information. The issue of notice could cause great harm to the party. He said that the Act laid down a condition percedent that complaint u/s 10(a)(i) could be by twenty five persons or more. It could not be said that there was no basis for it and when requirement of law was that a preliminary investigation be held to enable to the Commission to satisfy itself if the complaint was required to be inquired into of not, there was no safeguard when a came to Section 10(a)(iv). There was no provision, for notice to the party before the Commission issued notice u/s 10(a)(iv).Then, Mr. Nariman said that it was a case where the judge in the case was himself a witness and there was no protection against bias and trial being not fair. He referred to decision of the Supreme Court in S.L. Kapoor Vs. Jagmohan and Others, and Swadeshi Cotton Mills Vs. Union of India (UOI), Mr. Dua, however, submitted that the Act was beyond the realm of challenge and that it was protected by Section 31B of the Constitution. the Act appearing at item 91 of 9th Schedule to the Constitution. He said Article 39(C). under the Directive Principles of State Policy would also protect the Act from any challenge to its validity. An argument was also raised by Mr. Malhotra that Commission was in fact a Court and no one could be judged in his own cause. He relied on a decision of the Supreme Court in Shri Virindar Kumar Satyawadi Vs. The State of Punjab, . In a bench decision of this court in Premier Tyres Ltd v. M.R.T.P. Commission (Company Cases (Vol. 46, 1976) 297], (10) referred to by Mr. Dua.it was observed that u/s 12 of the Act the Commission was deemed to be a civil court for certain purposes and had been conferred with certain powers of the civil court. We are of the opinion that challenge of the petitioner to the validity of Section 10(a)(iv) is not of any avail. It is no;. that proceedings only under sub-clauses (i), (ii) and (iii) are of adversarial nature and that tinder sub-clause (iv) of inquisitorial nature. All would be of advertorial nature. The Commission is a high powered body constituted of a Chairman. a person who is or has been or is qualified to be a judge of the Supreme Court, or High Court and the members who are persons of ability integrity a.nd standing having adequate knowledge or experience of. or have shown capacity in dealing problems relating to economics. law, commerce, accountancy, industry ,public affairs or administration. Only such a high powered body had been entrusted with the job to administer the Act the object of which is to provide that the operation of economic system does not result in the concentration of economic power to the common detriment, turn the control of monopolies for the prohibition of monopolistic and Restrictive Trade practices and such other matters connected therewith or incidental thereto. It is, Therefore, difficult to comprehend that such a body will act in an arbitrary fashion when it chooses to inquire into a restrictive trade practice upon its own knowledge or information. Provisions of the Act and the objects provide enough guidance for the Commission to act under sub clause (iv)(a) of Section 10. It is incorrect to say that Commission is a court. It has been conferred with certain powers of a civil court under Sections 12, 12(a), 12(b), 12(c) etc.Commission can certainly be not equated with a civil court. When the Commission issues notice u/s 10(a)(iv) it only directs that inquiry be instituted against the person concerned in respect of the restrictive trade practices alleged against him and opportunity is granted to that person to be heard in the matter. No grievance can be made that before issuing of notice the party concerned is not heard. The issue of notice u/s 10(a)(iv) does not thus conclude the matter. It appears to us that whole procedure will stand nullified if before issuing such notice a party is to be heard. No rule? of natural justice can be said to have been violated. No doubt that the horizons of natural justice are ever expanding but then the aim of natural justice is to secure justice and to prevent miscarriage of justice. The Act and the Regulations give full protection to the party concerned to contest the notice of inquiry. In the circumstances we cannot read the requirement of an opportunity to the party concerned before issue of notice of inquiry and we feel that the legislature has advisedly made no such provision for hearing before issue of notice of inquiry as it has provided a detailed procedure to hear the party. The rules of natural justice only require that a party against whom an allegation is being inquired into should be given a hearing. In Nagendra Nath Bora and Another Vs. The Commissioner of Hills Division and Appeals, Assam and Others, the court observed that the rules of natural justice vary. with the varying constitutions of statutory bodies and the rules prescribed by the Act under which they function and the question whether or not any rules of natural justice had been contravened should be decided not under any pre-conceived notions, but in the light of the statutory rules and provisions. We, therefore ,reject the argument that Section 10(a)(iv) is invalid.
(23) We are also not impressed with the argument that provisions of Regulation 73(5) are in any way illegal being beyond the rule making powers of the Commission. As noted above ,the Regulations have been framed under Sections 18 and 66 of the Act. Under Regulation 73(5) any complainant applicant I informant or the government authority who makes reference u/s 10(a) is deemed to be a party and is entitled to be heard in the proceedings. No exception can be found to this provision. Mr. Malhotra did refer to a certain decisions of the Supreme Court, notably in State of Kerala Vs. K.M. Charia Abdullah and Co., to contend that the Commission could not transcend its powers conferred on it by the Act and he said that Regulation 73(5) did not find place in the scheme of the Act. We do not agree. As noted above, full opportunity is granted to the petitioner to participate in the proceedings before the Commission ,to cross-examine the witnesses deposing against him and to produce evidence in defense. Almost all provisions of the CPC could be made applicable tot he proceedings before the Commission by virtue of the Regulations. Under sub-section (2) of Section 18, Commission has powers to determine the extent to which persons interested or claimed to be interested in the subject matter of any procceding before it are allowed to be present or to be heard, either by themselves or by their representatives or to cross-examine witnesses or otherwise to take part in the proceedings before the Commission. Regulation 73(5) squarely falls within this power. The grievance of the petitioner has been to the order of the Commission allowing respondent No. 3 to be added as a party. There is nothing wrong in it. We. Therefore, reject the argument that Regulation 73(5) is ultra vires the powers of the Commission.
(24) In the result this petition fails and is dismissed with costs. Counsel''s fee Rs. 1,000.