DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs KHAITAN INDIA LTD.

A complaint was made by Jay Engineering Works alleging therein that the respondents had issued an advertisement in the Hindustan Times in its issue of 15th August, 1995 offering discounts ranging from Rs. 30/- to Rs.100/- on ceiling and portable fans, for a limited period. It was further complained that in the impugned advertisement, three models of the fans i.e. Lumair Ceiling Fan, Roopa Premium Table Fan and Tycoon Rainbow Ceiling Fan were shown and while discount of Rs. 30/- was being offered on fans at serial Nos. (ii) and (iii), the model at serial No. (i) was available at a discount of Rs. 100/-. It was also complained that similar advertisements appeared in Malayala Manorama of 9th August, 1995 and Matru Bhoomi of 10th August, 1995. It has been alleged that the discount of Rs. 100/- is being offered in respect of models, the sales of which, are about 2% of the total sales of the respondents'' fans, while discount of Rs. 30/- per fan is being offered on models of ceiling fans, known as Magnate and Baron which represent 50% to 60% of the total sales of the respondents'' fans. It was also alleged that before the impugned advertisements were issued, the respondents had effected two price increases on 1.4.1995 and again on 1.6.1995, as a result of which, the price of Magnate model was increased by Rs. 64/- whereas the discounts offered on it was only Rs. 30/-. It was also stated that this model was actually being sold in the market at discount of Rs. 150/-. In short, it was alleged that the trade practice, adopted by the respondents, relating to offering discounts without mentioning the period and thereby misleading the consumers attracted the provisions of Section 36A(1) of the Act.

THIS complaint of Jay Engineering Works Ltd. was treated as information vide Commission''s order of 16.8.1995 and a Notice of Enquiry was issued under the provisions of Sections 36B(d), 36A(1) and 36A(2) read with 36D(1) of the MRTP Act, 1969 (hereinafter referred to as the Act). By the same order, after considering the application under Section 12A of the Act, the Commission restrained the respondents from issuing advertisements in the violation of the Commission''s orders of 17.12.1993 and 26.7.1994 passed in UTPE 122/91 and UTPE 137/91 as it was also contended before the Commision that the impugned advertisements were issued in violation of the aforesaid orders of the Commission. In view of its above contention, the informant/complainant was given the liberty of moving an appropriate application under Section 13B of the Act. Subsequently, on an application made by the informant/complainant under Section 13B of the Act, a notice was issued to the respondents. However, after considering the statements made by Mr. C.R. Singvi and Mr. Aditya Narayan, Advocates that there was no intention to commit contempt, the contempt proceedings were dropped vide the Commission''s order dated 11.7.1997. The respondents in their reply, denied the charge of adoption of unfair trade practices.

On completion of pleadings, the following issues were framed : (1) Whether the respondents are or have been indulging in unfair trade practices as alleged in the NOE ? (2) Whether the said unfair trade practices are not prejudicial to the public interest ?

NO oral evidence was led on behalf of the DG. The respondents too, did not adduce any order or documentary evidence. We have heard the learned Advocates for the DG as well as that of the respondents. It is not disputed or denied that the impugned advertisement was issued by the respondents offering discounts ranging from Rs. 30/- to Rs. 100/- on ceiling and portable fans for a limited period. It is also not disputed that the discounts were offered during the off season in the year 1995. It is not the DG''s case nor it has been urged before us at the time of oral submissions that these discounts are still being offered. It is pertinent to mention here that the evidence brought on record shows that the "Magnate" model fan of the respondents being sold below the list price. The price list has been annexed as part of the evidence and the maximum list price of "Magnate Delux" fan is shown to be Rs. 976/- and Rs. 982/- of 900 and 1050 mm respectively, whereas the cash bills tendered as documentary evidence indicate that the "Magnate" model fans of 1050 mm were being sold at Rs. 825/- (Rs. 850/- discount of Rs. 25/-) and 48" fans the respondent for Rs. 845/- at different places in Kerala. In other words, not only discounts were being allowed, the fans were actually being sold at a price which is a much below the list price. It thus appears that the fans of the respondents were available at a price which is below the list price and with discount offered by the respondents in the impugned advertisement.

IT is evident, therefore, that there was no misrepresentation by the respondents and the impugned advertisement offering discounts was not misleading. Moreover, for condemning a trade practice as an unfair trade practices, it has to be seen whether it is prejudicial to the interest of the consumers or the public interest. In other words, the touchstone for determining a trade practice to be unfair is the prejudice it has caused or is likely to cause to the consumer interest or the public interest. In the instant case, no prejudice appears to have been caused to the consumers as the fans were available in the market at a price which is much lower than the price shown in the price list and discounts as advertised by the respondents in the impugned advertisement were also being made available to the consumers. It may also be mentioned here that though it was alleged that prices of the fans were revised upward as a result of two price increases, no evidence was led to show that the discounts offered by the respondents were recovered partly or wholly through the price increases effected by the respondents on 1.4.1995 and 1.6.1995. In view of the above, we are of the view that no case of adoption of or indulgence in unfair trade practices by the respondents has been made out. Even otherwise, the impugned advertisement appeared in August, 1995 and the offer of discount was limited to off season and although since then about seven years have elapsed, no complaint has been received from the consumers or even from the informant/complainant against the respondents that same or similar trade practices have been adopted or indulged in or that the same come within the purview of Section 36A(1) of the Act. In that view of the matter and more particularly, as the charge of adoption of and indulgence in unfair trade practices by the respondents has not been establised, the Notice of Enquiry deserves to be and is hereby discharged with no order as to costs on the facts and in the circumstances of the case. NOE discharged.