DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs RIFA INDUSTRIES PVT. LTD.

THE respondent M/s. Rifa Industries Pvt. Ltd. is a promoter and publisher of Cine Bilitz Magazine. It organised a contest under the caption Cine Bilitz ''Headliner'' Contest. THE scheme was first announced in July, 1997 issue of the magazine. As per advertisement, four issues of the magazine Cine Blitz starting from August, 1997 were to carry a ''Headliner'' contest in its cover and the participants were required to give a ''sizzling and provocative alternate headline''. Four hundred best Head Liners were to qualify for the lucky dip round to be held at the end of each month Lucky winners were to be picked up each month from the lot. Lucky winners of all four months were to qualify for the lucky dip, a Luxury Car picked by the Star of the month. THE contest was organised in association with BPL, Ricoh, Bantex and MTV who in turn announced their own prizes. THEre were 64 BPL 6CD Changer Music System, 80 Bentex watches, 96 Ricoh cameras and Full Audio Cassettes (100 Ultra Series) of the latest releases being given as Early Bird Prizes for the first 100 entries of every month. As per D.G. the scheme was introduced to increase the sale of magazine. This practice of the respondent in the opinion of D.G. is an unfair trade pracrice falling within the mischief of Section 36A(3)(b) of the Monopolies and Restrictive Trade Practices Commission Act (MRTP Act in short). It is thus prayed, that the respondent be directed to cease the practice if carried on at present and desist from repeating the same in future.

ON receipt of the said complaint, the Notice of Enquiry was issued to the respondent. In its reply, the respondent refuted the allegations levelled against it. It is stated that before launching the scheme on 23.6.1997, the respondent brought to the notice of the DG I&R its intention to run a contest in its magazine proving its bona fide. The format of the advertisement clearly shows a complete and adequate disclosure of the prizes as well the rules and regulations determining the contest. No extra cost has been charged in relation to the said issues to recover the cost of the gifts which are otherwise provided free by the associates. The contest has neither favourably affected the sales of the magazine nor had any adverse effect on the sales of other magazines. There is no entry fee and the contest being open to public at large, it cannot be held to be prejudicial to public interest. The quality of the magazine has also remained the same. The contest has rather promoted fair competition in any case it was organised somewhere in 1997, after which it has not been repeated. The allegations levelled by the DG I&R are, therefore, not sustainable and the Notice of Enquiry as issued against the respondent needs to be discharged. After completion of proceedings, the following issues were framed : (1) Whether the respondent is indulging in, or has been indulging in the unfair trade practices alleged in the complaint ? (2) Whether the alleged unfair trade practices are prejudicial to the interest of the consumers generally or public interest ? (3) Relief ?

While D.G. supported its case on the basis of the advertisement as given in the magazine, the respondent relied on the documents as well the statement of its witness.

THE submissions made on both sides through their Advocates have been carefully considered. THE grievance of the D.G. is that the respondent has organised the contest with an intention of increasing the sales of magazine which in turn would necessarily affect its quality. THE provisions of Section 36 A in general and that of Section 36(3)(b) of the Act in particular are, therefore, stated to be attracted. After carefully considering the submissions on both sides we find that Section 36A defines the unfair trade practices, so far as is relevant, it reads: (1) (2) .. (3) permits : (a) the offering of gifts, prizes or other items with the intention of not providing them as offered or creating the impression that something is being given or offered free of charge when it is fully or partly covered by the amount charged in the transaction as a whole, (b) the conduct of any contest, lottery, game of chance or skill, for the purpose of promoting, directly or indirectly, the sale, use or supply of any product or any business interest."

AS per Sub-clause (a) of Clause (3) of Section 36A of the Act, there has to be an offer of gifts, prizes or other items with an intention of not providing them or creating an impression that the gifts are offered free of charge when they are fully or particularly covered by the amount charged in the transaction as a whole. Admittedly the respondent has offered gifts and prizes as is evident from the representation published in the July issue of the magazine 1997. The cost of the gifts as advertised has been met by its four associates which stands substantiated by their letters of confirmations as available on record. It appears that the price of the magazine has not been increased atleast during the period the contest continued. The prizes as announced have also been given to the winners as per the list of winners filed along with photostat forms of entries with the affidavit of evidence. This remains uncontroverted by the DG I&R. AS regards the ''Luxury Car'' the same has also been made available as per the statement made at Bar by the learned Advocate for the respondent. There is no entry fee charged for participating in the contest. There is also no material placed before us to show that the respondent incurred some expenditure on the advertisement which in turn contributed to the cost of the magazine. Therefore, the provisions of Section 36A(3)(a) of the Act are not attracted. As regards Sub-clause (b) of Clause (3) of Section 36 A, while it is true that such like schemes are generally launched to promote the sale of any product or to promote the business interest of a person or any other entity, it can also not be denied that institution of such schemes has become common to the trade. The scheme is open to all irrespective of whether the contestant or the participant is a subscriber or not. From the information furnished with regard to the sales of the magazine during various months before the DG I&R as available in the case file, we find that there has been a great variation in the sales even in the months when the contest was not there. It cannot, therefore, be said that the increase in sales has been mainly due to the contest organised on behalf of the respondent. It is not the case of the DG I&R that the contest has led to the deterioration in the quality of the magazine and also affected adversely the other magazines. Therefore, the contest cannot be termed prejudicial to the interest of the consumers in general and public at large. In this context, we would like to refer to the decision of the Hon''ble Supreme Court in the case of HMM Ltd. v. Director General, Monopolies and Restrictive Trade Practices Commission, reported in VI (1998) SLT 621=AIR 1998 SC at page 2691. In the aforesaid case, a scheme was floated vide which the company inserted a chit in some of the packs of the Horlicks with the prize named therein ranging from a coloured TV to Rs. 20/-. In the eventuality of being lucky the person would get the earmarked prize. The Commission held the scheme to be inthe nature of unfair trade practice on the part of the concerned company. On an appeal the Hon''ble Supreme Court held that it would not amount to any lottery and would not be hit by Section 36(A)(3)(b) of the MRTP Act. In view of the above, we hold that no case of unfair trade practice has been established against the respondent and the Notice of Enquiry as issued deserves and is directed to be discharged. N.O.E. discharged.