DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs Sitapur Plywood Manufacturers Ltd.

IN its application filed before the Commission, the Director General (INvestigation & Registration) (for short the DG) has charged the respondents i.e. M/s. Sitapur Plywood Manufacturers Ltd. (hereinafter referred to as R-1) and M/s. Kalyan Singh & Company (hereinafter referred to as R-2) with adoption of and indulgence in unfair trade practices within the meaning of Section 36A of the Monopolies and Restrictive Trade Practices Act, 1969 (for short the Act). The contention is that after raising a proforma invoice and giving an impression to the party that the goods are under process and then by not supplying the same within the stipulated period as promised, a deceptive method has been adopted to sell the goods within the meaning of Section 36A of the Act. The charge as levelled is based on the facts as brought to the notice of the DG by the complainant Shri Giriraj Kishore. It so happened that one Shri Giriraj Kishore placed an order for supply of 343 numbers of flush doors on 11.4.1991 on respondent No. 1 the manufacturer. The complainant paid Rs. 25,000/- as an advance and the balance payment was to be made at the time of delivery of goods. On receipt of the order for doors from respondent No. 2, who was the wholesaler of R-1 at that point of time, R-1 raised the proforma invoice on 24.4.1991 for Rs. 2,31,889/-. Subsequently, the payment of Rs. 2,06,889/- was demanded from the complainant. The delivery was to be given within four weeks. On assurance given that the goods would be delivered within four weeks, the complainant further paid Rs. 50,000/- to respondent No. 1. Despite the payment of Rs. 75,000/- having been made, the goods were not delivered and the complainant requested for a refund of Rs. 75,000/-. The facts, contends the DG, are sufficient to establish the falsity of the representation made to the complainant on the basis of which the amount has been recovered from the party without supplying the goods. The prayer of the DG is that cease and desist order be passed against the respondents and suitable cost be awarded to the applicant. After finding that prima facie a case has been made out against the respondents, Notice of Enquiry dated 3.6.1994 was issued.

FOR the alleged trade practice on the part of the respondents, the applicant also claimed a sum of Rs. 91,575/- inclusive of interest @ 18% per annum from April, 1991 to September, 1992 and the expenses incurred on account of prolongation of the project and collection of out-station charges in its compensation application filed in C.A. No. 25/95. As both the applications arise from the same cause of action pertaining to the same subject matter, they are taken together and disposed of by a common order for the sake of convenience. In defence, the contention of respondent No. 1 is that the matter has been amicably settled with the complainant and Rs. 75,000/- stands refunded to it. On merits, it is stated that as per the agreement, the complainant was required to pay the entire amount before the delivery could be made. As the amount was not paid, the goods were not delivered within the stipulated time. This apart the delay was caused by certain circumstances beyond the control of the respondent, as apparent from the letters addressed to the applicant contended the respondent R-2 in its reply on the other hand stated that it is at the request of the applicant/complainant that it approached R-1 and settled the terms and conditions on its behalf. The demand draft of Rs. 25,000/- was duly sent to R-1 vide letter No. PP/CO/1/91/146 dated 11.4.1991. R-2 only acted as an agent to convey orders to R-1. It was R-1 who being the manufacturer of the goods had to supply the same to the complainant. R-2 being not responsible for any act of omission or commission cannot be held guilty of the charges as levelled against it. After the pleadings were complete, the following issues were framed : (1) Whether the Notice of Enquiry is not maintainable in view of the preliminary objections taken by the respondent in the reply to the Notice of Enquiry ? (2) Whether the respondents have been or are indulging in unfair trade practices as indicated in the Notice of Enquiry ? (3) If the answer to the foregoing issue is in the affirmative, whether the unfair trade practices are prejudicial to public interest or to the interest of the consumer or consumers generally.

Evidences by way of affidavit and counter-affidavit along with supporting documents were filed.

The first issue regarding the maintainability of the proceedings is to be decided against the respondent No. 1 as for not supplying the goods within stipulated period of time as promised, it has apparently indulged in unfair trade practices as alleged in the Notice of Enquiry.

AS to the second issue, chronological order of events reveals that the complainant/informant placed an order for 343 flush doors with the respondent No. 2 who in turn intimated the terms and conditions to R-1 vide its letter dated 11.4.1991. It appears that the goods were to be supplied within four weeks on payment of remaining amount. Thereafter an amount of Rs. 50,000/- was paid by demand draft vide letter dated 27.4.1991. The respondent vide its letter dated 9.5.1991 demanded the payment of the balance amount of proforma value, i.e. Rs. 1,60,595/- from the complainant/informant. This was however not paid. On 3.7.1991 R-2 informed the complainant/informant that due to major technical breakdown resulting in defective door production, delivery could be given within a fortnight''s time. This was followed by another letter dated 12.7.1991 conveying that the plant was still under repair and the goods would be delivered by the end of the next week. By subsequent letter again the same cause was indicated for non-supply of the goods as ordered. Thereafter, the complainant/informant cancelled the order on 14.8.1991 and asked for refund of the payment already made. The request for interest on the amount retained by R-1 was however declined and the amount of Rs. 75,000/- was refunded vide post-dated cheque dated 1.7.1992 encashed on 15.9.1992. AS per respondent, the dispute was amicably settled with the party. In the meanwhile, the applicant filed a complaint in the Commission on 5.1.1992. The DG proceeded with the case on the basis of the aforesaid complaint and the Notice of Enquiry was issued dated 2.6.1994. The compensation application was filed on 13.12.1996 i.e. after a lapse of more than three years of settlement of the dispute with the party. It is true that as per the terms and conditions of the agreement with R-2 who is a wholesale dealer of R-1, the goods were to be delivered within four weeks and the payment was to be made on receipt of goods. We also find that vide letter dated 11.4.1991 addressed by R-2 to R-1, the terms and conditions were made clear to R-1 and a copy of the same was sent to the complainant/informant. Thus it was on these conditions that the order was accepted by R-1 as is evident from Annexure VI filed along with the application under Section 36B(c) of the Act. Therefore, demand of remaining amount in the wake of breakdown of the machinery and the labour unrest does constitute the unfair trade practice on the part of R-1. Technically speaking for making false promises, the respondent No. 1 needs to be restrained from indulging in such like trade practices. While it is true that goods could not be supplied due to reasons stated to be beyond control of the respondent No. 1, yet demand of remaining money under the circumstances tentamounted to unfair trade practices. In the circumstances, we hold that the respondent No. 1 had indulged in unfair trade practice and directed to ''cease and desist'' from following such trade practice in future.

RESPONDENT No. 2 has only acted as an agent on behalf of R-1 and in view of money having been collected by R-1 who was responsible for supplying the goods, no charge of unfair trade practice can be levelled against it. As regards compensation demanded by the applicant, it may be mentioned that the compensation application has been filed after the applicant has settled the dispute with the respondent. By that time, it had also encashed its cheques too. The material on record shows that the demand for the amount paid as an advance was along with the interest from the respondent. Despite this, the applicant accepted Rs. 75,000/- without interest towards settlement. After having accepted the amount as final settlement, applicant cannot turn to the Commission for payment of interest and other expenses which have not been established to have been incurred. This apart, the compensation application filed is beyond three years - the reasonable period of limitation as considered by Their Lordships of Hon''ble Supreme Court in case of Corporation Bank & Anr. v. Navin J. Shah, reported in I (2000) CPJ 13 (SC)=II (2000) SLT 140=2000 CTJ 81 (SC)(CP). Hence, applicant''s claim for compensation stands rejected. No cost on the facts and circumstances of the case is awarded. Ordered accordingly.