MAEGAWARE COMPUTERS LTD Vs. STATE
LAWS(NR)-1993-5-6
MONO POLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION
Decided on May 13,1993

Appellant
VERSUS
Respondents

JUDGEMENT

N.C. Gupta, Member - (1.) A notice of enquiry was issued against the respondent under Section 10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices Act, 1969 (briefly, "the Act") and regulation 58 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974, on January 2, 1991, pursuant to a preliminary investigation report (PIR) submitted by the Director-General (Investigation and Registration) on November 25, 1990, on the basis of a complaint filed by Modern Educational Centre, Chandigarh (for short "the Centre").
(2.) The facts started in the said complaint and brought out in the notice of enquiry may be briefly stated. The Centre had deposited a sum of Rs. 60,000 with the respondent on September 12, 1988, by way of an advance for getting the distributorship of the products manufactured and marketed by the respondent. Since the distribution scheme failed to materialise, the Centre asked for refund of the said amount but the respondent paid back a sum of Rs. 45,000 only after deducting Rs. 10,000 as non-refundable registration fee and Rs. 5,000 on account of cancellation charges. This deduction of Rs. 15,000 roughly amounting to about 25 per cent, of the total amount has been eX facie treated as a restrictive trade practice within the meaning of Section 2(o)(ii) of the Act which tends to bring about manipulation of the price of the respondent's products, imposing on the consumer unjustified cost and restrictions within the meaning of the aforesaid legal provision. Further, the distributorship agreement to be entered into between the respondent and the prospective distributors, inter alia, included a clause pertaining to payment of distributorship commission as under : "That distributorship commission would be paid as per the following structure : The target turnover is the quarterly gross sales at the rate of Rs.4 lakhs per quarter. This turnover will be the total aggregate of sales of any of the items, viz., IBM compatible computers, calculators, desk top publishing software and maegarite." The clause amounts to a restrictive trade practice under Section 33(1)(e) of the Act. Finally, under the agreement the territory in the State of Haryana and the Union Territory of Chandigarh was assigned to the Centre on exclusive basis while the territory in the State of Himachal Pradesh was to be handled on case to case basis for the award of commission. This was prima facie considered to be a restrictive trade practice in terms of Section 33(1)(g) of the Act.
(3.) THE respondent filed a detailed written reply to the notice of enquiry where the impugned clauses in the distributorship agreement have not been denied. THE respondent has, however, emphasised that a sum of Rs. 5,000 was deducted towards processing charges in respect of the application of the complainant for being appointed a distributor and another sum of Rs. 10,000 was deducted being non-refundable registration fee. THE respondent has denied that the said deduction amounts to restrictive trade practice in terms of Section 2(o)(ii) of the Act. It has been further pleaded that the deduction as aforesaid cannot be said to be unjustifiable, tending to bring about manipulation of prices ; that assigning territory on exclusive basis does not amount to a restrictive trade practice within the meaning of Section 33(1)(g) of the Act ; that payment of commission on target turnover basis ranging between 12% to 18% does not fall within the mischief of Section 33(1)(e) of the Act. It has also been pleaded that the notice of enquiry is not maintainable under the aforesaid provision of law since no restrictive trade practice on the part of the respondent is made out on the facts disclosed in the complaint and as brought out in the notice of enquiry.;


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