Decided on October 31,1996



Dr. S. Chakravarthy, Member - (1.) THIS is an application filed by the Director-General (Investigation and Registration) (DG) under Section 36B(c) of the Monopolies and Restrictive Trade Practices Act, 1969, indicting the respondents named above, Usha International Ltd. and Jay Engineering Works Ltd. of having indulged in certain unfair trade practices attracting Sections 36A(3)(a) and (b) of the Act. The following is a summary of the Director-General's application :
(2.) Usha International Ltd. (respondent No. 1) is engaged in the business of marketing Usha fans manufactured by Jay Engineering Works Ltd. (respondent No. 2). For the purpose of promoting the use or supply of Usha fans, respondent No. 1 issued an advertisement in the "Indian Express", edition of date-line March 20, 1986, under the caption "Better Fans, Better Gifts!" The said advertisement announced a scheme of prizes in the form of Maruti cars, Vijai super scooters, tape-recorders, etc. All that a prospective customer had to do was to purchase an Usha fan to become eligible for participation in the scheme. The advertisement announced that the dealer from whom the fan was purchased would give the purchaser a sealed envelope containing the name of the gift. The scheme commenced with effect from February 11, 1986. The Director-General after inspecting the records of one of the outlets of respondent No. 1, noted that the prices of various categories of fans had been increased simultaneously from the date of the commencement of the advertised scheme. In particular, the Director-General noted that the cost of the prizes was fully or partly covered by the increase in the price of the fans. In view of the nexus between the price-rise and the prize scheme, he has brought about a charge that both the respondents are severally and jointly liable for the unfair trade practices indulged in by them, attracting the provisions of Section 36A(5)(a) and (b) of the Monopolies and Restrictive Trade Practices Act, 1969. Based on the application of the Director-General, a notice of enquiry was issued by the Commission on June 23, 1986, summarising the charge of unfair trade practices. In particular, the notice of enquiry (NOE) charges the respondents with having offered prizes free of charge whereas the cost of the prizes has been or was being recovered wholly or partly from the increased price of the fan, thus, creating an impression contrary to facts. Furthermore, the NOE charges the respondents'with offering prizes or gifts depending upon chance. While specifying that these two limbs of the charge constitute unfair trade practices falling under Section 36A(3)(a) and Section 36A(3)(b) of the Act respectively, the NOE further charges that the aforesaid unfair trade practices are prejudicial to public interest. Essentially, the synchronising of escalation in prices of the fans with the launching of the advertised scheme is central to the charge brought by the Director-General, besides the fact that any contest or scheme of this nature based on chance is ah unfair trade practice.
(3.) BOTH the respondents offered their detailed replies to the notice of enquiry. We summarise herein below their replies respondent-wise.;

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