S. Chakravarthy, Member -
(1.) THIS enquiry commenced with the issuance of a notice of enquiry (NOE) dated November 24, 1987, by this Commission charging the respondents named above with having indulged in the restrictive trade practice of boycott falling within the meaning of Section 2(o)(ii) of the Monopolies and Restrictive Trade Practices Act, 1969. Anterior to the issuance of notice of enquiry, an investigation was commissioned through the Director-General of Investigation and Registration (DG) on receipt of a complaint preferred by one Dr. S.C. Singhvi that the medicine "Septran" manufactured by Burroughs Wellcome (India) Ltd. was not available in the market.
(2.) According to the preliminary investigation report (PIR) submitted by the Director-General, the trade association, namely, All India Organisation of Chemists and Druggists, the first respondent named above, the State level association, Rajasthan Chemists Association, the third respondent above, and the district level association, namely, Jodhpur Chemists Association, the second respondent above, indulged in the restrictive trade practice of refusal to deal and discriminatory dealing by organising a boycott of the "Septran" range of products manufactured by Burroughs Wellcome (India) Ltd. by the distributors in the State of Rajasthan during the period September 1, 1985, to May 31, 1986. It would appear that the boycott of the distribution of the said product was at the instance of the first respondent which is the apex body of Chemists and Druggists Associations, in conjunction with the State and District level associations, namely, the third and second respondent, respectively. The Director-General has styled the said restrictive trade practice as "a blatant interference with the working of the competitive forces" and has prayed that an enquiry be instituted against not only the apex body, State body and the district body of chemists and druggists but also the distributors, namely, Medicentre, British Medical Stores and Rajputana Medical Agencies, who are named as the fourth, fifth and sixth respondents above.
On being communicated with the notice of enquiry the first, second and third respondents filed their respective replies and the other three respondents furnished more or less similar replies. As the respective responses are different and defensive of their respective stances, they are summarized below separately.
Reply of the first respondent :
All India Organisation of Chemists and Druggists has presented its reply in the form of an affidavit of its general secretary, Dr. Sushil Behari Misra. Essentially, the first respondent has averred as follows :
(a) The allegation is denied as there is no finding by the Director-General that the boycott of the products of Burroughs Wellcome (India) Ltd. by respondents Nos. 4 to 6 was at its instance.
(b) The preliminary investigation report shows that the first respondent "had been merely using its good offices in trying to sort out the differences in regard to the business dealings between Burroughs Wellcome (India) Ltd. and some of its dealers."
(c) The enquiry is based "purely on conjectures and surmises" and has been instituted after a lapse of more than two years after the alleged boycott.
(d) Article 19(1)(g) of the Constitution confers a fundamental right on every citizen to practise any trade or business and the right to carry on business includes the right not to carry on business and thus the alleged restrictive trade practice cannot be brought under Section 2(o) of the Monopolies and Restrictive Trade Practices Act. (emphasis* added).
(e) There was a contract between the manufacturer, Burroughs Wellcome (India) Ltd. and its dealers in terms of which the manufacturer was to give a discount of 10 per cent. to the dealers in respect of certain specified products but arbitrarily and unilaterally it reduced the discount to 4 per cent. and thus violated the contract. This made the dealers to discontinue purchase of goods from the said manufacturer.
Reply of the second respondent :
Jodhpur Chemists Association, the second respondent, has made the following averments in its reply :
(a) It had given no boycott call to its members as alleged nor at the instance of any other organisation.
(b) The 400 members of the respondent are free to do what they desire in the course of their trade.
(c) The second respondent has nothing to do with the policy, direction or dictates of the third respondent or for that matter of any other organisation.
(d) In fact, the second and the third respondents have had some differences and their relationship was not happy.
(e) Only after the Commission issued the notice of enquiry, the respondent became aware of the alleged boycott.
(f) During the period in question, "Septran" was available in the market in the District of Jodhpur.
Reply of the third respondent :
In its reply the third respondent has made the following averments :
(a) The alleged boycott was between September, 1985, and May, 1986, but in as much as it had ended by May, 1986, the present proceedings after the event are not competent in law.
(b) Because of the manufacturer's illegal refusal to pay 10 per cent. discount to its stockists, the alleged non-co-operation was resorted to.
(c) There is a network of 50 dealers working under the three respondents 4, 5 and 6, all of whom suffered as a consequence of the reduction in the discount and in order to get their legitimate demand, they resorted to the alleged non-co-operation. This will not amount to a restrictive trade practice.
(d) The alleged boycott was not in respect of any life saving drug and was confined only to the "Septran" range of products. There are other pharmaceutical companies manufacturing the same medicine and thus no inconvenience was caused to the public.
(e) The gateways provided in Section 38(1)(b) and (h) of the Monopolies and Restrictive Trade Practices Act are available to the third respondent.
Replies on behalf of respondents Nos. 4, 5 and 6 :
These three respondents who are the distributors of Burroughs Wellcome (India) Ltd, have made more or less the following common averments :
(a) The charges in the notice of enquiry are denied.
(b) The present proceedings having commenced after the boycott had ended, are not competent in law.
(c) The alleged non-co-operation was resorted to because of the arbitrary and unilateral reduction of the discount payable to the dealers by the manufacturer, Burroughs Wellcome (India) Ltd.
(d) Gateways provided in Section 38(1)(b) and (h) of the Monopolies arid Restrictive Trade Practices Act are available to the respondents.
(3.) THE rejoinders of the Director-General to the replies of the respondents are merely reiterations of the contents of the preliminary investigation report and the stated position of the Director-General.
On the basis of the pleadings the following issues were framed :
1. Whether respondents Nos. 1 to 6 are or have been indulging in the restrictive trade practices as stated in the notice of enquiry ?
2. If reply to issue No. 1 is in the affirmative, whether the aforesaid trade practices are not prejudicial to the public interest ?