Decided on May 06,1977



- (1.) ORDER on the application of the respondent dated 10th March, 1977, and the application of the Registrar dated 22nd March, 1977.
(2.) These are two applications, one filed by the respondent dated 10th March, 1977, and another filed by the Registrar dated 22nd March, 1977. The application of the respondent is for rejection of the Registrar's application purportedly made under Section 10(a)(iii), or in the alternative for directions to the Registrar to amend his application and plead all relevant facts constituting the cause of action and how and when it arose and furnish further and better particulars appropriate in the facts and circumstances of the ease or for confining the initial enquiry to the existence of restrictive trade practices. The application of the Registrar is for permission to amend the original application dated March 31, 1975, by insertion therein of additional paragraphs and by substituting one paragraph, i.e., paragraph 8 of the old application by the new paragraph 8. The respondent is a public limited company doing business in the manufacture and sale of commercial vehicles, spare parts, tools, accessories thereof. It had entered into an agreement with its dealers for the sale of spare parts, tools, accessories, etc. The Registrar of Restrictive Trade Agreements (hereinafter referred to as the " Registrar ") issued a notice under Section 42(1) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as " the Act"), to the respondent calling upon it to furnish particulars/information regarding the agreements and the respondent furnished these particulars by its letter dated 27th December, 1974. The Registrar thereafter applied to the Commission pointing out that the respondent's Dealer's Manual read with the respondent's letter dated the 27th December, 1974, showed that the respondent had entered into an agreement with its dealers and certain provisions of that agreement related to the restrictive trade practices of territorial restrictions, full-line forcing, exclusive dealings, resale price maintenance, payment of turnover rebate, discount, etc., by reason of dealings and restricting persons to whom goods are sold, which attracted the provisions of Sections 33(1)(a), (b), (c), (f), (e) and (g). It was also alleged that the restrictive trade practices referred to earlier prevented, distorted and restricted competition and obstructed the flow of capital and resources in the stream of production, tended to bring about manipulation of prices and conditions of delivery and affected the flow of supplies in the market and imposed on consumers unjustified costs and restrictions and were prejudicial to public interest. The clauses of the Dealer's Manual on which reliance was placed by the Registrar were Nos. 1, 2, 3, 5, 7, 9, 10, 12 and 13 and they are extracted below for facility of reference : " 1. Spare parts Target The target for each dealer will be fixed by the spare parts department, in consultation with the dealer depending upon the service effectiveness, of the dealer, the market potential and the vehicle population in his territory. The dealer should take adequate steps to ensure that he achieves the target set for him. 2. Stocking and ordering of spare parts : 1. The dealer should : (a) maintain at all times stocks of a comprehensive range of parts covering a minimum of 4 months' requirements for sale in his territory. Such stock should also include aggregates, chassis frames, cowls, sheet metal parts, etc. (b) place bulk orders covering the comprehensive range regularly, every 2 months. 3. Sale of spare parts : Although Telco reserves the right to make direct sales to any party, retail sale of spare parts will normally be channelised through the outlets of the dealers, their branches and Sub-dealers approved by Telco. It is an essential condition of the dealership, that the dealer sells spare parts only through his own outlets or Sub-dealers, within his territory, to genuine end users, and that he does not sell to the trade in general. 5. Sale of genuine Telco spare parts: It is the dealer's responsibility to ensure that all his outlets sell genuine Telco parts only, i.e., parts supplied by the Telco. For the information of the dealers, all parts supplied by Telco--either manufactured by Telco or by the ancillary manufacturers--are released for sale only if they are accepted by Telco's quality control department. 7. Sale of critical parts : The dealer should use the critical parts only for fitment on the vehicles which are repaired in his workshop. Exception to the policy may be made: (i) for genuine end-users like State Transport Organisations, fleet operators and Government departments who have their own workshop facilities ; and (ii) where the dealer is satisfied that the customer is a genuine end-user and his vehicle for which the critical item is required cannot be brought to the dealer's workshop for repairs. 9. Sales promotional activities : The dealer is required to maintain close liaison with the fleet operators, Government departments, projects. State Transport Divisions operating within his territory, etc., to promote the sale of genuine Telco spare parts. He should appoint field salesman to regularly contact these parties and secure orders for genuine Telco spare parts. 10. Submission of reports : The dealer should forward regularly to the spare parts department, Bombay, a copy of his quarterly workshop operation return which is submitted to the service department. This report must be submitted within one month after each quarter. The dealer should also furnish to the spare parts department, Bombay, a quarterly report on competition furnishing relevant details on availability and price of competitive parts, suggestions for meeting competition, and any other matter connected with sales promotion of spare parts. 12. Price list : The dealers under no circumstances should sell the spare parts at prices exceeding the retail prices published by Telco, plus the following expenses : (i) Freight charges at rates approved by Telco; (ii) Taxes and octroi as applicable; and (iii) Packing charges in the case of aggregates at rates approved by Telco. 13. Discounts : The present rate of discount is 10% on spare parts and 10% on aggregates. An additional 1% discount is allowed on bulk orders for a value of Rs. 2 lakhs and above. To qualify for the additional 1% discount, bulk orders must include orders for non-critical parts for a minimum value of Rs. 1.50 lakhs."
(3.) THE application of the Registrar dated January 31, 1975, included the following paragraph 8, which is one of the items in controversy : " That the restrictive trade practices set out hereinabove prevent, distort and restrict competition and obstruct the flow of capital and resources in the stream of production, tend to bring about manipulation of prices and conditions of delivery and affect the flow of supplies in the market and impose on consumers unjustified costs and restrictions and are prejudicial to public interest.";

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