Decided on May 13,1977



Order on the application of Registrar of Restrictive Trade Agreements dated 22-2-1977. - (1.) THIS is an application by the Registrar of Restrictive Trade Agreements, hereinafter referred to as " Registrar ", seeking permission to amend his application dated 13th September, 1974, by inserting therein paras. 6A and 10A setout in annexure II to the present application.
(2.) Respondent No. 1 is a public limited company doing, inter alia, business as distributors. Respondent No. 2 is the manufacturer of portable electric tools, valve refacers and stands, etc. (collectively known as " Wolf" Industrial Equipment), Respondent No. 2 is a subsidiary of respondent No. 1; who holds 60% of equity capital of respondent No. 2. The balance of 40% of the equity capital is held by Wolf Electric Tools (Holdings) Ltd., U.K. By an application dated the 13th September, 1974, the Registrar made two sets of allegations. One set of allegations related to the agreement between the respondent No. 1 and some of its distributors The other set of allegations related to the appointment by respondent No. 2 or respondent No. 1 as sole distributors of its, products for the Union of India and Nepal, We are not concerned in these proceedings with the first set of allegations because the Commission has already passed an order relating thereto on 20th February, 1976. In regard to the second set of allegations with which we are concerned in these proceedings the Registrar particularly drew attention to Clauses 2, 3, 4, 5 and 6 of the agreement, which read as under : " Clause 2 The manufacturer will sell to the distributor the electric tools manufactured as aforesaid at such, prices, less discounts and other usual terms as may be mutually agreed upon from time to time. The distributor shall be at liberty to sell the products to the dealers at any prices fixed by the distributor. Clause 3 The distributor will during the continuance of this arrangement use its best endeavours to sell or secure buyers within the territory for the products. Clause 4 The distributor does not undertake to absorb the full output of the manufacturer's factory. The manufacturer shall be entitled to appoint alternative or additional distributors for the whole or any part of the territory if the distributor is not absorbing a satisfactory portion of the manufacturer's output. Similarly, the manufacturer may appoint alternative or additional distributors for the whole or any part of the territory in the event of the distributor relinquishing its distributorship over any portion of the territory. Clause 5 The distributor shall take delivery of the electric tools sold to them within such period as may be mutually agreed and shall pay for the same within 30 days of the date of actual delivery of the electric tools to or to the order of the distributor, Clause 6 The distributor shall be responsible for advertising and publicity. "
(3.) THE Registrar made the following allegations in para. 10 of his application : " That having regard to the holding-subsidiary relationship between respondent No. 1 (Rallis India Ltd.) and respondent No. 2 (Ralliwolf Ltd.), the arrangement entered into between these parties for sale/distribution of the products of respondent No. 2 by respondent No. 1 is an arrangement to siphon off the profits of respondent No. 2 and is a device to reap the profits by respondent No. 1. THE arrangement is a restrictive trade practice and has the effect of keeping the resale price higher than the prices that are likely to obtain in the absence of such arrangement and it also brings about/tends to bring about manipulation of prices and conditions of delivery and affects the flow of supplies in the market in a manner as to impose on the consumers unjustified costs and restrictions.";

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