Decided on June 02,1989



D.C. Aggarwal, Member - (1.) THIS is an enquiry under Section 10(a)(iii)/37 of the Monopolies and Restrictive Trade Practices Act, 1969, instituted on the application of the Director-General against Vardhman Spinning and General Mills Ltd., Ludhiana (hereinafter referred to as "the respondent"). It is stated that the respondent is engaged in the business of manufacturing industrial yarn and tyre-cord and have appointed Victor Corporation of Ludhiana (respondent No. 2) as its selling agent at Ludhiana. An agreement dated November 11, 1985, was entered into between Vardhman Spinning and General Mills Ltd. and Victor Corporation. Victor Corporation has been described as a selling agent in the sale of industrial yarn-cord of 2/2/14, 3/14, 4/14 and 2/14 and the right was conferred on the selling agent to sell and procure orders as per the directions of the company. The territory allocated to the selling agent is the entire State of Punjab excepting a party named Ralson Cycles Ltd., Ludhiana. The said clause No. 2 relating to "territory" reads as follows : "(2) TERRITORY : That Victor Corporation, the selling agent at Ludhiana, shall be authorised to sell industrial yarn, tyre-cord for and on behalf of the company in the State of Punjab to all parties other than Ralson Cycles Ltd., Ludhiana."
(2.) According to the Director-General, this is a restriction which brings the trade practice under Clauses (a) and (g) of Sub-section (1) of Section 33 of the Monopolies and Restrictive Trade Practices Act, 1969. Notice of enquiry was issued to the respondents accordingly. The respondents did not file any reply to contest the notice of enquiry but only submitted that a new agreement dated August 10, 1988, had been entered into between the parties. The question is whether the impugned Clause 2 of the agreement, dated November 11, 1985, exhibit A-1, leads to restrictive trade practice and as such whether it should or not be directed to be discontinued. The new agreement dated August 10, 1988, said to have been entered into between the parties cannot forestall the examination and pronouncement of the restrictive trade practice, if any, emerging from the terms and conditions of agreement, exhibit A-1. There is no application under Section 37(2) of the Monopolies and Restrictive Trade Practices Act, 1969, filed by the respondents for seeking directions of the Commission to do away with the prejudicial character of the trade practice. This being so, in so far as the fresh agreement dated August 8, 1988, is concerned, it is not necessary to be examined by us. It is for the Director-General, in exercise of his powers under Section 35 of the Act, to see whether it requires registration and whether or not it gives rise to a restrictive trade practice.
(3.) NOW, coming to the agreement, exhibit A-1, it is to be seen that under Clause 8 of the agreement, the selling agent has to book orders for yarn only at prices and on the terms and conditions fixed by the company from time to time. Where the goods are supplied by the agent from his own stock, he shall not charge more than the price at which the yarn has been supplied to him by the company. However, under Clause 10, the selling agent has been held responsible for the payment of the goods supplied to or through him. It is further stipulated that, under no circumstances, would the agent default in making payment against the goods supplied directly to him and he shall be responsible for making the payment within the stipulated time. In the event of his failure to make the payment within the stipulated period, the company has been given the right to charge interest at 24% per annum or at such other rate as the company may, from time to time, determine. The commission payable for the services rendered by the selling agent is at 1%, to be calculated on the net value exclusive of duties/taxes on the sales made through the selling agent. A sum of Rs. 50,000 is to be kept in deposit with the company as security on which interest at 15% would be payable.;

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