Bhagwati, J. - (1.) This appeal under S. 55 of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter referred to as the Act) raises interesting questions of law relating to the interpretation and application of certain provisions of the Act. The facts giving rise to the appeal are for the most part undisputed and they may be briefly stated as follows:
(2.) The appellant is a public limited company engaged in manufacture and sale of jeep motor vehicles and their spare parts and accessories. Since 1947 the appellant was marketing and distributing jeep motor vehicles and it had set up a large and complex network of dealers, who were described as distributors, for marketing and after sale service of such vehicles. In or about 1956 the appellant started manufacturing its own jeep motor vehicles and since then it has been distributing such vehicles and distributing and marketing the same through its network of distributors. The appellant has appointed these distributors for marketing and sale of jeep motor vehicles on certain terms and conditions contained in a standard distributorship agreement. The material clauses of this agreement read as follows: "Section (3):Territory of Distributor - The Company grants to Distributor the non-exclusive privilege (except as hereinafter provided) of selling at retail and the right (except hereinafter provided) to appoint in writing by forms of agreements approved by the Company, Dealers to sell at retail the products enumerated in Sec. 2 of this agreement, within the following territory and also demarcated in the map attached hereto and which forms a part of this agreement. Distributor accepts the above retail selling privileges and agrees to develop with diligence the sales of sale products in said territory in accordance with this agreement and undertakes to achieve the quantum of sales in the territory as may be fixed by the Company from time to time. Section(4):Limitations on territorial Rights - (i) Distributor agrees not to solicit outside of the territory described in S. 3 - the purchase of any products. ********** Section (6):Price and Payment- Distributor will pay for products the Company's established Distributor net prices in effect on date on dispatch. Prices lists will be furnished to Distributor by the Company, but the Company reserves the right to change prices at any time without notice. ********** Section (11):Price Changes - if the Company reduces its published suggested retail list price, for any current model of 'Jeep' motor vehicles, the company will make an allowance to Distributor as hereinafter provided. The allowance shall be made in respect of new and unused 'Jeep' Motor vehicles of the then current model in respect of which the price change has been made which have been purchased by Distributor from the Company within a period of 30 (thirty) days prior to the effective date of such decrease in suggested list price, and which distributor shall have in his unsold stock on such effective date. The allowance shall be equal to the difference between the net amount paid to the Company for such 'Jeep' Motor Vehicle (less all allowance thereto granted), and the net amount which would have been paid had such 'Jeep' motor vehicles been purchased at the reduced price. No allowance, however, shell be made unless there is a reduction in the RETAIL list price and increases in discounts, bonuses and the like shall in no event be considered as a reduction in price. ********** Section (17):Care or owner and customer Relations ********** Distributor agrees - ********** (e) To refrain from selling or offering for sale any competing product. The Company shall be the sole judge as to whether a product is competing or not." The appellant by its letter dated 27th January, 1971 submitted to the Registrar of Restrictive Trade Agreements (hereinafter referred to as the Registrar) certified copies of agreements entered into by the appellant with the Distributors for registration, since in the opinion of the appellant, they were registrable under the provisions of Chap. V of the Act. The appellant also submitted to the Registrar along with its letter dated 19th May, 1972 four copies of the standard distributorship agreement for registration in terms of Cl. (ii) of Rule 12 of the Monopolies Restrictive Trade Practices Rules, 1970 (hereinafter referred to as the Rules) and the standard distributor-ship agreement was registered by the Registrar under S. 35 of the Act.
(3.) On 17th Dec., 1975 the Registrar made an application to the Monopolies and Restrictive Trade Practices Commission (hereinafter referred to as the Commission) under S. 10 (a) (iii) of the Act pointing out to the Commission that the standard distributorship agreement entered into by the appellant with the distributors was filed by the appellant for registration in the office of the Registrar and the same had been duly registered under S. 35 of the Act. The Registerer drew the attention of the Commission to Cls. (3), (3), (5), (6) (11), (13), (14), (17) and (20) of the standard distributorship agreement and claimed that the provisions contained in these clauses related 'to restrictive trade practices relating" to imposing restrictions on persons and classes of persons to whom goods are sold and from whom goods are bought; tie-up Sales/full-line forcing; exclusive dealing; granting or allowing concessions; discounts, overriding commission, etc. in connection with or by reason of dealings; resale price maintenance; and allocation of area/market for disposal of products covered under the agreement, respectively attracting clauses (a), (b), (c), (e), (f) and (g) of Section 33 (1) and/or Sec. 2 (o) of the Act." and that these restrictive trade practices had and might have the effect of preventing, distorting and restricting competition and tended to bring about monopolisation of prices and conditions of delivery and to affect the flow of supplies in the market relating to goods covered under the standard distributorship agreement in such manner as to impose on the consumers unjustified costs and restrictions and the same were prejudicial to public interest. The Registrar prayed on the basis of these allegations that the Commission be pleased to inquire into the restrictive trade practices indulged in by the appellant, under Sec. 37 of the Act and pass such orders as it might deem fit and proper. The Commission, on receipt of this application, decided, in exercise of the powers conferred upon it under Ss. 10 (a) and 37 of the Act, to hold inquiry into the restrictive trade practices complained of by the Registrar and issued notice dated 2nd Jan., 1976 under Regulation 53 of the Monopolies and Restrictive Trade Practices Commission Regulations, 1974 (hereinafter referred to as the Regulations) to the appellant that if the appellant wished to be heard in the proceedings before the commission it should comply with the requirements of Regulations 65 and 67 failing which the which the commission would proceed with the inquiry in the absence of the respondent. The appellant, by its letter dated 3rd February, 1976, acknowledged receipt of the notice and intimated to the Commission that it did not wish to be heard in the proceedings before the Commission but put forward its submissions in regard to the restrictive trade practices alleged by the Registrar in his application. The appellant pointed out that the clauses of the standard distributorship agreement complained of by the Registrar did not constitute restrictive trade practices for the reasons explained in the letter and requested the Deputy Secretary to place their submissions before the Commission at the enquiry to be held by it. The letter was purported to be submitted in terms of Regulation 36 (3), but the reference to this Regulation was obviously under some misapprehension because this Regulation occurred in Chapter V which provided the procedure for reference under Chapters III and IV and it had no application in case of an inquiry under S. 37 of the Act. The Joint Secretary (legal) of the Commission pointed out to the appellant by his letter dated 11th February, 1976 that if the appellant wished to be heard in the proceedings, the appellant should comply with the requirements of Regulations 65 and 67 and it is only if the appellant did so, that it could file a reply in answer to the application of the Registrar and moreover, the reply had to be properly drawn and duly verified and declared as provided in those Regulations. The Joint Secretary (Legal) made it clear that in view of this legal position obtaining under Regulations 65 and 67, it was not possible to take note of the contents of the letter addressed by the appellant setting out the explanation for the various clauses impugned in the application of the Registrar. Though this position in law was specifically pointed out by the Joint Secretary (Legal) on behalf of the Commission, the appellant did not comply with the procedure set out in Regulations 65 and 67 with the result that the Commission decided to proceed ex parte against the appellant. The Registrar filed an affidavit of the Assistant Registrar dated 10th May, 1976 in support of the allegations contained in the application but this affidavit surprisingly did not contain any further or other material than that set out in the application. No other evidence, oral or documentary, was produced by the Registrar and the commission proceeded to decide the issues arising in the enquiry on the basis of the application supported by the affidavit of the Assistant Registrar. The Commission, after going through the application and the affidavit of the Assistant Registrar and hearing the Registrar, made an order dated 14th May, 1976, the operative part of which was in the following terms: "(1) The Respondent is hereby restrained and prohibited by any agreement with any distributor to restrict by any method the persons or classes of persons to whom the goods are sold whether such person be retail purchaser or a dealer. (2) The Respondent is hereby restrained and prohibited from restricting in any manner, any purchaser whether a dealer or otherwise in the course of its trade from acquiring or otherwise dealing in any goods other than those of the Respondent or the goods of any other person. (3) The Respondent is hereby restrained and prohibited from selling any goods to any distributor, dealer or otherwise on the condition that the prices to be charged on resale by the purchaser shall be the prices stipulated by the respondent unless it is clearly stated that prices lower than those prices may be charged. The Respondent is hereby directed that in all future price lists it must state on the cover or on the front page that the prices of any indicated therein as resale prices are maximum prices and that the prices lower than those price may be charged. (4) The Respondent is hereby restrained and prohibited from allocating any area or market to any distributor or dealer for the disposal of the Respondent's goods. (5) The Respondent is hereby restrained and prohibited from preventing any distributor from appointing any dealer of its own choice on such terms and conditions as may be mutually agreed upon between distributors and dealers in cases where the Respondent does not undertake any obligation, liability or responsibility in respect of the dealers. (6) The clauses in the agreements relating to the above restrictive trade practices are hereby declared to be void. The practices arising therefrom shall be discontinued and shall not be repeated. (7) The Respondent shall within 3 months from the date of service of this order on it make and file an affidavit before the Commission setting out the manner in which this order has been given effect to. A copy of the said affidavit shall simultaneously be furnished to the Registrar. (8) There will be no order as to costs." Since the appellant was required to file an affidavit of compliance within three months as directed by cl. (7) of the Order, the appellant filed an affidavit dated 10th Sept., 1976 stating that the appellant had fully implemented in practice the directions contained in Paragraphs (1) and (5) of the Order and refrained from enforcing against the distributors any of the clauses which had been declared void by the Commission. The appellant also pointed out that a draft of a new distributorship agreement was being finalised by the appellant with a view to giving effect to the "restrictions and prohibitions" contained in the Order. The Registrar filed an affidavit of the Deputy Registrar filed an affidavit of the Deputy Registrar dated 27th Sept., 1976 seeking praticulars from the appellant showing how the appellant had implemented the directions contained in the Order. The appellant by its reply dated 11th November, 1976 pointed out that since the date of receipt of the Order, the appellant had not given effect to the trade practices covered by Paragraphs (1) to (5) of the Order nor required any of the distributors to abide by the clauses of the standard distributorship agreement relating to those trade practices and on the contrary, intimated to the distributors that the old distributorship agreement would have to be substituted by a new revised agreement. The appellant submitted the since the clauses of the standard distributorship agreement declared void by the Commission were not enforceable in law by the appellant, it did not make any difference whether or not they were deleted from the existing distributorship agreement and in view of the fact that a new revised agreement was being prepared which would comply with the directions contained in the Order, it was not necessary to effect any amendments in the existing distributorship agreement. It seems that there was a hearing before the Commission on this issue as regards compliance with the directions contained in the Order and the draft of the revised distributorship agreement prepared by the appellant was considered and pursuant to the suggestion made by the Commission, the appellant agreed to amend two clauses in the draft and the Commission by its Order dated 7th Dec., 1976 directed that the revised distributorship agreement should be filed by the appellant by 31st March, 1977.;