PROTECTION AGAINST MONOPOLISTIC AND UNFAIR TRADE PRACTICES IN INDIA

Author(s): K. Puri
Source: Journal of the Indian Law Institute , July-September 1992, Vol. 34, No. 3 (July-
September 1992), pp. 443-455
Published by: Indian Law Institute

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 PROTECTION AGAINST MONOPOLISTIC AND UNFAIR
TRADE PRACTICES IN INDIA*

I Concept of unfair competition : General definition

ALTHOUGH THE Indian Jaw provides no blanket prohibition a

remedy for, damage caused to the business reputation or g
trader by the unfair competitive acts of his or her rivals, ye
extensions of the tort of passing off, albeit camouflaged, appea
the law towards the (American) tort of unfair competition. Thus
to giving protection under the passing off action in situations wher
unfair competition is based on a misrepresentation , relief is als
made available where unfair competition is based on a misappr
The Indian courts are under constant pressure to extend the tor
off to provide a broader basis of relief through the mechanism of
and penalising unfair conduct in the market place. In addition
sanctions and administrative enforcements available under the
and Restrictive Trade Practices Act 1969 (hereafter the "M
and the Consumer Protection Act 1986 perform the tasks whic
for unfair competition performs, say in Germany,2 to allow
and consumer groups to enforce fair standards. In addition, p
against public confusion and deception is made available under
and Merchandise Marks Act 1958 and the versatile common law actions
of passing off and breach of confidence.
The Indian monopolies and restrictive trade practices legislation is
rooted in the English law although the consumer protection law draws
considerably on Australian and American inspiration. Broadly stating,
the principles applicable to the action for passing off are akin to those deve-
loped by the English judges.

II Protection aganist monopolistic and restrictive trade practices

A restrictive trade practice under the MRTP Act3 is one which has, or

*The author wishes to express his gratitude to his two valued colleagues at the Max-
Planck Institute Dr. F. Henning-Bodewig, Head of Department, for her support and
encouragement in writing this article and for her generous undertaking to translate the
paper into German inspite of her own research commitments, and Mr. H. Ruijesenaars
for perusing the first draft of the paper and making very useful suggestions. The author
also owes a considerable debt of thanks to Mr. P. An and, Advocate, Supreme Court of
India, for giving an up-to-date account of the case law on this topic.
1. See generally, M. B. Clerk "Passing Off and Unfair Competition : The Regulation
of the Marketplace" (1900) 6 IPJ 1 .
2. See the German Act against unfair competition 1909, as amended ( Gesetz gegen
den unlauteren Wettbewerb). For an authoritative commentary, see Baumbach-Hefermehl
Wettbewbsrecht (16 ed 1990 Verlag C.H. Beck).
3. For commentaries on the MRTP Act, see V. K. Agarwal, Consumer Protection

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444 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 34 : 3

may have, the effect of preventing, distorting or restricting competition in

any manner and in particular,

(/) which tends to obstruct the flow of capital or resources into

the stream of production, or
(//) which tends to bring about manipulation of prices or conditions
of delivery or to affect the flow of supplies in the market rela-
ting to goods or services in such manner as to impose on the
consumers unjustified costs or restrictions.4

The main objective of the MRTP Act is to ensure that the operation o
economic system does not result in the concentration of economic powe
in the hands of a few traders. This is sought to be achieved by provid
for Central Government's approval of proposals for substantial expansio
establishment of new undertakings, mergers, amalgamation, takeovers
and the like. Section 33 of the Act is the king-pin of the Act whi
enumerates the categories of registrable agreements covering a wide-range o
corporate activities. Such restrictive and monopolistic agreements cove
sale and purchase, production and distribution, horizontal and vert
arrangements, price and non-price discrimination, territorial and custom
allocation, resale price maintenance and predatory price cutting arran
ments. It is worth noting that every agreement falling within any of t
the clauses (a) to (jb) of s 33 (1) is deemed to be an agreement relating
restrictive trade practice and is per se registrable.
This requirement of compulsory registration of trade agreements ensures
that no single trader acquires a dominant or monopolistic position in
market and that unfair practices arising out of manufacturing inter-linkage
vre avoided. Note that there are similar procedures existing in m
countries, including Germany and UK. In Australia, an authorisatio
procedure exists under the Trade Practices Act 1974.
The other important objective of the MRTP Act is to promote com
tition by controlling monopolistic and restrictive as well as "unfair" tr
practices. This is sought to be achieved by the establishment of the Mo
polies and Restrictive Trade Practices Commission (hereafter the "MRT
Commission") an independent statutory administrative body set up und
the MRTP Act.

The Commission (analogous to its Australian counterpart - Trade

in India (1989); D.P.S. Verma, Monopolies , Trade Regulation & Consumer Protectio
(1985); B. Ray, Monopolies and Restrictive Trade Practices Act 1969 (1985); A Ramaiya,
Monopolies and Restrictive Trade Practices Act (F.W. Cheshire 1982); M.P. Jain,
Restrictive Trade Practices in India (1987). On Australian law, see generally, Taperel
Vermeesch and Harland, Trade Practices and Consumer Protection (Butterworths 1978
G. de Q. Walker, Australian Monopoly Law (1967); Vermeesch and Lindgren, Busine
Law of Australia (1987) chapter 21.
4. Section 2(0), MRTP Act 1969.

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1992] PROTECTION AGAINST MRTP IN INDIA 445

Practices Commission), is vested with certain judicial power

to restrictive and unfair trade practices, and with adviso
relation to concentration of economic power and monopolis
ctices. The Commission is a high powered body constituted o
a person who is or has been or is qualified to be a judge of
Court or High Court, and the members, who are persons of abili
and standing having adequate knowledge or experience in
problems relating to economics, law, commerce, accountanc
public affairs or administration.
The MRTP Act also empowers the Central Government to make a
reference to the Commission for inquiry if it appears to it that one or more
undertakings are indulging in any monopolistic trade practices. If, as a
result of its inquiry, the Commission submits an affirmative report, the
government may pass appropriate orders to prevent or remedy the mischief.
Apart from acting on Central Government's references, the Commission
can also institute suo motu inquiry into any monopolistic trade practice.5
The MRTP Act restrains restrictive trade practices in three respects:
(/) certain types of restrictive trade agreements (e.g. exclusive dealing, price-
fixing) are required to be registered; (/V) the MRTP Commission can inquire
into any restrictive trade practice and if the practice is found to be prejudicial
to public interest, it may by order direct that the practice be discontinued
or not to be repeated in future or declare the agreement void; and (iii) the
restrictive trade practice of resale price maintenance is prohibited outright.

Ill Protections against unfair trade practices

The MRTP Act, as it originally stood, did not contain any provisions
for the protection of consumers against false or misleading advertisements
or other similar unfair trade practices. By providing for measures against
restrictive and monopolistic trade practices, the legislature contemplated
that the consumers too, as a result, will get a fair deal. However, experience
in the market place revealed that adequate protection was not available to
consumers in certain situations, e.g. where advertisements made exaggerated
and baseless representations about the quality, standard and performance of
goods and services. Accordingly, significant amendments were made in
1 984 with the object of bringing honesty and truth in the relationship between
manufacturers and consumers.6

5. Section 10(a), MRTP Act 1969. See also, MRTP Commission Regulations 1974,
regulation 19.
6. See the MRTP (Amendment) Act 1984. See also Lakhanpal National Ltd v.
MRTP Commission AIR 1989 S.C. 1692, 1694-1695, where the court succinctly stated
the rationale for the 1984 amendments : "In the fast changing modern world of today
advertising goods is a well-recognised marketing strategy. The consumers also need it,
as the articles which they require for their daily life are of a great variety and the know-
ledge of an ordinary man is imperfect. If the manufacturers make available, by proper

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446 JOURNAL OF THE INDIAN LAW INSTITUTE [Vol. 34 : 3

The 1984 amendments incorporated, inter alia, new provisions for th

regulation of unfair trade practices e.g. false representations, misleadin
advertisements, bargain sales, bait and switch selling, hoarding and destr
ction of goods, etc. The MRTP Commission was vested with vast power
to institute inquiries against companies suspected of indulging in unfai
trade practices and to issue appropriate orders. For instance, the MRTP
Commission was empowered to forbid a company from issuing cert
types of advertisements which were considered false and misleading an
hence prejudicial to public interest.
A "monopolistic trade practice" refers to the practice of preventing o
lessening competition in the production, supply or distribution of any goods
or in the provision or maintenance of any services by adoption of unf
methods or unfair or deceptive practices. An "unfair trade practice" is
defined to mean a trade practice which, for the purpose of promoting t
sale, use or supply of any goods or for the provision of any service, adop
one or more of the practices mentioned in the section and thereby cause
loss or injury to the consumers of such goods or services, whether by elimi-
nating or restricting competition or otherwise, e.g. by falsely representi
that the goods are of a particular standard, quality, grade, composition
style or model.7 The scope of the term ''unfair trade practice" was recen
discussed by the Supreme Court of India in Lakhanpal National Ltd v. MR
Commission * The Court pointed out that the MRTP Act focuses o
the effect of the representation made by the manufacturer on a person
the street. Does it lead such a person in the position of a buyer to a wro
conclusion? The issue is not merely whether the representation is correc
or incorrect in the literal sense. The real inquiry is whether a reasonab
person on reading the advertisement would form a belief different from
what the truth is. The position is to be viewed with objectivity, in an imper-
sonal manner. The test by which the representation is to be judged is
see whether the discrepancy between the fact as represented and the act
fact is such as would be considered material by a reasonable represente

publicity, necessary details about their products, they come as great help to the man
the street. Unfortunately, some of the advertisements issued for this purpose m
exaggerated and sometime baseless representations about the quality, standard a
performance, with an object of attracting purchasers. It was therefore considered n
ssary to have statutory regulations insisting that, while advertising, the seller must spe
the truth."
7Ś See section 36A, MRTP Act 1969. The Act was further amended in 1986 to
enable any consumer or trade association to make a complaint to the MRTP Commission.
8. AIR 1989 S.C. 1692. In this case, the court held that the appellant's advertise,
ment, though erroneous, did not have the effect of causing confusion to consumers and
therefore section 36A of the MRTP Act was not attracted.
9. Id. at 1695, citing with approval Halsburýs Laws of England (4th ed) paras 1044
and 1045.

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1992] PROTECTION AGAINST MRTP IN INDIA 447

More recently, in Society for Civic Rights v. Colgate Palmol

Ltd.10 the Full Bench of the MRTP Commission ruled on a
under sections 36A. The complaint was that the respondent
advertisement announcing a contest, under the guise of educatin
in dental health care, fell within section 36A(3)(ã) of the MRTP
it served solely in the respondent's interest and caused serious in
consumers of such goods or services.11 The Commission found
fact that a large number of consumers were persuaded to part w
money in the hope of winning a prize was prejudicial to the publ
The respondent was therefore directed not to repeat such cont
future. The Commission also observed that it was not necessar
actual loss or injury to consumers. Further, a trade practice wh
one or more of the practices specified in section 36A had the inn
to cause loss or injury to consumers. The words "and thereby c
or injury to the consumers" in the prefatory part of section 36A
of description which indicate that the trade practices described in t
are of the type which cause loss or injury.
The MRTP Act enables the MRTP Commission to institute an
into certain trade practices alleged against a trader and if those trad
had or might have the effect of preventing or distorting or restric
tition or having the effect of imposing unjustified costs or res
the consumers and if such trade practices were prejudicial to pub
A unique feature of the Indian law is that it covers within its scope
the restrictive trade practices arising out of collective or bilate
but also the unilateral trade practices which are restrictive in na
However, despite these innovations, the MRTP Act failed to
the ultimate consumers from defective goods or deficient servic
pricing and unscrupulous dealings. This led to the enactment of
hensive legislation in 1986, entitled the Consumer Protectio
provide for better protection of the interests of consumers with m
on giving speedy remedies to consumers. The 1986 Act makes
for the establishment of Consumer Protection Councils at the Central and
State levels to promote and protect the rights of consumers and a three-tier

10. Unreported MRTP Commission 19 June 199J (inquiry no 41/84). See also P.
Anand "Colgate given the brush off" (1991) 7 IP Asia 11-12, where this case has been
noted.
11. Under section 36A(3)(¿>) practices which permit the conduct of any contest,
lottery, game of chance or skill, for the purpose of promoting, directly or indirectly,
the sale, use or supply of any product or any business interest" are included within the
definition of an "unfair trade practice".
'íè It may be noted that the UK's Restrictive Trade Practices Act 1976 excludes
unilateral practices. Also, certain bilateral agreements are excluded under the English
legislation.
13. For commentaries on this leglisation, see O.P. Garg, The Consumer Protection
Act 1986 (1990); P Leelakrishnan (ed) Consumer Protection and Legal Control (1983)

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448 JOURNAL OFTHE INDIAN LA W INSTITUTE [Vol. 34 : 3

quasi-judicial machinery - District Forum, State Commission and Nation

Commission - for redressing consumer grievances.
The meaning of the expression "unfair trade practice" for the purpose
of the Consumer Protection Act is the same as in the MRTP Act.14 But
for a complaint under the Consumer Protection Act, it is necessary that the
complainant must have suffered loss or damage as a result of any unfair
trade practice. There is no such limitation under the MRTP Act and the
MRTP Commission may inquire into any unfair trade practice irrespective
whether any loss or damage has been caused as a result of such practice.
The MRTP Act and the Consumer Protection Act have much in common
with one another. In a way, they are cognate legislation when it comes to
unfair trade practices. They would appear to form one code arid should
be taken together as forming one system.

IV Specific categories

(1) Causing confusion (passing off) - The Indian perspective

The action of passing off is a branch of law of torts. The action is not
based on proprietary interest in the get-up but in the business goodwill
associated therewith. The plaintiff in an action for passing off has to
establish that the plaintiff's products have derived from the advertising a
distinctive character recognised by the market. The principle of law is
that no one has any right to represent one's goods as the goods of another
person and sell them in the market for one's aggrandisement. This rule
has been treated as a special instance carved out of the general rule that any
misrepresentation calculated to give one trader the benefit of another's
goodwill is actionable.15
Conventionally, an action for passing off has required proof of reputation,
confusion and damage. However, in Century Traders v. Roshan Lai
Duggar & Co,16 the Delhi High Court gave the action of passing off a colour
of "unfair competition" by holding that in order to succeed in a passing off
action it was sufficient for the plaintiff "to establish user of the aforesaid
mark prior in point of time than the impugned user by the respondents."17

14. See section 3, Consumer Protection Act, 1986.

15. See National Garments v. National Apparels AIR 1990 Kerala 119 at 121.
16. AIR 1978 Delhi 250.
17. Id. at 253. It may be noted that the Indian courts have not felt constrained
by the narrow approach adopted in some English cases, e.g. in situations involving,
what is popularly referred to as "reputation without use". The leading case in England,
where passing off relief was denied by the English Court of Appeal, is Anheuser-Busch
v. Budějovicky Budvar (1984) FSR 413. There the court held that the plaintiff's product
(Budweiser beer) was not being sold in England, though the trade mark had acquired
suffcient reputation. In India, however, this decision has not been followed and passing
off actions have been successful in spite of the fact that no registration or use of the mark
had been made in India - see, for example, Scotch Whisky Association v. Mohan Meakin

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1992] PROTECTION AGAINST MRTP IN INDIA 449

The action of passing off is based on principles of equity. I

established that the person who seeks relief in equity must come
hands and this applies strongly to parties seeking relief against the in
ment of trade marks or in passing off action and against unfair comp
because a person seeking relief against fraud of others must be f
fraud. It is essential that the plaintiff should not be guilty of an
misleading representation.18
In a passing off action, similarity of general appearance or ge
goods is the relevant test, and totality of the impression as
kept in view. In order to determine whether one mark is deceptively
to another, the broad and essential features of the two are consid
for this purpose they need not be placed side by side to find out if th
any differences in the design.19 The standard to be applied is t
person of average intelligence and of imperfect recollection and
decide whether such impression is reasonably likely to cause con
not.20 In order to establish passing off of a design or get-up, it
shown that what a defendant has taken is in itself sufficiently distin
the plaintiff. The plaintiff must be shown to have not been guil
fraud, or must have come to the court with clean hands, and the
action should not be tainted with any deception because the foun
the action in such cases is the right of protection of a person's
consisting of goodwill or reputation in a certain trade name; tr
or business.21

An action for passing off is a common law remedy being in substance

an action for deceipt, that is, a passing off by a person of his own goods as
those of another. An action for infringement, on the other hand, is a
statutory remedy conferred on the proprietor of a registered trade mark
for the vindication of the exclusive right to the use of the trade mark in
relation to those goods. The use by the defendant of the plaintiff's trade
mark is not essential in an action for passing off, but is the sine qua non in
the case of an action for infringement. No doubt, where the evidence in
respect of passing off consists merely of the colourable use of a registered

Ltd. unreported Bombay High Court 19, November 1986 (No 1352/86); Kamal Training
Co ., v. Gillette UK Ltd unreported Bombay High Court 25, September 1987 (No 1092/
86); Yardley & Co. UK v. Kamal Trading Co unreported Bombay High Court 5, October
1987 (No 1116/87); Blue Ctoss X Blue Shield Association v. Blue Cross Health Clinic
unreported Delhi High Court 3, October 1988 (No 2458/88); Apple Computer Ine v.
Apple Leasing and Industries unreported Delhi High Court 10, May 1991 (No 2751/89).
For a case note on the last-mentioned case, see P. Anand "Appellations of Apple; A
famous foreigner wins again" (1991) 7 IP Asia 23-25.
18. See Prem Singh v. Ceeam Auto Industries A.I.R. 1990 Delhi 233 at 238-239.
19. Parle Products Pvt. Ltd . v. J. P . & Co. Mysore A.I.R. 1972 S.C. 1359 (deceptive
similarity). See also, Kali Aerated Water Works v. Rashid A.I.R. 1989 Madras 9.
20. Corn Products Refining Co. v. Shangrila Food Products Ltd. A.I.R. 1960 S.C.
142 (overall similarity - the standard to be applied).
21. Ceeam Auto Industries , supra note 18.

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450 JOURNAL OF THE INDIAN LA W INSTITUTE [Vol. 34 : 3

trade mark, the essential features of both the actions might coincide in th
sense what would be a colourable imitation of a trade mark in a passing off
action would also be such in an action for infringement of the same trade
mark. But, there, the correspondence between the two, ceases. In an
action for infringement, if the essential features of the trade mark of th
plaintiff have been adopted by the defendant, the fact that the get-up, packin
and other writing or marks on the goods or on the packets in which the
goods are offered for sale show marked differences, or indicate clearly
trade origin different from that of the registered proprietor of the mark
would be immaterial; whereas in the case of passing off, the defendant
may escape liability if it can be shown that the added matter is sufficient
to distinguish the defendant's goods from those of the plaintiff.22
The test as to likelihood of confusion or deception arising from simila-
rity of marks is the same both in infringement and passing off actions.2
Action for infringement is a statutory right and depends upon the vaildit
of the registration and subject to the other restrictions laid down in th
Trade and Merchandise Marks Act 1958. On the other hand, the right of
passing off action is misrepresentation although it is not necessary to prov
knowledge or intent to deceive. It is enough if the get-up of the plaintiff'
goods has become distinctive and there is a probability of confusion betwee
them and the defendant's goods. It is not necessary to prove actual deception
or actual damage.
In an action for passing off, a plaintiff need not prove any malice unlike
the plaintiff in a tort action for injurious falsehood. Likewise, proof of
damage as such is not essential to enable the plaintiff to maintain an action
for passing off. It is interesting to note that for an interlocutory injunction
to restrain the defendant, until the hearing of the action, the principle
applicable is slightly different from the principle applicable in ordinary cases.
For a temporary order in an action for passing off, the plaintiff need not in
general show a strong prima facie case. However, the prima facie cas
that is required to be shown must be something more than a case that wi
avoid the action being struck out as frivolous or vexatious. Generall
stating, even if the chance of success at the trial are only 20 per cent, th
interim relief sought for will be granted.

(2) Misleading representations

Among the various categories of unfair trade practices targeted unde

the MRTP Act, false or misleading representations have been given
prominent place. The various forms of such representations are enumera-
ted in subsection (1) of section 36A of the Act covering statements, wheth

22. Durga Dutt Sharma v. M. P. Laboratories A.I.R. 1965 S.C. 980 (differences bet
ween an action for infringement of a registered trade mark and an action for passing of
23. See Mohan Meakin Ltd. v. Kashmir Dreamland Distilleries A.I.R. 1990 J. & K., 42,
at 46-47.

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1992] PROTECTION AGAINST MRTP IN INDIA 451

made orally or in writing or by visible representation, which

falsely represent that the goods are of a particular standard, q
composition, style or model, or which falsely represent that the
of a particular standard, quality or grade, etc. The fact that
made the representation in good faith is not material to determin
is deceptive and misleading. Also, the evidence of actual d
not necessary. The important factor is to ascertain what im
likely to be created by the representation upon the consumer

(3) Discrediting competitors - comparative advertising

Sub-clause (x) of s 36A(1), MRTP Act declares the practice

any statement which gives false or misleading facts disparag
services or trade of another person as an unfair trade practic
comparative advertising by business concerns through which t
or implicitly name competitors or competitor's products.24 H
provision does not seem to forbid the use of truthful comparativ
ments.25

(4) Trade secrets

The law of trade secrets was discussed at some length in Konard

Wiedmann GmbH v. Standard Castings Pvt. Ltd?6 In this case, the Court
following the English decision in Saltman Engineering Co. v. Campbell
Engineering Co 27 enunciated the principle that even in the absence of a
contract of confidentiality, if the defendants are given access to the know-
how for a limited purpose, with the knowledge that it contained trade
secrets belonging to the plaintiffs, they cannot use if for any extraneous
purpose. Similarly, in John Brady v. Chemical Process Equipment Pvt.
Ltd.2g the defendant was injuncted from using the plaintiff's trade secrets,
the Court inferring confidentiality from the relationship between the parties.

(5) Other acts of unfair competition

Subsections (2) to (5) of section 36A of the MRTP Act declare the
following practices as unfair trade practices and hence prohibit their usage:
bargain price or bait advertisements, offering of gifts, prizes, etc and condu-

24. A good example of this is to be found in a decision of the MRTP Commission

in Burroughs Welcome India Ltd. unreported 2, June 1986, where the respondent had
issued an advertisement stating that its headache-curing tablets were the safest and did
not have the side-effects of Aspirin. The Commission held that this amounted to a clear
disparagement of Aspirin and the advertisement was, therefore, an unfair trade practice
within the meaning of section 36A(l)(x) of the MRTP Act.
25. See V. K. Agarwal, supra note 3 at 412-413.
26. (1985) 10 IPLR 243.
27. (1948) 65 RPC 203.
28. A.I.R. 1987 Delhi 372.

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452 JOURNAL OF THE INDIAN LA W INSTITUTE [Vol. 34 : 3

cting promotional contests, sale or supply of goods not complying with

safety standards, and the hoarding or destruction of goods.20
In India, statutes pertaining to unfair trade practices and consumer
protection legislation are scattered. To get an overview, reference should
be made to several enactments which deal with standardisation, grading,
packaging and branding, prevention of food adulteration, short weights
and measures, misleading advertisements, hoarding, profiteering, and other
similar practices.30 Relevant also are the several provisions of the Indian
Penal Code 1 860 which protect consumers against false weights and measures ;
adulteration of food, drink and drugs; false property marks, etc.31 In addi
tion, the law of torts entitles consumers to take action for damages if
defective, unfit or dangerous goods are supplied to them.32 The tort of
deceit enables consumers to recover damages for frauds practised on them by
others.

V Enforcement of protection

The MRTP Commission is empowered under the MRTP Act to make

an investigation to find out whether its orders have been or are being complied
with.33

(1) Civil sanctions

The MRTP Act lays down a dual machinery for the enforcement of its
provisions. These are the Central Government and the MRTP Commi-
ssion.

The reliefs available against an unfair trade practice under the MRTP
Act are by way of temporary injunction,34 consent order or cease and desist
order,35 and compensation.36
Under the Consumer Protection Act, relief may be granted by directing

29. These categories of unfair trade practices are similar to those which are to be found
in the Australian Trade Practices Act 1974.
30. See Indian Contract Act, 1872; Sale of Goods Act 1930; Specific Relief Act 1963;
Essential Commodities Act 1955; Prevention of Black Marketing and Maintenance of
Supplies of Essential Commodities Act 1980; Essential Services Maintenance Act 1968;
Prevention of Food Adulteration Act 1954; Drugs and Cosmetics Act 1940; Drugs
(Control) Act 1950; Drugs and Magic Remedies (objectionable Advertisements) Act
1954; Dangerous Drugs Act 1930; Poisons Act 1919; Trade and Merchandise Marks
Act 1958; Bureau of Indian Standards Act 1986; Agricultural Products (Grading and
Marking) Act 1937; Standards of Weights and Measures Act 1976; Companies Act
1956; and Industries (Development and Regulation) Act 1951.
31. See sections 264-267, 272-276 and 479-489.
32. See the leading English case of Donoghue v. Stevenson (1932) A.C. 562.
33. Section 13A, MRTP Act 1969.
34. Id ., section 12A.
35. Id ., section 36D.
36. Id., section 12B.

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1992] PROTECTION AGAINST MRTP IN INDIA 453

the opposite party to remove the defect; to replace the goo

the money; and to pay compensation for loss or injury suff
consumer.

The MRTP Commission has been vested with the powers of

court for certain purposes. It has power to issue an interim or interloc
injunction for the purpose of preventing any person or compan
carrying on any monopolistic or restrictive or unfair trade practic
the pendency of the Commission's inquiry.
Further, the Act empowers the Commission to award compensa
the complainant for the loss or damage caused as a result of the mono
or restrictive or unfair trade practice.
Every order made by the MRTP Commission granting a tem
injunction under section 12A of the Act or directing the other party
compensation under section 12B may be enforced by the Commi
the same manner as if it were a decree or order made by a court in a
proceeding. However, in the event of its inability to execute the
the Commission may send such order to the court of proper jurisdicti
that court shall execute the order as if it were a decree or order sent
execution.

The MRTP Commission may desist from instituting inquiries

the parties have given assurances that they have taken effective
refrain from indulging in restrictive and unfair trade practices revea
initial investigations.
Under section 10(ö)(/) of the MRTP Act, as amended by the Am
ment Act of 1986, the MRTP Commission may institute an inquir
restrictive trade practice on the basis of a complaint received fr
trade association or from any consumer37 or a registered con
association.38 An invalid complaint under section 10(a)(/) could b
as one under section 10(fl)(/v) to enable the Commission to inqui
any restrictive trade practice. Under the latter provision, the Com
can institute an inquiry upon its own knowledge or information
knowledge or information could be derived from a defective com
under the former provision. It should be noted that the Commi
not a court, although it has been conferred with certain powers o
court.

Section 12B(2) permits "class action", to enable one or more members

of a class to bring an action before the MRTP Commission on behalf of

37. A "consumer" means a person who buys and uses goods. See Ballarpur Indus -
tries Ltd. v. Director General of Investigations , MRTP Commission A.I.R. 1989 Delhi 329.
38. The term "registered consumers association" was introduced by the MRTP
(Amendment) Act 1986. For its definition, see section 2(n), MRTP Act 1969. See
also, MRTP (Recognition of Consumers' Association) Rules 1987.

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454 JO URN AL OF THE INDIAN LA W INSTITUTE [Vol. 34 : 3

the same class of aggrieved persons.39 The Commission may award damages
to all members of the class, without requiring individual proceedings.

(2) Measures to secure proof

An Anton Piller order is available in certain circumstances. It is an
ex parte order for inspection of the defendant's premises without prior
warning and discovery of the defendant's records.
As has been noted above, section 10(a) of the MRTP Act authorises
the MRTP Commission to inquire into any restrictive trade practice not
only upon receiving a complaint but also upon its own knowledge and
information.
An informant can also bring some facts to the notice of the Commission
which the Commission may after proper scrutiny find sufficient to start an
inquiry under s 10(a)(/v) of the MRTP Act.
Where during any proceedings under the Consumer Protection Act,
the District Forum has grounds to believe that documents or goods which
may be relevant to the inquiry may be destroyed, falsified, etc. it may, by
written order authorise any officer to enter and search the premises for the
purposes of seizure.40

(3) Penal sanctions

The offences under the MRTP Act are triable by a court not inferior
to that of a Court of Session.

The MRTP Act imposes stringent penalties for breaches of the Act.
Thus, persons indulging in unfair trade practices are punishable with impri-
sonment up to six months or with fine up to five thousand rupees. Harsher
penalties are imposed for continuing offences.41:
In the case of disobedience of any temporary injunction, the court may
order that the property of the disobedient person be attached and such
person be detained in the civil prison for term not exceeding three months.
Persons contravening orders made by the MRTP Commission are
punishable with imprisonment for term of six months (in the case of first
offence) or two years (in the case of second or subsequent offence). In
either case, where the contravention is a continuing one, fine may be imposed
which may extend to five hundred rupees per day.
The penalty for offences in relation to resale price maintenance is
imprisonment for a term which may extend to three months, or fine which
may extend to five thousand rupees or both.42

39. A "class action" facilitates an application for compensation by one or more persons
where any loss or damage is caused to numerous persons having the same interest.
40. See Consumer Protection Rules 1987, rule 10 {a).
41. See section 50, MRTP Act 1969.
42. Id sections 39-40.

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1992] PROTECTION AGAINST M RTP IN INDIA 455

Penalty for contraventions of the MRTP Commission's order

unfair trade practices is three years imprisonment or fine up to t
rupees.

Failure to register agreements is punishable with imprisonment for a

term which may extend to three years or with fine up to five thousand rupees
or with both.43

The Consumer Protection Act provides that where a person against

whom a complaint has been made neglects to comply with the order of the
District Forum, State or National Commission, as the case may be, such
person shall be punishable with imprisonment for term which shall not be
less than one month but which may extend to three years, or with fine
which shall not be less than two thousand rupees but which may extend to
ten thousand rupees, or with both.44

(4) Administrative sanctions

The Central Government is empowered under the MRTP Act to seek

certain information from any undertaking relating to its business, cost of
production, conduct, trade practices or management.45 In addition, the
Central Government may appoint inspectors for making investigations
into the affairs of undertakings which are suspected of indulging in any
monopolistic, restrictive or unfair trade practices.

Dr. K. Puri *

43. Id ., section 48.

44. Section 27, Consumer Protection Act 1986.
45. Section 43, MRTP Act 1969. The Central Government has framed the Monopolies
and Restrictive Trade Practices (Information) Rules 1971 in pursuance of this provision.
* BA, LLB, LLM (Del), Ph.D (ANU), Max-Planck Institute for Foreign and Inter-
national Patent. Copyright and Competition Law, Munich; (Barister and Solicitor (NZ),
Associate Professor of Law University of Queensland, Australia, Churchill Fellow
1987).

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