MANU/MR/0006/1984

Equivalent/Neutral Citation: (1985)1C ompLJ235(MRTPC ), (1985)1C ompLJ235(MRTPC )

IN THE MONOPOLIES AND RESTRICTIVE TRADE PRACTICES COMMISSION

NEW DELHI
Interlocutory Application No. 116 of 1984 in UTPE No. 54 of 1984
Decided On: 27.11.1984
Voluntary Organisation in The Interest of Consumer Education and Ors. Vs. ITC Ltd.
Hon'ble Judges/Coram:
S. Madhusudan Rao, J. and S.D. Manchanda, Member
Counsels:
For Appellant/Petitioner/Plaintiff: Ram Khanna, DR and Kailash Rekhi
For Respondents/Defendant: G. Saran, ADG, T.V.S. Panduranga Sharma, Jt. AGD, Anil
Dbwan, Senior Advocate and Ravinder Narain, Advocate
ORDER
S. Madhusudan Rao, J.
1 . This is an application under section 12A of the Monopolies. and Restrictive Trade
Practices Act, which will hereinafter be referred to as the Act. The applicants 'Voluntary
Organisation in the Interest of Consumer Organisation (VOICE) and Indian Federation of
Consumer Organisation (IFCO)' are the complainants in UTP Enquiry No. 54 of 1984 on
the file of this Commission. The respondent Indian Tobacco Company Ltd. (ITC Ltd.),
Calcutta is a manufacturer of cigarettes including the brand of cigarettes known as 'Wills
Filter Tipped'. In the daily newspaper 'Tribune' dated the 14th of November 1984, the
respondent advertised a contest known as 'Made for Each Other Contest.' The contest is
open only to married couples provided one of the couple is a smoker. Any eligible
couple can participate in the contest by sending a recent photograph of the two spouses
together to the respondent company. The couples who send their photographs are sent
printed folder of the rules and conditions with a publicity sticker pasted on the folder.
The sticker displays a packet of Wills Filter Tipped Cigarettes. The couples are also sent
a four page folder containing the rules and regulations governing the contest. The last
date for receipt of entries is the 30th of November, 1984.
2 . In the complaint filed by them before this Commission, the applicants alleged that
the conduct of the contest is an unfair trade practice insofar as the respondent is
organising the contest to promote its business interest and the sale of the Wills Filter
Tipped Cigarettes. It has further been alleged by the applicants that since the contest is
open only to couples one of whom is a smoker and not to non-smoking couples, it
tempts and influences non-smokers to begin smoking with a view to enter the contest
and win the prizes offered. The respondent has offered an air-conditioned Premier
Padmini Deluxe car as 1st prize and exquisite kashmiri carpet as second prize and
Elegant Silver Salver as third prize. It is further submitted on behalf of the applicants
that after selecting three healthy good looking couples as winners of the prizes, the
respondent would be advertising its cigarettes by publishing the photos of the three
winning couples and thus give an impression to the non-smoking public that even
smokers can be healthy and smart. Under this application it is prayed that a temporary

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 injunction restraining the respondent from conducting the contest may be granted as
the contest is prejudicial to public interest and would cause loss or injury to the public.
The application is supported by two affidavits. One affidavit is that of Dr. Sri Ram
Khanna representing the VOICE and the other affidavit is that of Smt. Kailash Rekhi
representing IFCO.
3. The respondent took notice of the application and filed a counter opposing the grant
of temporary injunction. It is admitted by the respondent that it is conducting the
contest alleged by the applicants and that the contest, however, does not constitute an
unfair trade practice within the meaning of section 36A of the MRTP Act. It is also
contended that insofar as no inquiry in regard to an unfair trade practice is pending
before the Commission there is no jurisdiction for the Commission to grant a temporary
injunction under section 12A of the Act.
4. When the matter was heard, Shri Anil Diwan, the learned counsel for the respondent
reiterated the contentions raised in the counter and argued that the Commission has no
jurisdiction to pass any order by way of temporary injunction under section 12A of the
Act, insofar as no inquiry is pending before the Commission because the complaint filed
by the applicants has been forwarded to the Additional Director General of Investigation
for a preliminary report. It is further contended by Shri Diwan that the contest
advertised by the respondent is not an unfair trade practice within the meaning of
section 36A of the Act. On being enquired by the Commission as to whether the action
of the respondent does not constitute a restrictive trade practice, Shri Diwan submitted
that it does not also constitute a restrictive trade practice within the meaning of section
2(o) of the Act.
5. Shri Khanna arguing for the applicants refuted the contentions raised on behalf of the
respondent and submitted that unless the Commission grants a temporary injunction
pending the enquiry instituted against the respondent, there would be irreparable loss
and damage to the interest of the public and that it would also distort competition
amongst the various manufacturers of cigarettes.
6 . In the light of the allegations and the averments in the counter and the arguments
addressed on behalf of the applicants and the respondent, the important issues arising
for decision in this application are:
(1) Has the Commission jurisdiction to pass a temporary injunction under
section 12A of the Act at this stage?
(2) Is the trade practice of conducting the impugned contest an unfair trade
practice or a restrictive trade practice under the Act?
(3) Even if the trade practice adopted by the respondent is an unfair trade
practice or a restrictive trade practice, is it necessary that the Commission
should invoke its jurisdiction under section 12A of the Act and issue a
temporary injunction against the respondent.
Issue No. 1
7. Section 12A reads as follows:
"12. Power of the Commission to Grant Temporary Injunction-(1) Where,
during an inquiry before the Commission, it is proved, whether by the
complainant Director General, any trader or class of traders or any other

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 person, by affidavit or otherwise, that any undertaking or any person is carrying
on, or is about to carry on, any monopolistic or any restrictive or unfair, trade
practice and such monopolistic or restrictive or unfair trade practice is likely to
affect prejudicially, the public interest or the interest of any trader, class of
traders or traders generally or of any consumer generally, the Commission may,
for the purposes of staying or preventing the undertaking or, as the case may
be, such person, from causing such prejudicial effect, by order, grant a
temporary injunction restraining such undertaking or person from carrying on
any monopolistic or restrictive, unfair, trade practice until the conclusion of
such inquiry or until further orders.
(2) The provision of rules 2A to 5 (both inclusive) of Order XXXIX of the First
Schedule to the Code of Civil Procedure, 1908, shall as far as may be, apply to
a temporary injunction issued by the Commission under this section, as they
apply to a temporary injunction issued by a Civil Court, and any reference in
any such rule to a suit shall be construed as a reference to an inquiry before the
Commission".
8 . The applicants filed a complaint before this Commission under section 36B(a)
alleging that the respondent is indulging in the unfair trade practice of conducting a
contest. On receipt of the complaint, the Commission applied its mind to see whether
the facts alleged constitute an unfair trade practice and whether the complainant is a
consumer association having a membership of not less than twenty-five persons and
opined that the matter requires a thorough probe by issuing a notice to the respondent.
The complaint was therefore, taken on the file of this Commission as Unfair Trade
Practice Enquiry No. 54/84 and directed the Additional Director General to make a
preliminary investigation and submit his report expeditiously. Laying stress on the
words 'during an enquiry before the Commission'-Shri Anil Diwan contends that no
enquiry has so far commenced against the respondent and that, therefore, Commission
has no jurisdiction to pass any order under section 12A of the Act. We are unable to
find any substance in this submission, section 36B and section 36D are exactly the
same as section 10 and section 37 respectively with this difference that while the former
two sections deal with unfair trade practices, the latter two sections deal with restrictive
trade practices. The enquiry by the Commission in the case of either a restrictive trade
practice or an unfair trade practice is of two distinct phases. The first phase of the
enquiry does not envisage any notice to the person against whom the enquiry is
instituted, while the second stage commences with a notice to the person against whom
the enquiry is made. Either on receipt of a complaint or on receipt of a reference from
the Central or the State Government or an application from the Additional Director
General (I&R) or while instituting an enquiry suo-motu, the Commission does not
generally issue a notice to the person against whom the enquiry is initiated. A
preliminary enquiry under section 10 in the case of a restrictive trade practice and under
section 36B in the case of an unfair trade practice is usually made, as permitted under
those provisions and then the Commission either closes the enquiry should there be no
case, or issues a notice of enquiry to the concerned person or undertaking under section
37 in the case of a restrictive trade practice and under section 36D in the case of an
unfair trade practice. The enquiry into an unfair trade practice commences as soon as
the Commission institutes an enquiry either under section 10 or under section 36B.
Once an enquiry is instituted by the Commission without any reference to the other
steps that may be taken by the Commission before the issuance of the notice to the
concerned party, the enquiry becomes pending before the Commission. It is only where
after preliminary enquiry, the Commission feels that a particular person or undertaking
should be asked to show cause as to why an appropriate order under section 37 or

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 section 36D should not be passed, the Commission issues a notice of enquiry marking
the beginning of the second stage of the enquiry. The forwarding of the complaint to
the Director General of Investigation for a preliminary investigation is a part of the
enquiry instituted by the Commission. Section 36C does not bar any preliminary enquiry
by the Commission. It is clearly provided in the section that is the case of an unfair
trade practice in regard to which a complaint is made under clause (a) of section 36B,
the Commission shall cause a preliminary investigation before issuing any process
requiring the attendance of the person complained against. The provision clearly
enunciates the purpose for which the preliminary investigation is made compulsory and
that purpose is that the Commission should be satisfied that the complaint requires to
be inquired into as contemplated under section 36D. The anterior enquiry envisaged
under section 36B is independent and uncontrolled by the provision under section 36C
which comes into play only when the Commission considers it necessary to issue
process requiring the attendance of the person complained against. When a complaint
from a consumer association or a reference from the Government or an application from
the Director General of Investigation (RRTA) is received the Commission institutes an
inquiry either under section 10 or under section 36B by forwarding the complaint,
reference or application to either its Research Wing or Investigation Wing or by
directing a notice of enquiry under section 37 or under section 36D. In all such cases,
where no notice of enquiry has been ordered under section 37 or section 36D, it cannot
be said that there is no enquiry by the Commission. Under the circumstances, therefore,
we over-rule the objection against the existence of jurisdiction to pass an order under
section 12A of the Act at this stage. We have no doubt whatever that an enquiry is
pending against the respondent in the instant case, the same having commenced on our
receiving the complaint and registering a case after due examination of the allegations
in the complaint.
Issue No. 2
9. It is not denied that the respondent is conducting a contest known as 'Made for Each
Other Contest' and the same is admittedly for the purpose of promoting the sale of
'Wills Filter Tipped' cigarettes and also for promoting the business interest of the
respondent company.
10. Shri Anil Diwan, the learned counsel for the respondent vehemently contends that
the mere conduct of the contest which does not insist on the purchasing Wills Filter
Tipped Cigarettes or on the purchase of any cigarettes manufactured by the respondent
cannot be construed as an unfair trade practice. He points out that there is absolutely
nothing like loss or injury to any consumer or consumers generally and that no trade
practice can be considered to be an unfair trade practice except when such trade
practice causes loss or injury to the consumers of the goods in question. An unfair trade
practice is defined in section 36A of the Act as any trade practice which, for the purpose
of promoting the sale of any product adopts one or more of the trade practices detailed
in sub-sections (1) to (5) and thereby causes loss or injury to the consumer by
eliminating or restricting competition or otherwise, sub-section (3) of section 36A
provides as follows:
"(3) permits-
(a) the offering of gifts, prizes or other hems with the intention of not
providing them as offered or creating the impression that something is
being given or offered free of charge when it is fully or partly covered
by the amount charged in the transaction as a whole,

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 (b) 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."
11. The language of the above sub-clause (b) abundantly shows that the Parliament
intended to prohibit the conduct of any contest, lottery, game of chance or even a game
of skill if it is intended for the purpose of promoting directly or indirectly the sale, use
or supply of any product or for that matter any business interest. Shri Anil Diwan
submits that mere conduct of a contest should not be construed as an unfair trade
practice, even if it is to promote the business interest as long as there is no proof that
such a contest causes any loss or injury to the consumers. Even accepting this
contention, we are unable at this stage to hold that the contest advertised and sought to
be conducted by the respondent is not an unfair trade practice. On the face of it, it is a
contest among smokers and the contest naturally enlarges the smokers circle and would
be prejudicial to public interest. The question whether a trade practice clearly coming
within the language of section 36A sub-section 3(b) is by itself an unfair trade practice
or whether there should be separate proof of loss or injury to the consumers on account
of such trade practice will be decided by us in the final enquiry. But at this stage, we
are of the view that the action of the respondent amounts to an unfair trade practice
within the meaning of section 36A, sub-section 3(b) of the Act as loss or injury to the
consumers is' implicit in the trade practice. We are also of the view that the trade
practice adopted by the respondent is a restrictive trade practice within the meaning of
section 2(o) of the Act, insofar as it affects competition in the trade of cigarettes.
Issue No. 3
12. As rightly contended by Shri Anil Diwan, the learned counsel for the respondent, a
temporary injunction, pending enquiry into a restrictive/monopolistic/unfair trade
practice, cannot be granted as a matter of course in any and every enquiry. It is only in
exceptional cases attracting the prescribed situation in section 12A of the Act that the
Commission can issue a temporary injunction. Section 12A clearly provides that only
when it is proved by affidavit or otherwise that any undertaking or any person is
carrying on a monopolistic or restrictive or unfair trade practice and such trade practice
is likely to affect prejudicially any public interest or the interest of any trader, class of
traders or consumers, the Commission may, by order, grant a temporary injunction
restraining such undertaking or person from carrying on the monopolistic or restrictive
or unfair trade practice until the conclusion of the enquiry or until further orders. As
pointed out already/the contest which the respondent is conducing is likely to affect
prejudicially the public interest and it would be, therefore, necessary to restrain it. The
respondent's learned counsel submits that the last day for receipt of entries to the
contest is the 30 November 1984 and that, therefore, the balance of convenience would
be not to prevent the contest which has been advertised since the 29 October 1934 and
carried on till today-the 27 November. An examination of the rules and conditions
published by the respondent in regard to the contest clearly shows that it is only the
first stage of the contest that comes to an end by the 30 November 1984 and there are
two more further stages before the contest reaches its finality. We do not think it
necessary to reiterate the rules and conditions published by the respondent. Annexures
I, II and III to the complaint are marked as Exhs. A-1, A-2 and A-3 for the purpose of
this enquiry. Exh. A-3 contains the rules and conditions. While the last date for receipt
of entries is the 30 November 1984, the process for closing the contest by way of
awarding prizes continues for considerably a long time. Rules 9, 18a and 18b are clear
and they provide for the other two stages of the contest. One pernicious aspect of the
contest is contained in rule 21 which reads:

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 "Photographs/films of all the couples appearing in the preliminary contests and
final contest, submitted by them or taken by the sponsors at any time, will
become properties of the sponsors who will also have the copyright therein,
and may be used at their discretion for advertising purposes. The couples will
not be entitled to payment and/or raise objections to taking such
photographs/films and use thereafter."
13. As submitted by Dr. Khanna, the respondent is proposing to publish the photos of
the selected couples in its advertisements of the cigarettes. Such advertisements are
likely to create an impression amongst the public that cigarette smoking is not so
injurious to health as is usually printed on the cigarette packets. In para 8 of the
complaint, it is stated as follows:
"that this contest is devoid of any social objective and is solely designed to
associate cigarette smoking with happily married, lively, smart and good
looking couples. It would create the impression that smoking was a good habit.
Each advertisement, folder, sticker for the contest conspicuously displays Wills
Filter cigarettes and its slogans and is designed to associate cigarette smoking
with conjugal harmony, happy married life; smartness, beauty, personality, etc.
This contest is advertised as a 'unique social event' with the sole purpose of
promoting smoking of cigarettes in general and Wills Filter in particular. Hence,
it causes loss or injury to the health of those who consume the cigarettes and
commits an unfair trade practice under section 36A(3)(b) of the Act as well as
negates the purpose behind the statutory warning envisaged under the
Cigarettes (Regulation of Production, Supply and Distribution) Act of 1975."
14. We find sufficient substance in this allegation made in the complaint and we deem
it expedient in the interest of the public to restrain the respondent to proceed with the
stages 2 and 3 of the contest. The Commission hereby grants a temporary injunction
restraining the respondent from carrying on with the contest or from taking any steps in
furtherance of the contest after the 30 November 1984, i.e., from the 1 December 1984
until the conclusion of the enquiry now pending against the respondent or until further
orders of this Commission.
15. The Commission would like to make it clear that the respondent is at liberty to
receive any entry under the existing rules until 30 November 1984 and the respondent
shall not, however, either by itself or its agents or employees advertise or take any step
in furtherance of the remaining stages of the contest until further orders of the
Commission.
1 6 . Pronounced in the open Court by dictation to short-hand writer on this the 27
November 1984.
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