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CASE NO.:

Appeal (civil) 2330 of 2000

PETITIONER:

M/S HARIDAS EXPORTS

Vs.

RESPONDENT:

ALL INDIA FLOAT GLASS MFRS. ASSN. & ORS.

DATE OF JUDGMENT: 22/07/2002

BENCH:

Y.K. Sabharwal, K.G. Balakrishnan.

JUDGMENT:

W I T H

Civil Appeal Nos. 3572 of 2000, 76 of 2002 , Civil Appeal No._4238/2000

of 2002 @ SLP (C) No. 22549 of 2001 and Civil Appeal No. 3562 of 2000

J U D G M E N T

KIRPAL, C.J.I.

Civil Appeal Nos. 2330 of 2000, 3572 of 2000, 76 of 2002 and

S.L.P.(C )No. 22549 of 2001 :

Leave granted.

These appeals are against orders passed by the Monopolies and

Restrictive Trade Practices Commission (hereinafter referred to as the

"MRTP Commission") whereby Indonesian manufacturers of float

glass had been restrained from exporting the same to India at

allegedly predatory prices.

Respondent No.1 is an association of float glass manufacturers

in India. During March-April, 1998, complaints were made by the

said respondent to the Customs Department, alleging that the

Indonesian manufacturers of float glass, in association with Indian

importers were allegedly indulging in heavy under-invoicing. The

respondents were, however, informed by the Customs Department in

Calcutta that if they had any genuine grievance, the same could be

made before the Designated Authority, Ministry of Commerce dealing

with anti-dumping complaints. On 26th May, 1998, the respondent

No.1 presented a complaint before the Designated Authority. This

complaint appears to have been filed before the Anti-Dumping

Authority and the same was possibly not pursued by the complainant.

On 10th September, 1998, the respondent No.1 filed a complaint

before the MRTP Commission under Section 33(1)(j), (ja) and Section

36A read with Section 2(o) of the Monopolies and Restrictive Trade

Practices Act, 1969 (hereinafter referred to as the 'MRTP Act')

against three Indonesian companies alleging that they were

manufacturing float glass and were selling the same at predatory

prices in India, and were hence resorting to restrictive and unfair trade

practices. In the complaint, it was stated that the float glass of

Indonesian origin was being exported into India at the CIF price of

US$ 155 to 180 PMT. At this price, some float glass had been

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shipped into India during the period December, 1997, to June, 1998.

It was alleged that these sale prices were predatory prices as they were

less than not only the cost of production for the product in Indonesia

but also the variable cost of production of the product. The

complainant gave figures indicating the estimated cost of float glass

internationally as well as the cost of production of float glass in India

with a view to demonstrate that the Indian manufacturers of float glass

would not be able to compete with the price at which the Indonesian

manufacturers were presently selling or intending to sell to Indian

consumers. On this basis, it was contended that the sale of float glass

by the Indonesian manufacturers at the said price of US$ 155 to 180

PMT will restrict, distort and prevent competition by pricing out

Indian producers from the market. This would result in lowering the

production of the Indian industry and the consequent idle capacity and

losses would force the industry to become sick which would lead to its

closure which would have a direct impact on the employment in the

industry.

In response to the notice issued to the Indonesian companies,

M/s P.T. Mulia Industries (respondent No. 2 in this appeal) wrote a

letter to the MRTP Commission stating that it had never in the past

exported float glass to India. The other two respondents did not send

any reply to the Commission. The appellant, however, which is the

Indian importer of the float glass from Indonesia had filed a caveat

before the Commission. It also filed a reply refuting the allegations of

the respondent and it was the contention of the appellant that

respondent No.1 was a cartel of Indian manufacturers of float glass

which was, in fact, exporting out of India at prices far lower than their

own cost of production in India. It was also contended by the

appellant herein that the cost of production of float glass was lower in

Indonesia than in India and float glass was not being exported to India

at predatory prices.

The application under Section 12-A for interim injunction was

heard by the Chairman of the Commission and a second Member.

There was a difference of opinion amongst them. While the Chairman

vide order dated 18th January, 1999, allowed the application and

restrained the Indonesian companies from exporting to India their

float glass production at predatory prices, Dr. S. Chakravarthy, the

second Member dismissed the application, inter alia, holding that

there was no evidence to substantiate the plea of predatory pricing at

this stage. By order dated 9th February, 2000, the third Member who

heard the case concurred with the view taken by the Chairman and

passed an order of injunction against the Indonesian companies.

While Civil Appeal No. 2330 of 2000 is filed by the Indian

importer who was the caveator before the Commission, Civil Appeal

No. 3572 of 2000 has been filed by P.T. Muliaglass which is the

subsidiary of P.T. Mulia Industrindo. It is the case of P.T. Muliaglass

that the holding company does not carry out any manufacturing

operations and that is why it had informed the MRTP Commission

that it was not engaged in the export of float glass to India and,

therefore, it did not appear before the MRTP Commission. P.T. Mulia

Glass which, in fact, manufactures the float glass being aggrieved by

the order of the MRTP Commission has filed the appeal, inter alia,

contending that it is not exporting float glass to India at predatory

prices.

On behalf of the appellant, it was submitted that the MRTP

Commission had no jurisdiction to entertain and adjudicate upon the

complaint which was made by the respondents. It was submitted that

the essence of the compliant of the respondents before the MRTP

Commission was of injury to the domestic industry on account of low

prices by the Indonesian manufacturers which is a dispute under Anti-

Dumping law and does not fall within the jurisdiction of the MRTP

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Commission. It was submitted that the complaint which was made

against the Indonesian exporters was one essentially of dumping as it

had been contended that the Indonesian exporters were exporting float

glass at very low prices which were predatory in nature and the

intention was to cause injury to the domestic industry.

It was submitted that Article 18.1 of the WTO Agreement on

Implementation of Article VI of the GATT, 1994, provides that "no

specific action against dumping of exports from another Member can

be taken except in accordance with the provisions of GATT, 1994 as

interpreted by this Agreement". The remedy against the practice of

"dumping"/export of goods at "predatory prices" has been expressly

agreed upon internationally under the General Agreement on Tariffs

and Trade (GATT) to which India is a signatory. The Agreement

deals with anti-dumping duties and provides mechanism to implement

it.

In pursuance of the GATT, 1994, the Parliament for the first

time inserted provisions 9A to 9C in the Customs Tariff Act vide the

Customs Tariff (Amendment) Act, 1995, No. 6 of 1995 which

replaced the provisions of sections 9, 9A and 9B earlier inserted in the

Customs Tariff Act under Act No. 52 of 1982. The Statement of

Objects and Reasons to the Bill clearly states that the Bill seeks to

amend the Custom Tariff Act to bring the provisions of the Custom

Tariff Act in conformity with the provisions of Article VI of the

GATT 1994, and the agreements on subsidies and countervailing

measures. Even the preamble of the Customs Tariff (Amendment)

Act, 1995, No. 6 of 1995 also provides that the provisions of sections

9, 9A and 9B of the Customs Tariff Act, 1975, have been replaced by

the new sections 9, 9A and 9B to reflect the changes in the domestic

law, consequent upon coming into effect the Agreement on Anti-

dumping (i.e. an Agreement on implementation of Article VI of the

GATT 1994). under the Uruguay Round on 1st January, 1995.

Section 9A, inter alia, provides that where any article is

exported from any country or territory to India at less than its normal

value, then, upon the importation of such article into India, the Central

Government may, by notification in the Official Gazette, impose an

anti-dumping duty not exceeding the margin of dumping in relation to

such article. The said section indicates how the normal value and the

margin of dumping is to be ascertained. Section 9B contains

provisions which provide for exemption from levy under Section 9 or

Section 9A in certain cases while Section 9C gives the right of appeal

against the order of determination or review thereof regarding the

existence, degree and effect of any subsidy or dumping in relation to

import of any article. The Act contemplates the Designated

Authority, which is appointed under it's provisions, to conduct a

detailed investigation into the allegation of dumping of articles before

it determines the normal value, export price and the margin of

dumping. It is important to note that in undertaking this exercise, the

Government or the foreign country exporting the article is required to

be informed. By notification dated 1st January, 1995, Anti-Dumping

Duty Rules were framed. Rule 14 sets out circumstances under which

the designated authority may terminate an investigation. In Rule

14(d), there is a de-minimus requirement that is to say the volume of

the dumped imports, actual or potential, should account for not less

than 3% of the imports of the like product. If the imports are below

this level, the authority shall terminate the investigation immediately.

It is the case of the appellant that the float glass which was imported

from Indonesia was much less than 3%.

The learned counsel for the appellants contended that the

respondents have in the complaint filed by them with the MRTP

Commission under the MRTP Act sought redressal of their alleged

grievance that certain Indonesian companies are selling float glass at

prices much lower than their cost of production and are thereby

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allegedly indulging in predatory pricing with an alleged intent to

eliminate competition and causing material injury to the interest of

domestic float glass industry. For redressal of the alleged grievance

of the respondents, a specific remedy has been provided under

sections 9A to 9C of the Customs Tariff Act and the Anti-dumping

Duty Rules. The provisions of sections 9A to 9C introduced under the

Customs Tariff Act and the Anti-dumping Duty Rules provide for a

complete and exhaustive machinery to prevent dumping of goods into

India including export of goods into India at predatory price causing

"injury" to domestic industry, causing threat of injury to domestic

industry and material retardation to establishment of domestic

industry by way of imposition of anti-dumping duty on import of such

goods. The expression "injury" has been defined under Article 3 of

the Agreement on Anti-Dumping as under:

"Injury shall unless otherwise specified, be taken to mean material

injury to a domestic industry; threat of material injury to a

domestic industry or material retardation of the establishment of

such an industry, and shall be interpreted in accordance with the

provisions of this Article."

Thus, it was submitted, the remedy for imposition of anti-

dumping duty has been provided so as to prevent distortion,

impairment and restriction of competition in domestic industry. A

specific authority, i.e., the Designated Authority on Anti-dumping has

been constituted under the Anti-dumping Duty Rules framed under

the Customs Tariff Act which has the powers to conduct investigation

upon receipt of a complaint from the domestic industry or suo motu

relating to dumping of goods by a foreign company to identify the

existence, degree and effect of any alleged dumping in relation to

import of any article and injury to domestic industry, threat of injury

to domestic industry, material retardation to establishment of domestic

industry, etc. and to recommend to the Central Government the

amount of anti-dumping duty to remove the injury to the domestic

industry, based on which the Central Government imposes provisional

or final anti-dumping duty upon importation of the concerned goods

into India as a result of which the cost for the Indian importer for the

imported goods and the articles becomes the same as that of fair value

of such goods and articles in the domestic market. The object of the

provisions of the Customs Tariff Act and the Anti-dumping Duty

Rules is thus to prevent distortion, impairment and restriction of

competition caused by export of goods to India at dumped/predatory

price. In view of the aforesaid, the finding of the MRTP Commission

that as the provisions of the Customs Tariff Act only provide for

imposition of custom duties, they have had no relevance for

overriding the provisions of the MRTP Act, is erroneous, was the

submission. It is also submitted that the object of the MRTP Act on

the other hand generally is to check concentration of economic power

to the common detriment, to control monopolies and to prohibit

monopolistic and restrictive trade practices and for matters connected

therewith or incidental thereto. In view of the above, the MRTP Act

and the provisions of the Customs Tariff Act cover the same subject-

matter as the scope and object of both the Acts is same although the

MRTP Act is a general Act and the Customs Tariff Act is a special

Act for the redressal of grievance of the respondents.

It was urged that where a particular subject has received special

treatment under specific provisions/statute, it will exclude the

applicability of the general provision(s) which might otherwise cover

the said topic. Therefore, applying this well-settled law, the general

provisions of the MRTP Act will be excluded in relation to any

grievance and complaint pertaining to dumping/exporting of goods at

predatory price from foreign country into India, with an intent to

cause injury to the domestic industry which is specifically covered

under the provisions of Sections 9A, 9B and 9C of the Customs Tariff

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Act and the Anti-dumping Duty Rules framed there under. Therefore,

Sections 9A to 9C of the Customs Tariff Act exclude the jurisdiction

of the MRTP Commission in such matters. The appellants rely on the

following decisions of the Hon'ble Supreme Court which

unequivocally lays down and reiterates the above mentioned principle:

(i) Belsund Sugar Co. Ltd. vs. State of Bihar and Others

(1999) 9 SCC 620; at 638 and 639, 641, 648, 649 and 650.

(ii) Jogendra Lal Saha vs. State of Bihar and Others

1991 Supp (2) SCC 654; at 657

(iii) Life Insurance Corporation of India vs. D.J.Bahadur and Others

(1981) 1 SCC 315; at 349, 350-354.

(iv) Damji Valji Shah and Another Vs. Life Insurance Corporation of

India and Others

[1965] 3 SCR 665; at 673.

(v) Gobind Sugar Mills Ltd. vs. State of Bihar and Others

(1999) 7 SCC 76; at 80-82.

(vi) Shriram Mandir Sansthan vs. Vatsalabai and Others

(1999) 1 SCC 657; at 661 and 662.

On behalf of the respondents, it was submitted that the

provisions of the Customs Tariff Act, 1975, relating to imposition of

anti-dumping duties do not in any way oust the jurisdiction of the

MRTP Commission over the restrictive trade practice of predatory

pricing. It was contended that the two statutes occupied different

fields and were distinct in their scope and applicability. There was no

overlap or conflict between the statutes and hence the question of

repeal, whether implied or express, did not arise. The Customs Tariff

Act is concerned with the imposition of duties of customs. Imposition

of customs duty is the policy decision of the Government in the realm

of taxation. Section 9A read with the Rules provide for the

determination of certain objective criteria on the basis of which the

decision of the Central Government to levy anti dumping duty can be

based. The Customs Tariff Act does not confer any right on any

individual or Association and does not provide for any remedy to

them. Only the domestic industry can approach the Designated

Authority.

It was further contended that whereas predatory pricing

enquiries are concerned with sales below the cost of production of the

predator with the intention to eliminate competition, anti-dumping

investigations are triggered when an exporter sells his products in the

export market at a price below that of the price at which he sells his

product in the country of origin. In anti-dumping investigations,

therefore, the focus is on sale price in the country of origin as opposed

to the cost of production.

According to the respondents, the MRTP Act provides for a

judicial remedy for specified practices done individually or

collectively. An individual consumer or a trade association or a

competitor can approach the MRTP Commission. There is a right of

appeal to the Supreme Court against the orders passed by the MRTP

Commission. Only domestic industry has the right to initiate anti-

dumping proceedings. Thus the scope and operation of the Acts

mentioned above was different. In particular, the ingredients of

transactions which attract operation of the MRTP Act and the

Customs Tariff Act are different and the question of one superseding

the other as a special law does not arise. They operate in different

fields and are subject to different considerations. Hence, in the

absence of any conflict or overlap between the two statutes, the

question of the Customs Tariff Act provisions impliedly repealing the

provisions of Section 33(1)(j) of the MRTP Act do not arise, was the

submission.

While adopting the arguments of the other counsel, Shri Anil

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B. Divan, Senior Advocate on behalf of the respondent No. 1 referred

to Sections 2(e), 2(u), 13 and 14 of the Act. He submitted that

Section 2(u)(i) which defines "trade practice" covers a chain of

events/series of transactions that affect the price charged or methods

of trading. Thus a part of "trade practice" may be outside India but

the affectation of prices may have effect in India. Thus, he

submitted, the import of goods and the sale in India which is the last

link of the trade practice of predatory pricing read with Section 14

clearly gives jurisdiction in an appropriate case to the MRTP

Commission. He contended that like the EEC as well as the USA, the

law in India was the same, namely, that if the effect of a restrictive

trade practice came to be felt in India because of a part of the trade

practice being implemented in India, the MRTP Commission would

have jurisdiction. This "effects doctrine" was, therefore, sought to be

invoked with a view to clothe the MRTP with jurisdiction to pass

orders even though a transaction which resulted in exporting goods to

India at predatory price, which was in effect a restrictive trade

practice, had been carried outside the territory of India. He submitted

that where the effect of restrictive trade practice carried out outside

the territory of EEC or USA is felt within the EEC or USA, the

authorities enforcing competition law in the EEC or the USA exercise

jurisdiction in regard to such conduct. He relied upon the decision of

the European Court of Justice in the Wood Pulp case rendered on

27th September, 1988. There, while interpreting Article 85 of the

EEC Treaty which prohibited any agreement, decision and concerted

practice which have the effect of prevention, restriction or distortion

of competition within the common market, it was held that where

producers established outside the EEC implement a pricing

agreement within the common market the community's jurisdiction to

apply its competition rules to such conduct is covered by the

territoriality principle and is not in breach of the principle of

international comity.

It was submitted by Mr. Divan that even while a regime for

imposition of anti-dumping duties has been present in the EEC right

from 1968, it was never suggested before the European Commission

or the European Court of Justice that it's jurisdiction stood ousted or

that the provisions of Article 85 stood impliedly repealed by the anti-

dumping code in respect of imports. Mr. Divan also submitted that in

the USA, the Antitrust Enforcement Guidelines for International

Operations issued by the U.S. Department of Justice enunciated that

the State Department will exercise jurisdiction under the Sherman Act

over foreign conduct which had direct, substantial and reasonably

foreseeable effects on U.S. domestic or import commerce.

While adopting the arguments of the other counsel, Shri Anil

Divan on behalf of the respondents, drew the Court's attention to

Section 4 of the MRTP Act which reads as follows:-

"Application of other laws not barred.- (1) Save as otherwise

provided in sub-section (2) or elsewhere in this Act, the provisions

of this Act, shall be in addition to, and not in derogation of, any

other law for the time being in force.

(2) Notwithstanding anything contained in Section 3 or elsewhere

in this Act, so much of the provisions of this Act, as relate to

matters in respect of which specific provisions exist in the-

(i) Reserve Bank of India Act, 1934 (2 of 1934), or the

Banking Regulation Act, 1949 (10 of 1949), or

(ii) State Bank of India Act, 1955 (23 of 1955), or the State

Bank of India (Subsidiary Banks) Act, 1959 (38 of 1959),

or

(iii) Insurance Act, 1938 (4 of 1938),

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shall not apply to a banking company, the State Bank of India or a

subsidiary bank, as defined in the State Bank of India (Subsidiary

Banks) Act, 1959 (38 of 1959), or an insurer, as the case may be."

He submitted that the provisions of the MRTP Act clearly

postulated the continued applicability of other laws. There was no

specific provision in the MRTP Act which made any other law

inapplicable and there was no reason why by a process of

interpretation the Indian MRTP Act should be emasculated and a

beneficiant anti-monopoly jurisdiction exercised world-wide should

be denied to the Indian MRTP Commission.

What is the scheme of the Act, insofar as it is relevant to the

present case, relating to allegation of restrictive trade practice and the

jurisdiction and power of the Commission in regard thereto.

As the preamble indicates the MRTP Act, inter alia, prohibits

restrictive trade practices. Section 2(o) defines restrictive trade practice

while Section 2(u) defines trade practice.

Section 10 gives the jurisdiction to the Commission to inquire

into any restrictive trade practice. This jurisdiction can be exercised

either upon receiving of a complaint or upon reference made by the

Government or upon an application by the Director General or upon

its own knowledge or information. Before a process is issued

requiring the attendance upon any person the Commission may

require, under Section 11, the Director General to make an

investigation and to submit a report. Section 12-A contains the power

of the Commission to grant temporary injunctions and the same reads

as follows:-

"12-A. Power of the Commission to grant temporary

injunctions.- (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 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 or consumers 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, or unfair,

trade practice until the conclusion of such inquiry or until further

orders.

(2) The provisions of Rules 2-A to 5 (both inclusive) of Order

XXXIX of the First Schedule to the Code of Civil Procedure, 1908

(5 of 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 any

inquiry before the Commission."

Section 14 relates to orders where a party concerned does not

carry on business in India. Section 15 contains the restriction of

application of orders in certain cases and reads as follows:-

"Restriction of application of orders in certain cases.- No order

made under this Act with respect to any monopolistic or restrictive

trade practice shall operate so as to restrict-

(a) the right of any person to restrain any infringement of a patent

granted in India, or

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(b) any person as to the condition which he attaches to a licence

to do anything, the doing of which but for the licence would

be an infringement of a patent granted in India, or

(c) the right of any person to export goods from India, to the

extent to which the monopolistic or restrictive trade practice

relates exclusively to the production, supply, distribution, or

control of goods for such export."

Chapter V contains provisions relating to restrictive trade

practices and unfair trade practices. In the present case, it was the

contention of the respondents that there were agreements between the

Indian importers and the foreign parties which were registerable under

Section 33 of the Act. So far as the import of float glass is concerned,

it was contended that the provisions of Section 33 (1) (j) were

attracted. The relevant portions of Section 33 are as follows:-

"Registerable agreements relating to restrictive trade

practices.-

(1) Every agreement falling within one or more of the following

categories shall be deemed, for the purposes of this Act, to be an

agreement relating to restrictive trade practices and shall be subject

to registration in accordance with the provisions of this Chapter,

namely-

(a) xxx xxxx

(b) xxx xxxx

(c) xxx xxxx

(d) any agreement to purchase or sell goods or to tender for the

sale or purchase of goods only at prices or on terms or

conditions agreed upon between the sellers or purchasers;

(e) xxx xxxx

(f) xxx xxxx

(g) xxx xxxx

(h) xxx xxxx

(i) xxx xxxx

(j) any agreement to sell goods at such prices as would have the

effect of eliminating competition or a competitor;

(ja) any agreement restricting in any manner, the class or number

of wholesalers, producers or suppliers from whom any goods may

be bought;

(jb) any agreement as to the bids which any of the parties thereto

may offer at an auction for the sale of goods or any agreement

whereby any party thereto agrees to abstain from bidding at any

auction for the sale of goods;

(k) xxx xxxx

(l) xxx xxxx

(2) The provisions of this section shall apply, so far as may be, in

relation to agreements making provision for services as they apply

in relation to agreements connected with the production, storage,

supply, distribution or control of goods.

(3) No agreement falling within this section shall be subject to

registration in accordance with the provisions of this Chapter if it

is expressly authorised by or under any law for the time being in

force or has the approval of the Central Government or if the

Government is a party to such agreement."

The registration of agreement is provided for by Section 35.

The relevant provisions of which are as follows:-

"Registration of agreement.- (1) The Central Government shall,

by notification in the Official Gazette, specify a day (hereinafter

referred to as the appointed day) on and from which every

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agreement falling within Section 33 shall become registrable under

this Act:

Provided that different days may be appointed for different

categories of agreements.

(2) Within sixty days from the appointed day, in the case of an

agreement existing on that day, and in the case of an agreement

made after the appointed day within sixty days from the making

thereof, there shall be furnished to the Director General in respect

of every agreement falling within Section 33, the following

particulars, namely-

(a) the names of the persons who are parties to the agreement; and

(b) the whole of the terms of the agreement.

(3) If at any time after the agreement has been registered under this

section, the agreement is varied (whether in respect of the parties

or in respect of the terms thereof) or determined otherwise than by

afflux of time, particulars of the variation or determination shall be

furnished to the Director General within one month after the date

of the variation or determination.

(4) The particulars to be furnished under this section in respect of

an agreement shall be furnished-

(a) in so far as the agreement or any variation or determination of

the agreement is made by an instrument in writing, by the

production of the original or a true copy of that agreement; and

(b) in so far as the agreement or any variation or determination of

the agreement is not so made, by the production of a

memorandum in writing signed by the person by whom the

particulars are furnished.

(5) The particulars to be furnished under this section shall be

furnished by or on behalf of any person who is a party to the

agreement or, as the case may be, was a party thereto immediately

before its determination, and where the particulars are duly

furnished by or on behalf of any such person, the provisions of this

section shall be deemed to be complied with on the part of all such

persons.

Explanation I.- Where any agreement subject to registration under

this section relates to the production, storage, supply, distribution

or control of goods or the performance of any services in India and

any party to the agreement carries on business in India, the

agreement shall be deemed to be an agreement within the meaning

of this section, notwithstanding that any other party to the

agreement does not carry on business in India.

Xxx xxx"

The investigation by the Commission and the orders which may

be passed by it relating to restrictive trade practices is dealt with by

Section 37.

We will first consider whether the MRTP Act has extra

territorial application. In other words, can the MRTP Commission

pass orders against parties who are not in India and who do not carry

on business here and where agreements are entered into outside India

with no Indian being a party to it.

The preamble of the MRTP Act reads as follows:

"An Act to provide that the operation of the economic system does

not result in the concentration of economic power to the common

detriment, for the control of monopolies, for the prohibition of

monopolistic and restrictive trade practices and for matters

connected therewith or incidental thereto."

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Presumably the economic system to which reference has been made in

the preamble of the Act can only be with regard to the Indian

economic system and not any other system in the world. The object

of the Act was that there should be no exploitation of the people of

India, as a result of concentration of economic power or by reason of

monopolistic and restrictive trade practices being carried out in India.

Section 1(2) states that the Act "extends to the whole of India

except the State of Jammu and Kashmir". Section 2(a) defines

"agreement" while Section 2(e) defines "goods" which reads as

follows:-

""goods" means goods as defined in the Sale of Goods Act, 1930

(3 of 1930), and includes,-

(i) products manufactured, processed or mined in India;

(ii) shares and stocks including issue of shares before

allotment;

(iii) in relation to goods supplied, distributed or controlled in

India, goods imported into India;"

Section 14 which has relevance on the point in issue reads as

follows:-

"Orders where party concerned does not carry on business in

India.- Where any practice substantially falls within monopolistic,

restrictive, or unfair, trade practice, relating to the production,

storage, supply, distribution or control of goods of any description

or the provision of any services and any party to such practice does

not carry on business in India, an order may be made under this

Act with respect to that part of the practice which is carried on in

India."

Reading Sections 1(2), 2(e) and 14 together can leave no

manner of doubt that the Act has no extra territorial operation.

Section 1(2) specifically provides that the Act extends to the whole of

India except the State of Jammu and Kashmir, thereby defining the

geographical boundary of the operation of the Act. Section 2(e)(iii)

defines goods as including those goods which are supplied, distributed

or controlled in India or the goods imported into India. The emphasis

is on the words "in India" or "into India". Paraphrasing the said

sub-section "goods" would mean "those goods supplied in India or

goods distributed in India or goods controlled in India or goods

imported into India". In the present case, we are concerned with float

glass which was sought to be imported into India. For the purpose of

the Act, it is only the goods imported into India which will fall within

the definition of the word "goods" in Section 2(e). As such for the

Commission to exercise any jurisdiction goods must be those which

are imported into India. As long as the import has not taken place and

the goods are merely intended for export to India the same will not

fall within the definition of the word "goods" in Section 2(e).

Even if there was any manner of doubt the same would stand

dispelled by the plain reading of Section 14. The said section

visualizes where, inter alia, restrictive or unfair trade practice is

carried on and any party to such practice does not carry on business in

India then an order can be passed under the Act only with respect to

that part of the practice which is carried on in India. To put it

differently, it is only that part of monopolistic, restrictive, or unfair,

trade practice, relating to production, supply etc. of goods in India in

respect of which orders can be passed. To put matters beyond any

doubt Explanation I to Section 35, which refers to agreements which

are subject to registration under the said section, provides that when

any party to the agreement for the production, supply, distribution etc.

of goods or performance of any services in India carries on business in

India then that agreement shall be deemed to be an agreement within

the meaning of the section, notwithstanding that any other party to the

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agreement does not carry on business in India. The meaning of this

clearly is that it is only that agreement which would require

registration in India if at least one party to the agreement carries on

business in India. It may happen that there may be two or more

parties which enter into an agreement outside India, relating to supply

or distribution of goods to India, the formation of such an agreement

would not ipso facto require any registration even if it relates to

restrictive trade practice but if one of the parties to an agreement

carries on business in India then that agreement shall be deemed to be

an agreement within the meaning of the section which would require

registration.

The next question which would arise for consideration is

whether the principle of "effect doctrine" has any application in India.

Where, in other words, actions take place and agreements are entered

into outside India but the resultant adverse effect is experienced in

India then can the MRTP Commission have any jurisdiction.

The preamble of the Act indicates that the MRTP Act was

enacted, inter alia, for prohibiting any restrictive trade practice.

Restrictive trade practice has been defined in Section 2(o) which reads

as follows:

" 'restrictive trade practice' means a trade practice which has, or

may have, the effect of preventing, distorting or restricting

competition in any manner and in particular,-

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

the stream of production, or

(ii) which tends to bring about manipulation of prices, or

conditions of delivery or to effect the flow of supplies in

the market relating to goods or services in such manner as

to impose on the consumers unjustified costs or

restrictions;"

The expression "trade practice" has been defined under Section

2(u) which reads as under:

" 'trade practice' means any practice relating to the

carrying on of any trade, and includes-

(i) anything done by any person which controls or

affects the price charged by, or the method of

trading of, any trader or any class of traders,

(ii) a single or isolated action of any person in relation

to any trade;"

Section 33 of the Act deals with certain types of agreements

stipulated therein to be an agreement relating to restrictive trade

practice and such agreement requires to be registered. Section 37(1)

gives the Commission power to inquire whether an agreement is

governed by Section 33 and has been registered under Section 35 or

not.

Section 37 reads as under :

"37. Investigation into restrictive trade practices by

Commission.- (1) The Commission may inquire into any

restrictive trade practice, whether the agreement, if any, relating

thereto has been registered under Section 35 or not, which may

come before it for inquiry and, if, after such inquiry it is of opinion

that the practice is prejudicial to the public interest, the

Commission may, by order, direct that-

(a) the practice shall be discontinued or shall not be repeated;

(b) the agreement relating thereto shall be void in respect of such

restrictive trade practice or shall stand modified in respect

thereof in such manner as may be specified in the order.

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(2) The Commission may, instead of making any order under this

section, permit the party to any restrictive trade practice, if he so

applies to take such steps within the time specified in this behalf by

Commission as may be necessary to ensure that the trade practice

is no longer prejudicial to the public interest, and in any such case,

if the Commission is satisfied that the necessary steps have been

taken within the time specified, it may decide not to make any

order under this section in respect of that trade practice.

(3) No order shall be made under sub-section (1) in respect of-

(a) any agreement between buyers relating to goods which are

bought by the buyers for consumption and not for ultimate

resale whether in the same or different form, type or specie or

as constituent of some other goods;

(b) a trade practice which is expressly authorised by any law for

the time being in force.

(4) Notwithstanding anything contained in this Act, if the

Commission during the course of an inquiry under sub-section (1),

finds that the owner of any undertaking is indulging in

monopolistic trade practices, it may, after passing such orders

under sub-section (1) or sub-section (2) with respect to the

restrictive trade practices as it may consider necessary, submit the

case along with its findings thereon to the Central Government for

such action as that Government may take under Section 31."

Section 37 thus gives power to the Commission to inquire into

any restrictive trade practice and if it is of the opinion that the practice

is prejudicial to the public interest, the Commission may, by order,

direct that the practice shall be discontinued or shall not be repeated.

It appears to us that what is, inter alia, prohibited by the Act will be

carrying on restrictive trade practice as defined in Sections 2(o) and

2(u) of the Act. The restrictive trade practice may or may not be

directly connected with or be the result of any agreement between the

parties in India. Any act which falls under the category of restrictive

trade practice can be investigated into and orders passed under Section

37(1). Sections 2(o) and 2(u) do not specifically indicate that the

practice should be carried on only by a person or persons in India. If

the trade practice is such that it becomes a restricted trade practice in

India as contemplated by Section 2(o), then action can be taken under

Section 37(1) in respect of such a trade practice.

Section 38 provides that every restrictive trade practice shall be

deemed to be prejudicial to the public interest unless the Commission

is satisfied of any one or more of the circumstances mentioned in

Clauses (a) to (k) of Section 38 exists and it is further satisfied that the

restriction is not unreasonable having regard to the balance between

those circumstances and any detriment to the public or to persons not

parties to the agreement.

Section 2(u) does state that 'trade practice' means any practice

relating to the carrying on of any trade but then it adds that such a

trade practice would include anything done by any person which

controls or affects the price charged by, or the method of trading of,

any trader or any class of traders. The Act and the aforesaid section,

in particular, is, therefore, concerned specifically with the incidence of

the restrictive trade practice within India which in Section 2(o)(i)

refers to the obstruction to the flow of capital or resources into the

stream of production, while Section 2(o)(ii) talks of manipulation of

prices or conditions of delivery or to effect the flow of supplies in the

market but which must be such as to impose on the consumers

unjustified costs or restrictions. To put it differently, mere

manipulation of prices or conditions of delivery would not be a

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restrictive trade practice under Section 2 (o)(ii) unless it is done in

such a manner so as to impose on the consumers unjustified costs or

restrictions. Lowering of prices cannot be regarded as imposing on

the consumers unjustified costs or restrictions.

Under Section 33(1)(j) of the Act, any agreement to sell goods

at such prices as would have the effect of eliminating competition or

a competitor is regarded as an agreement relating to restrictive trade

practice and shall be subject to registration. The Act nowhere states

that this agreement should be only in India or between Indian parties.

In effect, this Section recognizes the 'effects doctrine', namely, where

an agreement results in sale of goods at such prices which would have

the effect of eliminating competition or a competitor. In the very

nature of things, the sale of goods keeping in mind the definition of

the word "goods" in Section 2(e) must be of goods imported into

India, in the case like the present. But if we replace the word "goods"

in Section 33(1)(j) with the definition of "goods" in Section 2(e)(iii),

then the Section 33(1)(j) would read as follows:

"Any agreement to sell goods imported into India at such prices as

would have the effect of eliminating competition or a competitor."

Thus, the agreement requiring registration must be in respect of

goods after their import into India.

In other words, where the goods are already in India, then any

agreement which has the effect of eliminating competition or a

competitor of the sale of those goods existing in India would be a

restrictive trade practice and it would be immaterial as to where the

agreement takes place in relation to the sale of those goods. The

"effects doctrine" would be applicable only in relation to those goods

which are within the territory of India before its sale referred to in

Section 33(1)(j) of the Act. An agreement, which results in sale

outside India and the export of the goods to India, even if that sale is

at predatory prices, would not fall within the ambit of Section 33(1)(j)

of the Act. It is a subsequent agreement of sale of the imported goods,

if it has the effect of eliminating competition or a competitor, which

would be registerable under Section 33(1)(j) of the Act.

Even if an agreement is executed outside India or the parties to

the agreement are not in India and agreement may not be registerable

under Section 33, being an outside India agreement, nevertheless, if

any, restrictive trade practice, as a consequence of any such an outside

agreement, is carried out in India then the Commission shall have

jurisdiction under Section 37(1) in respect of that restrictive trade

practice if it comes to the conclusion that the same is prejudicial to the

public interest.

It is possible that persons outside India indulge in such trade

practices, not necessarily restricted to the effectuation of prices within

India, which have the effect of preventing, distorting or restricting

competition in India or gives rise to a restrictive trade practice within

India then in respect of that restrictive trade practice, MRTP

Commission will have jurisdiction. The counsel for the respondents is

right in submitting that if the effect of restrictive trade practices came

to be felt in India because of a part of the trade practice being

implemented here the MRTP Commission would have jurisdiction.

This "effects doctrine" will clothe the MRTP Commission with

jurisdiction to pass an appropriate order even though a transaction, for

example, which results in exporting goods to India at predatory price,

which was in effect a restrictive trade practice, had been carried out

outside the territory of India if the effect of that had resulted in a

restrictive trade practice in India. If power is not given to the MRTP

Commission to have jurisdiction with regard to that part of trade

practice in India which is restrictive in nature then it will mean that

persons outside India can continue to indulge in such practices whose

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adverse effect is felt in India with impugnity. A competition law like

the MRTP Act is a mechanism to counter cross border economic

terrorism. Therefore, even though such an agreement may enter into

outside the territorial jurisdiction of the Commission but if it results in

a restrictive trade practice in India then the Commission will have

jurisdiction under Section 37 to pass appropriate orders in respect of

such restrictive trade practice.

We will now consider whether the Anti-dumping provisions

will oust the jurisdiction of the MRTP Commission, as has been

contended by the appellants.

The jurisdiction of the MRTP Commission, in our opinion, is

not ousted by the Anti-dumping provisions in the Customs Act. The

two Acts operate in different fields and have different purposes. The

Import Control Act and the Customs Tariff Act are concerned with

import of goods into India and the duty which could be imposed on

the imported items. Import may be allowed on the basis of an import

license or, depending upon the policy, import may be allowed under

OGL - Open General License where no specific license for import is

required. Whether to allow import or not and the terms on which an

item may be imported is a matter of policy and regulated by law.

There is in this case no challenge to the import policy allowing

import of float glass and even if such a challenge was to be there it

would hardly succeed. The grievance of the respondents is that

import is being made at predatory prices. The challenge is to the

actual import. But allowing such a challenge will amount to giving the

MRTP Commission jurisdiction to adjudicate upon the legal validity

of the provisions relating to import, which jurisdiction the

Commission does not have. It is not a court with power of judicial

review over legislative action. Therefore, it would have no

jurisdiction to decide whether the action of the Government in

permitting import of float glass even at predatory prices is valid or

not. The Commission cannot prohibit import, it's jurisdiction

commences after import is completed and any restrictive trade

practice takes place.

Customs duty on import of any goods is levied under the

provisions of the Customs Tariff Act. The rate at which the import

duty is to be levied is a matter of policy. The rate of duty is

determined by the schedule to the Customs Tariff Act and is subject

to such exemption as may be granted under that Act. Thus the rate of

import duty which is imposed is a legislative act and is thus not

amenable to the jurisdiction of the MRTP Commission. A party

cannot contend before the MRTP Commission that the rate of duty is

too high or too low. In fact, such a challenge is hardly likely to

succeed in a Court of law and the question of the MRTP Commission

having such a jurisdiction does not arise.

Apart from the rate of duty the value of the goods imported has

to be determined for the purpose of levy of duty. The customs

authorities are required to determine whether the value of the goods

imported has been correctly declared. In case of wrong valuation, the

customs authorities can determine the correct value and levy duty

thereon. Normally the goods are valued at the price at which they are

actually purchased. Then that will be the value at which the duty will

be imposed. It is not the case of the respondents that the appellants

are guilty of under-valuing the goods imported. It is the low price

which has been charged by the Indonesian exporter which is really the

object of attack.

The levy or non-levy of anti-dumping or other duty being a

legislative act pursuant to the exercise of powers under the Customs

Tariff Act can also not be a subject-matter of judicial review by the

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MRTP Commission. The two Acts substantially operate in different

fields and the following table brings out some of the distinctions

between the MRTP Act and the Anti-dumping provisions:

COMPETITION LAW

ACTIONS

ANTI-DUMPING ACTIONS

1.

2.

3.

4.

5.

Competition law is concerned

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with the regulation of

competition in a particular

market within the territory of a

country. Thus, it would take

within its sweep a whole host of

anti-competitive practices

including (i) monopolistic trade

practices, as defined in Section

2(i) of the MRTP Act, (ii)

restrictive trade practices, as

defined in Section 2(o), and (iii)

unfair trade practices as defined

in Section 36A.

A Complaint under the MRTP

Act can be filed by a Trade

Association or any Consumer or

a Registered Consumers

Association, or a reference can

be made by the Central

Government or the State

Government or even by the

Director General upon its own

knowledge or information.

[Section 10(1)(A) of the MRTP

Act.]

Competition law procedures

allow and require consideration

of interest groups such as

manufacturers, importers,

exporters, consumers and the

general public. Commercial

actors can have their interests

assessed through the

determination of the market,

causation or injury. Interests of

consumers are taken into

account when assessing the

impact of a business practice on

competition.

In predatory pricing enquiries,

the complainant has to establish

that the predator acted with

intent to eliminate competition

and competitors. Actual injury

is not required.

In most countries, competition

cases are dealt with by a court

of law, where parties are

entitled to full discovery rights

and due process.

An anti-dumping law is

concerned with addressing just

one type of unfair, international

trade practice that causes injury

to domestic industry, i.e.,

"dumping" of goods by an

exporting country.

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An Anti Dumping Petition can be

filed by the Domestic Industry as

defined under the Anti Dumping

Rules or suo motu by the

Designated Authority. [See

Rules 2 (b), 5(1) and 5(4) of the

Anti Dumping Rules.]

No interest group other than

domestic industry has full legal

standing in anti-dumping cases.

The predominant interest group

is of domestic producers.

Industrial users and consumers

do not have legal standing to

maintain a complaint.

In anti-dumping complaints,

intent is irrelevant but actual

injury has to be shown. Further,

a causal link has to be

established between the dumping

and the injury suffered.

Anti-dumping enquiries are

always conducted by government

agencies through administrative

procedures and law.

A perusal of the above chart indicates that the two statutes and

regimes operate in different and distinct spheres and there is no

conflict between the two regimes/statutes. Hence, the question of

implied repeal of the provisions of Section 33(1)(j) of the MRTP Act,

1969 on account of the provisions of Section 9A of the Customs Tariff

Act, 1975 does not arise.

It is thus seen that the provisions relating to anti-dumping

contained in the Customs Tariff Act do not in any way affect the

power or jurisdiction of the MRTP Commission. The Import Control

Act and the Customs Tariff Act on the one hand and the MRTP Act

on the other operate in different independent fields and the authority

under one has no jurisdiction over the other. In other words, their

paths do not cross each other. While the provisions of Anti-dumping

Act are concerned with the levy of anti-dumping duty, the MRTP Act

in the present case would be concerned with the agreements between

the parties which relate to the restrictive trade practices. Therefore, it

would be incorrect to say that the incorporation of the anti-dumping

provisions ousts the jurisdiction of the MRTP Commission to inquire

and pass orders, inter alia, with regard restrictive trade practice in

India.

It was submitted that import by the Indian party from Indonesia

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at predatory prices required the agreement for import to be registered

as per Section 33 (1)(j) of the Act. On the facts of this case, we are

not inclined to agree that such a case is made out. As far as Section

33(1)(j) is concerned, there must be an agreement between the foreign

seller and the Indian importer to sell goods at such prices as would

have the effect of eliminating competition of a competitor, i.e., here

the Indian industry. What seems to have happened here is that the

monopolistic Indian undertakings are now having to face competition.

The quantum of import in the present case is a small fraction of the

total float glass which is manufactured and sold in India. The

reduction in prices of the Indian importer is to the benefit of the

Indian customer. It is only if there is an agreement between the Indian

importer and the foreign seller which has such an effect that the

production in India of float glass by efficient Indian industry would

have to stop and such stoppage is considered prejudicial to the public

interest, can an order under Section 12-A or Section 37 be passed. It

is the case of the petitioners that the Indian manufacturers have

formed a cartel of their own and are charging high prices because of

lack of competition. It is alleged that the Indian manufacturers are

making much profits and despite import of float glass having taken

place for the last 5-10 years the Indian industry has not suffered. On

the other hand, the volume of sales has increased and the profit of the

Indian producers not decreased. Under these circumstances, it was

contended, the passing of the injunction was wholly uncalled for.

Import of material at prices lower than prevailing in India

cannot per se be regarded as being prejudicial to the public interest. If

the normal or export price of any goods outside India is lower than the

selling price of an indigenously produced item then to say that the

import is prejudicial to the public interest would not be correct. The

availability of goods outside India at prices lower than those which

are indigenously produced would encourage competition amongst the

Indian industry and would not per se result in eliminating the

competitor, as was sought to be submitted by the respondents.

It is while dealing with a complaint relating to restrictive trade

practice that the MRTP Commission has the jurisdiction to grant

temporary injunction under Section 12-A(1). It is only on the basis of

proof, and not mere allegation, and on the basis of an inquiry before

the Commission that any trader or class of traders is carrying on a

restrictive trade practice which is likely to affect prejudicially the

public interest or the interest of any trader, class of traders or traders

generally or of consumers that the Commission would have

jurisdiction to grant a temporary injunction restraining any

undertaking or person from carrying on any restrictive trade practice.

While the Commission has power to grant ex-parte temporary

injunction, but in view of Explanation II to Section 12-A, whereby the

provisions of Rule 2-A of Order XXXIX of the Code of Civil

Procedure, 1908 are made applicable, for the grant of temporary

injunction the Commission normally ought to give notice and hear the

respondents before passing an order of injunction. What is, however,

important is that the conditions stipulated in Section 12-A(1) have to

be satisfied before an order for injunction can be passed. In other

words, it has to be proved that the respondents before the Commission

is carrying on or about to carry on a restrictive trade practice which

will be prejudicial to the public interest or to the interest of traders etc.

before an order for injunction can be issued. Merely because an

industry will finds itself unable to be able to compete with imports

from outside can be of no ground for exercising jurisdiction under

Section 12-A(1). It is only if the trade practice which is being

impugned is such that would fall within the four corners of Section

2(o), which defines restrictive trade practice, can the Commission

grant an injunction. The facts on record do not indicate any

justification for any interim order being passed in the present case.

Furthermore, the impugned order passed against the foreign

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manufacturers of float glass, who do not carry on business in India is

clearly contrary to the provisions of Section 14 of the Act and, as

such, cannot be sustained.

In our opinion, the MRTP Commission has no extra territorial

jurisdiction. The action of an exporter to India when performed

outside India would not be amenable to jurisdiction of the MRTP

Commission. The MRTP Commission cannot pass an order

determining the export price of an exporter to India or prohibiting him

to export to India at a low or predatory price.

The matter may be examined from another angle. In this case,

there is a sale of float glass by the exporter in Indonesia. If the float

glass was ready and available, then being ascertained goods the sale

would be regarded as having taken place where the goods existed at

the time of sale, i.e., in Indonesia. If the glass had to be manufactured

and not readily identifiable, then the sale would take place outside

India when the goods are appropriated to the contract by the foreign

exporter. Here the appropriation would take place in Indonesia when

the glass is earmarked and exported to India. In either case the MRTP

Commission would have no jurisdiction to stop that sale. If the said

sale cannot be stopped and the import policy permits the Indian

importer to import on payment of duty then we fail to see what

jurisdiction the MRTP Commission can possibly have till a restrictive

trade practice takes place after float glass is imported into India.

It is not as if the Indian industry has no remedy against goods

being exported to India at predatory prices. It is because of the need

for such a provision that the Customs Act was amended and

anti-dumping provisions were incorporated. Recourse to this was

taken by the respondents but then that remedy was not pursued. At

this stage, it is relevant to refer to the provisions of Section 11 of the

Customs Act. The said Section gives the Central Government a

power to prohibit importation or exportation of goods, if it is satisfied

that it is necessary to do so for any of the purposes specified in sub-

section (2). Under sub-section (2), such prohibition can be for the

purpose of establishment of any industry (sub-clause (i)); preventing

serious injury to domestic production of goods of any description

(sub-clause (j)); the compliance of imported goods with any laws

which are applicable to similar goods produced or manufactured in

India (sub-clause (s)); the prevention of the contravention of any law

for the time being in force (sub-clause (u)) and any other purpose

conducive to the interest of general public (sub-clause (v)) Inasmuch

as, the import into the country is, inter alia, governed by the Customs

Act and the power to prohibit or not to prohibit the importation of any

goods is with the Government, then unless and until, a law

prohibiting import is infringed, it is difficult to perceive as to how the

MRTP Commission can prevent the importation of the goods. In this

connection, it is also useful to refer to Section 33(3) of the Act which

reads as under:

"No agreement falling within this section shall be subject to

registration in accordance with the provisions of this Chapter if it

is expressly authorized by or under any law for the time being in

force or has the approval of the Central Government or if the

Government is a party to such agreement."

Inasmuch as the importation of float glass is permitted by law,

under the provisions of the Customs Act and the Import Control Act,

then an agreement in relation to such an import may not be liable to be

registered under the provisions of the Act. It is only in respect of float

glass, which is imported and thereafter if in respect to that a restrictive

trade practice is indulged can the MRTP Commission have

jurisdiction qua post import Indian end of the transaction.

Conclusions :

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From the aforesaid discussion and reasons, we arrive at the

following conclusions:-

1. Anti-dumping provisions do not per se oust the jurisdiction of

the MRTP Commission.

2. The MRTP Commission can, inter alia, take action whenever a

Restrictive Trade Practice is carried out in India in respect of

imported goods or otherwise.

3. It is only in respect of the Indian leg of the restrictive trade

practice, can an order under Section 12 A and/or Section 37 be

passed.

4. Under Section 33 of the Act what can be registered is only an

agreement in regard to which any party to an agreement carries

on business in India [Section 35 Explanation I]. But this does

not mean that if an agreement is entered into outside India and

which results in a Restrictive Trade Practice in India, the MRTP

Commission has no jurisdiction. The "effects doctrine" will

apply and Section 2(o) read with Section 2(u) and Section 37

gives jurisdiction to the MRTP Commission to pass appropriate

orders qua the Restrictive Trade Practice in India. The MRTP

Commission, in such a case, may not be able to stop import but

there can be order imposing post import restrictions such as, for

example, not to sell imported goods in India in such a manner

which will be regarded as a restrictive trade practice under

Section 37.

5. In Explanation I to Section 35 the use of the words "shall be

deemed to be an agreement within the meaning of this

section." and the time-frame for registration clearly

indicates that Section 33 and Section 35 apply only to Indian

agreements or agreements in India and, therefore, it became

necessary to incorporate Explanation I so as to enlarge the

ambit and give extra territorial jurisdiction in relation to those

agreements which relate to performance of services in India and

any party to that agreement carries on business in India.

6. On the facts of this case, the impugned order passed by the

MRTP Commission against the Indonesian exporters cannot be

sustained and is set aside

Appeals are disposed of in the aforesaid terms. Parties to bear

their own costs.

Civil Appeal No. 3562 of 2000 :

Interim order of the MRTP Commission restraining the appellant

from dispatching, directly or indirectly, soda ash to India is the subject

matter of challenge in this appeal.

The complainant M/s Alkali Manufacturers Association of

India (AMAI for short) had filed a complaint before the MRTP

Commission under Section 33(1)(d), Section 36-A and Section 40 read

with Section 2(i) & (o) of the MRTP Act. The Complainant

Association had 34 members carrying on the business of Soda Ash in

India. In the complaint, it was stated that the Soda Ash was being

manufactured by six companies in India and was being sold to the

Indian consumers at a net price of Rs. 8190 to Rs. 8320 PMT net of

excise. It was alleged that the appellant M/s American Natural Soda

Ash Corporation (hereinafter referred to as ANSAC) consisted of six

producers of natural Soda Ash who have joined together to form an

Export Cartel by virtue of a Membership Agreement amongst them

entered into in America on 8th December, 1983. By this agreement, the

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six producers had agreed that all export sales by them or by any of their

subsidiaries will be made through ANSAC which was set up as a

Corporation in accordance with the provisions of the United States

Export Trade Act, 1918. It was further alleged in the complaint that

ANSAC in an attempt to invade the Indian market and undercut the

Indian producers, it sold American Soda Ash to Indian consumers at an

unrealistically low price of US $ 132 PMT-CIF. With a view to

circumvent the prohibition in Indian law against monopolistic,

restrictive and unfair trade practices, a strategy had been adopted by

ANSAC by selling American Soda Ash to Indian consumers through

the front of one M/s G. Premjee of Singapore in whose favour the

Indian producers had opened letters of credit. According to this

complaint, there was a bulk sale of soda ash by ANSAC to the Indian

Consumers through the conduit of M/s G. Premjee of Singapore. On

the basis of these averments, namely, that ANSAC was a Cartel of

American Soda Ash Producers and was likely to affect maintenance of

prices at reasonable and realistic levels in India and with a view to

adversely affect the local production and availability of Soda Ash, the

MRTP Commission should enquire against this restrictive and unfair

trade practice and grant an ex-parte injunction restraining ANSAC from

despatching the goods. On the basis of these allegations, the MRTP

Commission on 9th September, 1996 passed an ad-interim injunction,

which was subsequently confirmed by it, directing ANSAC not to

indulge in the practice of cartelisation by exporting soda ash to India in

the form of cartel directly or indirectly. The order further stated that it

was without prejudice to the final outcome of the said enquiry as well

as to the rights of the importers or exporters in the individual capacity

to export soda ash to India. This order has been affirmed by the

Commission by it's order of 9th March, 2000.

While denying that ANSAC was a cartel or that export of Soda

Ash to India was violative of any of the provisions of the MRTP Act,

ANSAC has submitted in this appeal that the MRTP had no extra-

territorial jurisdiction and furthermore in view of the provisions of the

anti-dumping law, the MRTP Commission had no jurisdiction to decide

the case.

This appeal was heard along with Civil Appeal No. 2330 of 2000

- M/s Haridas Exports v. All India Float Glass Manufacturers

Association. In Haridas Exports case common contentions raised in

this appeal regarding jurisdiction of the MRTP Commission and the

scope and ambit of the MRTP Act vis-a-vis Anti Dumping Duty have

been dealt with. We now propose to deal with the allegation of export

by the appellant, which is alleged to be a cartel, and whether there was

justification for granting the injunction.

Some more undisputed facts, which are relevant may first be

mentioned. ANSAC was set up under the Webb Powerence Act of

U.S.A. as an export agency, the six producers of soda ash in U.S.A.

being it's members. Like a canalising agency exports of natural soda

ash by these producers cannot be made by the members individually.

Exports of soda ash from U.S.A. are made by the canalising agency,

namely, the appellant.

While the Indian companies manufacture synthetic soda ash, the

American companies export natural soda ash which is cheaper to

produce than the Indian soda ash. Since its inception in 1983, the

appellant had sold for export to India only one consignment equal to

1.44 per cent of the annual production of India, and it is in respect of

this consignment that the MRTP Commission issued injunction

restraining it's import. Till today, therefore, no soda ash has been

exported by the appellant to India.

It was submitted by the respondent that the agreement of 1983

formed a cartel and was registrable under Section 33(1)(d) of the MRTP

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Act.

In so far as Section 33 (1) (d) is concerned, the scheme appears to

be that every agreement falling under Section 33 (1)(a) to (l) is

presumed to be one relating to restrictive trade practice and is subject to

registration. An agreement falling under Section 33 need not

necessarily be one in writing inasmuch as Section 2(a) defines an

agreement as including any arrangement or understanding as well.

Therefore, if apart from written agreement there is an arrangement or

understanding amongst the sellers or the purchasers with regard to the

purchase or sale of goods to be only at the prices or on terms or

conditions agreed upon amongst them then such an agreement would

require registration. Section 33(1)(d) regards an agreement to be one

relating to restrictive trade practice if such agreement relates to

purchase or sale of goods or to tender for sale or purchase of goods only

at prices or on terms or conditions agreed upon amongst the sellers or

amongst the purchasers. Such an agreement amongst the sellers or

amongst the purchasers relating to purchase or sale or to the prices in

respect thereof may be regarded as the formation of a cartel.

Section 35 specifies the period within which every agreement

falling under Section 33 becomes registrable. As we have already

noticed, Explanation I would make such an agreement registrable only

when at least one party to the agreement carries on business in India.

On an agreement being filed under Section 35 particulars are furnished

to the Director General who is required to maintain a register under

Section 36. Section 37 then gives the jurisdiction to the Commission to

make an inquiry, whether an agreement is registered or not, in order to

find out if a restrictive trade practice is prejudicial to the public interest.

The effect of this is that by not registering an agreement falling under

Sections 33 and 35 the Commission is not divested of its jurisdiction of

exercising its powers under Section 37. The opening words of Section

37 make it quite clear that an inquiry into any restrictive trade practice

can be made by the Commission even in relation to an agreement which

is not registered. Therefore, once an agreement comes to the notice of

the Commission which is to be regarded as containing a restrictive trade

practice then the Commission is under an obligation to find out and

determine whether in its opinion the practice is prejudicial to the public

interest. It is only if the Commission is satisfied that there is prejudice

to the public interest then the Commission has the jurisdiction to direct

either that the practice shall be discontinued or shall not be repeated or

to hold that any such agreement which is prejudicial to the public

interest shall be void in respect of such restrictive trade practice or that

the said agreement shall be modified in such a manner as may be

specified. If remedial steps have been taken then, as contemplated by

Section 37 (2), no order need be passed by the Commission. One

further restriction on the power of the Commission to pass order is also

contained in Section 37 (3) (b) which provides that if a trade practice is

expressly authorised to be carried on by any law for the time being in

force then no order shall be passed under Section 37. This Explanation

is in addition to the provisions of Section 38 which deals with cases

relating to presumption as to the agreement of the types mentioned

there in being in the public interest.

The impact of reading of the provisions together is that what is

sought to be targeted in relation to restrictive trade practice is not the

nature or the factum of the restriction but such restriction should not be

prejudicial to the public interest. For example, an agreement may be

entered into amongst the purchasers in order to ensure constant supply

of goods at a reasonable rate. Such an agreement even though it may

fall under Section 33 (1) (d) would not be regarded as being prejudicial

to the public interest.

It is in this context that when we examine the provisions of

Section 12-A, we find that the power of the Commission to grant

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temporary injunction arises only after it is satisfied that a restrictive

trade practice or unfair trade practice is being carried on which is likely

to affect prejudicially the public interest or the interest of trader or class

of traders etc. It is only with a view to prevent the causing of a

prejudicial effect that an interim order can be passed by the

Commission under Section 12-A.

As we have already seen the Act does not have any extra

territorial operation. An agreement which is referred to under Section

33 (1) (d) must, therefore, be of a kind in which a person in India is a

party. This is clear from the bare reading of Explanation I to Section

35. This means that for an agreement to fall within the ambit of Section

33(1)(d) and in respect of which the Commission can exercise its

powers under Section 37 a person in India must be regarded as one of

the sellers who is a person to such an agreement. This is clear from the

use of the words "any party to the agreement carries on business in

India" occurring in Explanation I to Section 35. A Careful reading of

Section 33(1)(d) indicates that it refers to two classes of agreements.

One class is an agreement to purchase goods or to tender for the

purchase of goods only at prices or on terms or conditions agreed upon

between the purchasers. The other class is an agreement to sell goods

or to tender for the sale of goods only at prices or on terms or

conditions agreed upon between the sellers. In other words, Section

33(1)(d) refers to the agreements which have the effect of forming

either a buyers cartel or a sellers cartel. This sub-section does not refer

to or deal with agreements of sale and purchase between sellers and

purchasers.

In the case of import of soda ash, the contention is that the

appellant is a cartel in America which was proposing to sell soda ash to

India at very low prices with a view to eliminate competition and to

adversely affect the Indian industry. Any agreement of sale by the

appellant to an Indian purchaser would not attract the provisions of

Section 33(1)(d), which refers only to cartelising agreements and not to

agreements of sale and purchase. But the MRTP Commission will have

jurisdiction under Section 37 to pass orders if such a sale was to amount

to being a restrictive trade practice. For the Commission to have

jurisdiction to pass such an order, whether interim or final, it must come

to the conclusion that it is in public interest to do so. It is to be borne in

mind that public interest does not necessarily mean interest only of the

industry. Unless and until it can be demonstrated that an efficient

Indian industry would be forced to shut down or suffer serious loss

resulting in closure or unemployment, the Commission ought not to

pass an injunction restraining an Indian party from importing goods

from a cartel at predatory prices. Importing goods at a price lower than

what is available in India is not per se illegal. We have provisions

under the Customs Act which enables the Government to impose anti-

dumping duties with a view to protect the Indian industry.

Nevertheless, the era of protectionism is now coming to an end. The

Indian industry has to gear up so as to meet the challenges from abroad.

If the cartel is selling goods to India and still making profit then it will

not be in the interest of the general body of the consumers in India to

prevent the import of such goods. The remedy of the Indian industry, in

such an event, is to take recourse to the provisions under the Customs

Act in relation to the levy of anti-dumping duties.

A cartel is formed, inter alia, with a view that members of the

cartel do not wage a price war and they sell at an agreed or uniform

price. There may perhaps also be a cartel where members divide the

territories to which each of them can export. There is little doubt that

the object of an export cartel is to capture a market even if at first, it

may result in a loss to the exporter.

The competition law in the form of MRTP as it stands today does

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not contain any provision, which can give it jurisdiction to interfere

merely with cartel formation. Formation of cartel which takes place

outside India is outside the territorial jurisdiction of the MRTP. The

Indian importer obtaining goods at a low price does not contravene any

law. He has obtained a good bargain.

We need not go into the question whether anti-dumping

provisions in the Customs Act can be an effective remedy against such

cartelisation. But if the cartel carries out Restrictive Trade Practice in

India or it's actions have the effect of a Restrictive Trade Practice being

carried out in India, then the MRTP Commission will get jurisdiction to

act under Section 37(1) of the MRTP Act.

We make it clear that we are expressing no opinion as to whether

the appellant is a cartel or on the question of predatory prices for the

reason that we are satisfied that here no case had been made out by the

respondents for the grant of injunction against the appellant. The

injunction issued against the appellant was not only against the

provisions of Section 14 of the Act but even on facts as alleged no case

had really been made out for any order under Section 12-A or Section

37 of the Act more so when no import of soda ash into India from the

appellant had, in fact, taken place. On the other hand, prima facie the

allegation of the appellant that it is the respondents which have formed

a cartel and do not welcome any competition does merit consideration,

perhaps in another case.

For the aforesaid reasons, this appeal is allowed with costs.