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PETITIONER: HINDUSTAN LEVER LTD.

       Vs.

RESPONDENT: COLGATE PALMOLIVE (I) LTD. & ANR.

DATE OF JUDGMENT:       17/12/1997

BENCH: S.C. SEN, M. JAGANNADHA RAO.

ACT:

HEADNOTE:

JUDGMENT:                THE 17TH DAY OF DECEMBER, 1997 Present:                Hon’ble Mr.Justice Suhas C.Sen                Hon’ble Mr.Justice M.Jagannadha Rao Harish  N.Salve,   Sr.Adv.,  Rajesh  Malhotra,  Dalip  Kumar Malhotra, Advs. with him for the appellant Soli J.Sorabjee,  Iqbal  Chaqla,  Kirit  Rawal,  Sr.  Advs., R.Karanjawala,  S.Ganesh,   Ms,  Ruby   Ahuja,   .   Arunabh Chawdhury, and  Ms. Manik  Karanjawala, Advs.  with them for the Respondents,                       J U D G M E N T      The following  Judgment of  the  Court  was  delivered: M. JAGANNADHA RAO,:.      Hindustan Lever  Ltd. has filed this Civil Appeal under Section 55  of the Monopolies and Restrictive Trade Practice Act. 1969  thereinafter called the Act) against the order of the Monopolies  &  Restrictive  Trade  Practices  Commission thereinafter called  the Commission). The order is dated 576 November, 1997  and is  passed in Injunction Application No. 336 of 1997 filed in the Main Case No. 405 of 1997.      The two  respondents are colgate Palmolive (India) Ltd. and Miss  Pallavi S.  Desai. The  said respondents  were the complainants 1  and 2 respectively in the main case No. 4054 of 1997  which is  pending before the Commission . By virtue of the  impugned order,  certain directions in the nature of temporary injunction  have been  granted in  favour  of  the respondents complainants and against the appellant. It is to be noted  further that  the Commission.,  which  directed  a panel of  experts to  give  it    its  onion  on  the  issue involved, made  it clear  that  the  order  that  was  being passed was a "temporary interim order "be  and a final order on the  injunction Application  would be  passed later after receiving the opinion at the experts. The Commission said:      " If the parties are agreeable, the      order  passed  at  present  may  be      treated  as   a  purely   temporary      interim    order     subject     to      modification, variation or vacation      after perusing  the opinion  of the      aforesaid panel of experts".

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    We shall  state the  brief facts and the conclusions pf the Commission  in so  far as  they  are  material  for  the purposes of this appeal.      The first  respondent, Colgate-Palmolive  (India)  Ltd. manufactures Colgate  Dental Cream.  The appellant  too  has various brands of tooth paste but we are concerned here with the New  Pepsodent’ toothpaste  introduced by  the appellant recently  into   the  market.   The  appellant   had   given advertisement in  the print,  visual,  and  boarding  media, claiming that  its toothpaste  "new Pepsodent"  was  "102  % better  than  the  leading  toothpaste".  The  advertisement contains a  "schematic’ picture  supposedly  of  samples  of saliva    It  depicts on  one side  of the  advertisement  a pictorial   representation of  the germs  in a  sample taken from the  mouth of  a person  hours after brushing with "the leading toothpaste." And another pictorial representation is or the  germs from  a similar sample taken from the mouth of another person  using the  "New Pepsodent". The former shows large number  of germs  remaining in  the sample  of  salive where the  leading toothpaste  is used  and the latter shows almost neglible  quantity of  germs in  the sample of salive where New  Pepsodent’ is used. The advertisement also speaks of tests  conducted at  the Hindustan L ever Dental Research Centre and  says that  the appellant’s product is based on a Germ check  formula which  is twice as effective on germs as the leading toothpaste and that it was, in fact, 102% better in fighting germs. In the TV advertisement of the appellant, two boys  are asked  the name  of the  toothpaste with which they  had   brushed  their   teeth  in   the  morning.   The advertisement shows Pepsodent 102% superior in killing germs which is  being used  by one  of the by. So far as the other boy is  concerned, who  is using another toothpaste which is inferior in  killing germs,  the lip  movements according to the respondents, indicated that the boy was using "Colgate " though the voice is muted. Additionally, when this muting is done there  is a  sound of the same jingle as is used in the usual Colgate-  advertisement,  leaving,  according  to  the complainants,. doubts  in the  minds  of  the  viewers  that "pepsodent" was being compared with Colgate.      On these and other allegations, the complaint was filed by  the  respondents  before  the  Commission  relying  upon Sections 10,  36A and  36B of the Act and in particular upon Section 36A  (viii) and (x) of the Act. The respondents also filed  an  Injunction  Application  336/1997  for  grant  of temporary Injunction  under Section  12A if  the Act, It was contended that  the appellant  was guilty  of  unfair  trade practice under  Section 36A  in as  much  as  the  appellant allegedly adopted,  for the  purpose of promotion sales, use or supply  of its  goods,  an  unfair  method  or  deceptive practice by making a representation as stated in Section 36A (viii) and  giving false  or misleading  facts "disparaging" the goods of the appellant as stated in Section 36A m(x).      The appellant,  while defending  itself, contended that there was  no unfair  trade practice  practiced by  it under clause (viii)  or (x)  of Section  36A and  that no case for grant of  temporary Injunction  under Section  12A  was made out. The  appellant contended  that  the  complainants  were bound to  prove that the facts depicted in the advertisement as to 102% superiority of Pepsodent were false. Unless  such falsity was proved in the     I.A. no  temporary  injunction could be granted.      The Commission  in its  order dated  9th/6th  November. 1997 after referring to the facts and contentions, held that the  injection   based  on   Sections  36B   and  10  as  to maintainability of the complaint was not tenable because the

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Commission was empowered, even to act upon its own knowledge or  information  for  purpose  of  inquiry  under  the  Act. Further, the 2nd complainant, who was a consumer, could rely upon Sections  10 and  36B. It  found that  inasmuch as  the overall market  share of Colgate was shown to be 59 % in the second quarter of the year 1997 and the appellants share was 27 %  , the  reference in  the advertisement  to a ’leading’ toothpaste must  be taken  to be  a reference  to   ’Colgate dental cream  of the  1st  complainant  and  this  was  also obvious from  the use  of the  word ’the  ’ before  the word ’leading; in  the TV  and newspaper  advertisements. The  TV advertisement with  the Two  boys shown alongwith the jingle was  sufficient   to  identify  the  leading  toothpaste  as Colgate, according to the Commission.      As to  the ’anti-bacterial’ superiority, the Commission stated that  the inference  was that  the appellant  was not merely treating  its toothpaste as superior but was treating Colgate as  102% ’interior’. It was not necessary that there should be  any direct reference about inferiority and it was sufficient if  there was  an allusion,  hint  etc,  to  that effect  and   such  a  reference  prims  facie  amounted  to ’disparagement’ for purposes of Section 36A(X). Adverting to the contention  of the  appellant that  there  would  be  no ’disparagement;’ if  the factual  cata relied  upon  by  the appellant  was   true,  the  Commission  observed  that  the appellant has  produced  opinions  of  "certain  experts  to controvert the  case of  Colgate",  that Colgate,  have also brought  on   record  certain   test-regarts  from  certains institutions  including   one  from    Haffkine  Institute., According to  the respondents, there was not much difference between the  Pepsodent (old version) and the ’New Pepsodent’ marketed buy  the appellant. As the old one was not superior to  Colgate,   the  new  one  was  also  not  superior.  The appellants also  contended before  the Commission  that  the protocols adopted  for testing  the  germ-content  were  not uniform and  that the  complainant a  protocols were not the correct ones.  Adverting to these protocols., the Commission referred to the objection of the appellant, as follows:      At this state, it may be noted that      the       case        of        the      applicants/complainant   is    that      Colgate offered  to the  respondent      that  the  test  of  the  concerned      toothpaste products of both colgate      and  the   respondent   should   be      carried out  by certain experts who      should decide  their own  protocols      for the  puspcse. It  appears  that      the respondent  has not  agreed  to      it"      Having states as above in regard top the protocols, the Commission noticed  that so  far as  the  claims  of  102  % bacterial superiority  was concerned,  it was a matter which required a  highly scientific approach and should be decided by independent  experts and  it would  be hazardous  for the Commission to  venture even  a prima facie. It then referred to the  voluntary suggestion of the appellant for appointing a panel of experts. as follows:      " In fact , the respondent has also      volunteered in  its reply that this      may be  done by  a team of experts.      That may  be done  at the  stage of      final  hearing.   If  the   parties      agree,  it   can  be  done  at  the      interim stages  also, provided each

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    side furnishes the names of experts      with their consent to give opinion,      if so  desired by  the  Commission,      within  the   reasonably  specified      time limit..."      Thus, by  adverting to the suggestion of the appellant, and relying  on the same the Commission felt that the claims of superiority  of the appellant and the respondent could be decided by  an expert body, which could submit its report in 4 or  5 months. For that purpose each side could suggest the name of  an expert and the Commission would nominate a third expert. Parties  were to  give the names in a fortnight, The commission then  stated that  thus was  a  purely  temporary interim order. It said that this was:      "a purely  temporary interim order,      subject to  modification, variation      or  vacation   after  perusing  the      opinion of the panel of experts-."      The Commission  therefore held  that  prima  facie  the reference in  the appellant advertisements were referable to Colgate and  that because  of the  claim  or  anti-bacterial superiority, a  orima facie  case  for  purpose  of  interim relief was  made. It referred to Colgate Palmolive Pvt. Ltd. Vs. Rexona  Pty. Ltd.  (1981) 37  ALR 391  (Australia) where temporary injunction  was granted  against making  such tall claims" till  the truthfulness  of the claim was established at the trial. The Commission, then went into the question of ’balance of  convenience’ and  held that  the representation through the  media, in  particular through the TV was likely to make  consumers take  the  appellants  claim  as  a  true statement’ If  not as  the gospel  truth’ and that there was evidence filed by Colgate showing that there was a reduction of 5%  of its sales in August 1997 and 8% in September 1997. The Commission observed that the appellant was not likely to suffer much  if interim  relief was  granted  and  if  fact, appellant would be saving on its advertisement expenses.      On the  basis of  the   above reasoning, the Commission granted a temporary interim injunction against the appellant from making  any reference  ’directly or  indirectly in  the appellants advertisement claiming anti-bacterial superiority and  also   from  making  any  ’specific  quantum’  of  anti bacterial superiority "till its claim of such anti bacterial superiority is  fully established".  This would  also be for protecting the Consumer’s interest. In the last paragraph of the order.,  the Commission  clarified that  the  injunction would apply   whether  the reference  to Colgate  was by any allusion or hint.      It is  against the  above order  of  temporary  interim injunction that  this appeal  has been  preferred.  We  have heard elaborate  arguments by  Shri  Harish  Salve  for  the appellant  and   of  Sri   Soli  J.  Sorabjee  for  the  1st Complainant  and   of  Shri   Iqbal  Chegla   for  the   2nd Complainant.      The   point    for   consideration   is   whether   the discretionary order  of temporary interim injunction granted buy the  Commission p[ending  the passing of final order sin the  Injunction   application  filled  by  the  respondents- complainants, is liable to be set aside or modified?      From the  facts set  out above,  it is  clear that  the Commission has granted a temporary injunction which is of an ’interim nature  and the  Commission is  yet to pass further orders in  the same injunction application, after receipt of the opinion  of the panel of experts. It is also to be noted that the  Commission proposed  the appointment  of an expert panel for  two reasons. The first reason was that both sides

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were relying  upon laboratory tests or opinions of their own experts. These  opinions were conflicting and the Commission had no  machinery of  its own  to verify  the claims  of the parties unless  a body  of experts could give its opinion to the  Commission.   The  second   reasons  according  to  the Commission was  that the  appellant itself  volunteered  and suggested  that such a panel of experts could be appointed.      There was  some  argument  before  us  by  the  learned counsel for  the appellant that appellant had nor agreed for the panel  as stated  in the  order. In  this behalf. we are satisfied that  what the  Commission had stated in its order is correct  and is  clearly borne  out by what the appellant had stated  in its  re[ply before  the Commission.  In fact, after the  Commission had passed its orders on 5/6 November, 1997, the  appellant gave  an advertisement  on 6.11.1997 in the press  to the effect that the Commission had appointed a panel of experts at the suggestion of the appellant.      It was, however, vehemently argued by Shri Harish Salve for the  appellant that  the 1st  complainant put forward it case upon  clause (x)  of Section 36A and under that clause, unless  it  was  "  proved"  by  the  complainant  that  the appellant had  " given false or misleading facts disparaging the goods.,  service or  trade" of  the 1st  complainant, it could not  be said,  even prima  facie, " that the appellant was guilty  of any  ’unfair trade  practice; referred  to in that  sub-clause.  Learned  counsel  relied  upon  Lakhanpal National Ltd.  vs. MRTS Commission _ 1989 (3) SCC 251- which has also  been referred to by the Commission in the impugned order and  to judgements  of Courts in UK and USA and to the principles of  law stated  in several  books, for contending that unless  it was  established by the complainant that the facts stated  in the  advertisement were ’false’ or  untrue’ it could not be said that there was unfair trade practice or disparagement. Learned  counsel also relied upon Section 12A of the Act which deals with grant of Temporary injunction by the  Commission  and  contended  that  the  said  provisions requires ’proof  of an  unfair trade practice’ and also that such practice  was likely  to  affect  prejudicially  public interest or the interests of traders or consumers generally.      On the  other  hand,  it  was  contended  by  Sri  Soli Sorabjee for  the respondent and by sri Iqbal Chagla for the 2nd respondent  that the  above contentions  are not correct and that  this was an appeal under Section 55 of the Act and the grounds  available in the appeal are the same grounds as specified in  Section 100 C.P.C  (before the 1976 Amendment) and that  the discretion  exercised by  the  Commission  was proper in  the circumstances  of the case, that the claim of the 1st   complainant was not only under Section 36A (k) but also under Section 36A (vii) and under the latter clause, it was sufficient  for the  purpose of  proving an unfair trade practice’ that  the appellant had made a representation in a form which purported to be a warranty or guarantee and which was materially  misleading or  that there  was no reasonable prospect that  such warranty  or guarantee  would be carried out. It was also argued that the conduct of the appellant in having voluntarily  proposed the  appointment of  a panel of experts has to be taken into account in deciding whether the Commission went wrong in directing an expert body. which was to be nominated as stated in the order, to give its opinion.      On a  consideration of  the above  contentions and on a careful appraisal  of the  season given by Commission we are of the  view that  the order  passed by the Commission was a purely discretionary  order and  was also  an interim  order p[ending  the   passing  of   a  final  order  of  temporary injunction and  is not  liable to be interfered with in this

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appeal. As  stated earlier,  a reading  of the  Commission’s order snows  that it  noticed that the appellant was playing upon opinions  of experts  to substantiate its claim of 102% superiority in  anti-bacterial action  while the respondent, 1st experts  to contradict the appellant’s claim. The matter being technical  in  nature,  if  the  Commission  felt,  as suggested by  the appellant  in its  reply, that  a panel of experts could  go into  the correctness  of rival claims and give its  opinion and  if the  Commission further  said that after the  opinion was given, parties could make their final submissions  in   the  Injunction  application  and  if  the Commission felt that till then an order of an interim nature should operate,  we do  not think  that it is a fit case for interference with  such a  discretionary order,  we  do  not therefore propose  to go into the merits of the contentions. Further, any  expression of  opinion by this Court on merits at this  preliminary stage  could  cause  prejudice  to  the claims and contentions of one or other of the parties.      For the  aforesaid reasons,  This appeal  fails and  is dismissed. We  may make  it clear  that  we  should  not  be understood as  having  stated  anything  on  the  merits  of contentions either  of the complainants or of the appellant. In the  circumstances of the case, there will be no order as to costs.