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CASE NO.: Appeal (civil)  3640 of 1998

PETITIONER: M/s. Premier Engineers                   

RESPONDENT: M/s. Taj Rubber Industries & another  

DATE OF JUDGMENT: 12/08/2005

BENCH: ASHOK BHAN & S.B. SINHA

JUDGMENT: J U D G M E N T

BHAN, J.                  This appeal by grant of leave is directed  against the order dated 16.5.1997 passed by the  Monopolies and Restrictive Trade Practices  Commission [for short "the MRTP Commission"] in  Compensation Application No. 53 of 1993 wherein it  has allowed the application for compensation under  Section 12-B of the Monopolies and Restrictive Trade  Practices Act, 1960 [for short "the MRTP Act"]   filed by the Respondent No. 1 and has directed the  appellant to refund to the first respondent a sum of  Rs. 1,04,164/- with interest @ 18% per annum plus  compensation of Rs. 5,000/-.

Shortly stated the facts are:

M/s N.A. Rubber Industries through its partner  Shri Nasiruddin, a partner of the applicant firm \026  respondent as well, placed an order in December,  1980 for the supply of one rubber mixing machine  of  size 14" x 36".   Appellant agreed to supply the  said machine to the respondent by its letter dated  10.12.1980.  In terms of acceptance, the appellant  was to supply the said machine for Rs. 55,000/- ex- factory price by May 1981 and the respondent was to  supply certain input components like electric motor,  reduction gear box and fluid coupling to be fitted  to the machine by the appellant as these input  components were not manufactured by the appellant.   Respondent paid a sum of Rs. 2,000/- for which a  receipt was given by the appellant.  Later on a sum  of Rs. 5,000/- was also paid by the respondent on  16.3.1981.  N.A. Rubber Industries was closed and  thereafter respondent firm M/s Taj Rubber Industries  was started in its place.  On 21.2.1985 the  appellant informed the respondent that the machine  would be ready and supplied within a week. The  respondent thereafter paid Rs. 50,000/- in May 1985  and approached the appellant for taking delivery of  the machine.  Due to certain reasons which were  accepted by both the parties the machine could not  be supplied till May 1990.  Ultimately, the machine  was supplied in the month of October, 1990.   According to the respondent the aggregate amount of  Rs.  80,184/- was paid by it to the appellant.  It

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was alleged that the respondent had paid Rs.  23,980/- for procuring and supplying the electric  motor, fluid coupling, reduction gear box etc..   

       Respondent filed an application under  Section 12-B of the MRTP Act against the appellant  alleging therein that the machine supplied after a  considerable delay and it was defective, non-  working and old/second hand machine.  It was fitted  with old and second hand parts and it has failed to  fit the "oil system" and thereby appellant has  indulged in unfair trade practice under Section 36 A  (1) of the MRTP Act.

Appellant in its detailed reply apart from  replying on merits took five preliminary objections:

1.      That since the order was placed on the  appellant in the year 1980 i.e. before the  amendment of MRTP Act relating to unfair  trade practice (Section 36-A) and  compensation (Section 12-B) which were  inserted with effect from 1st August, 1984,  the action was not maintainable as these  amendments do not have retrospective  operation and, therefore, the compensation  application was not maintainable.

2.      The order of machine in question was not  placed by the applicant but by the N.A.  Rubber Industries.  There being no privity of  contract between the applicant and the  appellant firm, the compensation application  was not maintainable.

3.      There is "not even a single averment  disclosing any unfair trade practice."

4.      The controversy must be adjudicated upon by a  civil court, as it relates to enforcement or  breach of contract between the parties.

5.      An earlier application of the applicant had  been closed by the Commissioner and thus the  present application was barred by the  principle of res judicata.

On merits, the allegations made against the   appellant were controverted and the appellant denied  its liability to compensate the respondent.

The MRTP Commission overruled the preliminary  objections raised by the appellant and came to the  conclusion that the appellant had indulged in unfair  trade practices as there was abnormal and  unconscionable delay in supplying the machine by  almost ten years and that the machine did not work  even for a single day and was suffering from various  defects.  Allegations made that old second hand  parts had been fitted in the machine were also  accepted.  Based on these findings the MRTP  Commission directed the appellant to refund a sum of  Rs. 1,04,164/- to the respondent with interest at  the rate of Rs. 18% per annum w.e.f. 16.10.1990 upto  the date of its payment.  Rs. 5,000/- was awarded by

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way of compensation for mental agony and harassment  suffered by the partner of the respondent firm.

Aggrieved against the order of MRTP Commission  the present appeal has been filed.

Counsels for the parties have been heard at  length.

Counsel appearing for the appellant reiterated  the submissions made on behalf of the appellant that  the order of the MRTP Commission deserve to be set  aside and the application filed by the respondent  under Section 12-B dismissed.  Without going into  the preliminary objections which have been raised,  this appeal deserves to be allowed on another point  as in Colgate Palmolive (India) Ltd. Vs. MRTP  Commission & Ors., 2003 (1) SCC 129, in which one of  us [Justice Sinha] was a member, analysed the  Section 36-A of the MRTP Act and observed that a  bare perusal of Section 36-A would clearly indicate  that the following five ingredients are necessary to  constitute an unfair trade practice:  

1.      There must be a trade practice [within a  meaning of Section 2 (u) of the Monopolies  and Restrictive Trade Practices Act]. 2.      The trade practice must be employed for the  purpose of promoting the sale, use or supply  of any goods or the provisions of any  services. 3.      The trade practice should fall within the  ambit of one or more of the categories  enumerated in clauses (1) to (5) of Section  36-A. 4.      The trade practice should cause loss or  injury to the consumers of goods or services. 5.      The trade practice under clause (1) should  involve making a ’statement’ whether orally  or in writing or by visible representation."

After having observed so the Court set aside  the order of the MRTP Commission in which the  Commission had held that actual loss and injury are  not the essential ingredients of the unfair trade  practice.  It was observed that causation of loss or  injury thus is a sine qua non  for invoking the  principles of Section 36-A of the MRTP Act.

In Hindustan Ciba Geigy Vs. Union of India &  Ors., 2003 (1) SCC 134, again Sinha, J. sitting in a  combination of three-Judge Bench held that causation  of loss or injury to the consumer was a must for  attracting the provisions of Section 36-A of the  MRTP Act.  The order passed by the Commission was  set aside wherein the Commission had taken the  contrary view.  It was observed:

"7.     A bare perusal of the  aforementioned provision would  clearly go to show that an unfair  trade practice would mean a trade  practice which for the purpose of  promoting the sale, use or supply  of any goods or for the provision

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of any services, adopts one or  more the practices specified   therein adopted and as a result  thereof loss of injury has been  caused to the consumers of such  goods or services, either by  eliminating or restricting  competition or otherwise.  It  would furthermore clearly go to  show that the two conditions  precedent mentioned therein are  required to be read conjunctively  and not disjunctively."   After having said so this Court observed that the  Commission had committed a manifest error in holding  that the actual loss or injury need not be caused to  the consumers.  

               In the present case, we find that in the  application filed by the applicant/respondent apart  from saying that the defective machinery fitted with  old/second hand parts had been supplied after  considerable delay the respondent did not say a word   regarding the actual loss and injury or a notional  loss caused to the respondent.  There is nothing on  the record to suggest that any actual loss or injury  was caused to the respondent.  The application filed  by the applicant/respondent was not only cryptic but  lacked in particulars to fall within the definition  of unfair trade practice as defined in Section 36-A  read with Section 2 (u) of the MRTP Act.  The MRTP  Commission in its order has not adverted to this  fact and has not recorded a finding as to the any  actual loss or injury caused to the respondent.

       Since the respondent in the present case failed  to aver as well as prove that actually any loss or  injury was caused to it which was the sine qua non  for invoking the provisions of Section 36-A, this  appeal is accepted.   The MRTP Commission has also  not recorded any finding as to whether any actual  loss or injury or a notional loss was caused to the  respondent.   Accordingly, impugned order is set  aside and the appeal is allowed.  There shall be no  order as to costs.