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PETITIONER: M/S VOLTAS LIMITED, BOMBAY.

       Vs.

RESPONDENT: UNION OF INDIA & ORS.

DATE OF JUDGMENT07/02/1995

BENCH: SINGH N.P. (J) BENCH: SINGH N.P. (J) AHMADI A.M. (CJ) MOHAN, S. (J)

CITATION:  1995 AIR 1881            1995 SCC  Supl.  (2) 498  JT 1995 (2)   261        1995 SCALE  (1)455

ACT:

HEADNOTE:

JUDGMENT: 1.  These  appeals have been filed under Section 55  of  the Monopolies and Restrictive Trade Practices Act, 1969  (here- inafter  referred to as ’the Act’) against the judgment  and order  of  the Monopolies and  Restrictive  Trade  Practices Commission (hereinafter referred to as ’the Commission’). 2.The  appellant  had  entered into  agreements  with  large number  of companies, who are respondents in  different  ap- peals,  in respect of distribution of different  machineries and equipments within different territories of  India.   The companies, 264 who  are  respondents, to the different  appeals  have  been manufacturing  different types of machines and  instruments, which   under  the  terms  of  the  agreements  are  to   be distributed by the appellant as the Marketing Company.   The appellant  has  been appointed as Buyer (Sole  Importer)  on the .terms and conditions mentioned in different agreements. 3.   On 26.11.1986, notices were issued under        Section 10(a)(iii) read with Section  37  of the Act, informing  the appellant that the agreements between the appellant and  the different  companies, some of which have their Head  Offices in  foreign  countries contain conditions  which  amount  to restrictive  trade  practices under clauses (a) and  (c)  of Section  33(1)  of the Act.  In the notices  aforesaid,  the terms  and  conditions  in different  agreements  which  are alleged  to be violative of Section 33(1)(a) and (c) of  the Act  were  reproduced.  Pursuant to the  notices  aforesaid, show  cause  was filed in different cases initiated  by  the Commission against the appellant.  Documents and  affidavits were also filed on behalf of the appellant in support of its stand that none of the agreements referred to in the notices issued  to  the  appellant  related  to  restrictive   trade practices,  calling  for  any action  under  the  Act.   The Commission,  however,  by the impugned  judgment  and  order

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directed  the  appellant  in  respect  of  each  of  the  15 enquiries to discontinue the restrictive trade practices  as mentioned  in the Notice of Enquiry, and not to  repeat  the same in future.  It was also directed that the objectionable clauses,  as  mentioned in the Notices be deleted  from  the respective agreements, within 8 weeks of the receipt of  the said order. 4.   All   the  appeals  were  heard  together,  since   the controversy, which has been raised, is more or less  similar in all the appeals, and as such facts are being referred  to from  Civil Appeal No. 2252 of 1994, which was heard as  the leading  case.  It appears that the agreement in  that  case had  been entered into between the appellant and  Respondent No.4  M/s.   Societe Genevoise D, Instruments  De  Physique, Geneve.  through its Secretary, on 29.11.1956. The  Director General  of  Investigation  and  Registration   (hereinafter referred to as the ’DG’) took objection in respect of  three of the clauses of the agreement and on his application being filed  before  the  Commission, notice  was  issued  to  the appellant  on 26.11.1986 saying that the following terms  of the  agreement  amounted  to  restrictive  trade  practices, within the meaning of the Act:               "2. The Buyer shall not sell the goods of  the               Seller  to any person who is not  residing  or               carrying on business within the Territory  nor               to any person residing or carrying on business               within the Territory for the purpose of resale               by such person outside the Territory."               "3. The Buyer shall use his best endeavours to               promote  the  interests  of  the  Seller   and               specifically  shall not deal in or sell  goods               which could compete with those of the Seller."               "6. For the consideration aforesaid the Seller               agrees  not  to sell any  goods  as  mentioned               before  to any individual or firm  within  the               territory   other  than  the  Buyer  and   all               enquiries  and orders received by  the  Seller               from  the Territory shall be referred  to  the               Buyer.  The Seller shall further not quote for               not deliver his goods to any firm outside  the               Territory for import into the Territory except               with the previous consent of the Buyer and  at               terms agreed upon with the Buyer." 5.   It is proper to refer to some of the provisions of  the Act. 5A.  Section 2(o) defines "restrictive trade practice":               (o)"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;" In  view of Section 10, the Commission may inquire into  any restrictive trade practice (i) upon receiving a complaint of facts  from  any trade association or from any  consumer  or (ii)  upon a reference made to it by the Central  Government or a State government, or (ill) upon an application made  to it  by the Director General, or (iv) upon its own  knowledge

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or  information.   Subsection  (1) of Section  33  which  is relevant is as follows:-               "33.   Registerable  agreements  relating   to               restrictive   trade  practices.-   (1)   Every               agreement  failing 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)   any  agreement  which restricts,  or  is               likely to restrict, by any method the  persons               or  classes of persons to whom goods are  sold               or from whom goods are bought;               (b)any  agreement  requiring  a  purchaser  of               goods,  as  a condition of such  purchase,  to               purchase some other goods;               (c)any agreement restricting in any manner the               purchaser  in  the course of  his  trade  from               acquiring  or otherwise dealing in  any  goods               other  than those of the seller or  any  other               person;               (d)any agreement restricting in any manner the               purchaser  in  the course of  his  trade  from               acquiring  or otherwise dealing in  any  goods               other  than those of the seller or  any  other               person;               (e)any agreement to grant or allow concessions               or  benefits, including allowances,  discount,               rebates  or credit in connection with,  or  by               reason of, dealings;               (f)any  agreement to sell goods  on  condition               that the prices to be charged on resale by the               purchaser  shall be the prices  stipulated  by               the  seller unless it is clearly  stated  that               prices lower than those prices may be charged;               (g)any   agreement  to  limit,   restrict   or               withhold the output or supply of any goods  or               allocate  any area or market for the  disposal               of the goods;               (h)any agreement not to employ or restrict the               employment of any method, machinery or process               in the manufacture of goods;               (i)any  agreement for the exclusion  from  any               trade association of any person carrying on or               intending  to  carry on, in   good  faith  the               trade   in   relation  to  which   the   trade               association is formed;               (j) any agreement to sell goods at                                    266               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)   any agreement not hereinbefore  referred               to   in   this  section  which   the   Central               Government  may, by notification  specify  for               the  time  being  as  being  one  relating  to

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             restrictive trade practice within the  meaning               of   this   sub-section   pursuant   to    any               recommendation made by the Commission in  this               behalf,               (i)   any  agreement to enforce  the  carrying               out of any such agreement as is referred to in               this subsection." Clauses (a) to (1) of Section 33(1) specify different  types of agreements, which shall be deemed for the purposes of the Act,   to  be  agreements  relating  to  restrictive   trade practices   and  shall  be  subject  to   registration,   in accordance with the provisions of Chapter V of the said Act. Section 35 requires the Central Government to specify a  day by  notification in the Official Gazette on and  from  which every  agreement  falling  within Section  33  shall  become Registerable  under the Act.  Section 37 vests power in  the Commission  to inquire into any restrictive trade  practice, the relevant part whereof is as follows:-               "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." The  Commission  may  inquire  into  any  restrictive  trade practice  in  connection with any agreement which  has  been registered under Section 35 or not.  If after such  inquiry, the  Commission  is  of the opinion  that  the  practice  is prejudicial  to  the  public interest,  the  Commission  may direct that the practice shall be discontinued or shall  not be   repeated  and  the  agreement  relating  to  any   such restrictive  trade  practice shall be void and  shall  stand modified  in respect thereof.  In view of Section 38(1)  the restrictive trade practice shall be deemed to be prejudicial to  the public interest unless the Commission  is  satisfied about  the  existence  of  the  circumstances  specified  in clauses  (a) to (k) in the said sub-section 1 of Section  38 and is further  satisfied that restriction is not  unreason- able   having   regard   to  the   balance   between   those circumstances and any detriment to the public. 6.   It may be pointed out that originally the main part  of sub-section (1) of Section 33 said:               "33.Registerable agreements relating to               267               restrictive trade practices.-(1) Any agreement               relating  to  a  restrictive  trade   practice               falling  within one or more of  the  following               categories shall be subject to registration in               accordance   with  the  provisions   of   this               Chapter,namely:-" By  Act  No.30  of  1984 that  part  was  substituted  w.e.f 1.8.1984:               "33.   Registerable  agreements  relating   to               restrictive   trade  practices  -  (1)   Every

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             agreement  failing 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               (emphasis supplied) In  the substituted sub-section (1) of Section 33 a  deeming clause  has  been introduced by the Parliament  saying  that every agreement failing within one or more of the categories mentioned  in the said subsection (1) shall be  deemed,  for the  purposes  of the Act, to be an  agreement  relating  to restrictive    trade   practices.    While   amending    and substituting that part of subsection (1) of Section 33,  the Parliament determined and specified that agreements  falling within  one or more of the categories mentioned  in  clauses (a) to (1) to subsection (1) of Section 33, shall be deemed, for  the purposes of the Act, to be the agreements  relating to  restrictive trade practices.  This was not the  position in the original sub-section (1) of Section 33. 7.   The  effect of a statute containing a legal fiction  is by  now  well  settled.  The Legislature by  a  statute  may create a legal fiction saying that something shall be deemed to have been done which in fact and truth has not been done, but  even then Court has to give full effect to such  statu- tory fiction after examining and ascertaining as to for what purpose and between what parties such statutory fiction  has been  resorted  to.   In the well known  case  of  East  End Dwellngs  Co.Ltd. v. Finsbury Borough Council, (1952) A.  C. 109(B), Lord Asquith has said:-               "If you are bidden to treat an imaginary state               of  affairs as real, you must  surely,  unless               prohibited from doing so, also imagine as real               the  consequences and incidents which, if  the               putative,   state  of  affairs  had  in   fact               existed,  must inevitably have flowed from  or               accompanied it..... The statute says that  you               must  imagine a certain state of  affairs;  it               does  not  say that having done so,  you  must               cause  or  permit your imagination  to  boggle               when it comes to the inevitable corollaries of               that state of affairs." This  Court  in the cases of State of  Bombay  v.  Pandurang Vinayak  and others, AIR 1953 SC 244 = 1953 SCR  773,  Chief Inspector  of Mines, and another etc. v. Karam Chand  Thapar etc.   AIR  1961  SC 838 = 1962(1) SCR 9,  M/s  J.K.  Cotton Spinning  and Weaving A-fills Ltd. and another v.  Union  of India  and  others, AIR 1988 SC 191 = 1988(1)  SCR  700,  M. Venugopal   v.  The  Divisional  Manager,   Life   Insurance Corporation  of India, Machilipatnam,Andhra Pradesh  &  Anr. JT 1994(1) SC 281 = 1994(2) SCC 323 and recently in the case of Harish Tandon v. The Addl.District Magistrate, Allahabad, JT 1995(1) SC 291, has dealt with in detail the effect of  a statutory fiction and the- limitation of the Court to ignore the  mandate of the Legislature, unless it is  violative  of any  of  the provisions of the, Constitution.  So  far  sub- section  (1)  of Section 33 is concerned, it  mandates  that agree- 268 ments covered under different clauses of sub-section (1)  of Section 33 shall be deemed for the purposes of the Act to be agreements relating to restrictive trade practices.  By  the deeming  clause one is not required to treat  any  imaginary state  of  affairs  as  real but  to  treat  the  agreements specified  and enumerated in sub-section 1 of Section 33  as

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agreements relating to restrictive trade practices.  It  can be  said  that Parliament after  having  examined  different trade  practices, has identified such trade practices  which have  to  be  held as restrictive trade  practices  for  the purposes  of the Act.  To keep such trade  practices  beyond controversy  in  any proceeding, a deeming clause  has  been introduced in subsection (1) of Section 33 saying that  they shall be deemed to be restrictive trade practices.  In  this background,  according  to us, there is not much  scope  for argument that although a particular agreement, is covered by one or the other clause of subsection 1 of Section 33, still it  shall not amount to an agreement  containing  conditions which  can be held to be restrictive trade practices  within the meaning of the Act. 8.   According  to  Mr.  Desai,  the  learned  counsel,  who appeared  on  behalf  of  the  appellant,  inspite  of   the amendment  in subsection 1 of Section 33 , the power of  the Commission or of this Court has in no way been curtailed  or abridged  and the Commission or this Court, can  examine  an agreement  for recording a finding as to whether any of  the clauses  of  such  agreement relates  to  restrictive  trade practices.  He pointed out that Section 37 which vests power in  the Commission to examine and investigate any  agreement relating to restrictive trade practices is in two parts, (i) the  Commission is required to examine and ascertain  as  to whether  any of the terms of a particular agreement  relates to  restrictive  trade  practices  (ii)  if  such  agreement relates  to  restrictive  trade  practices  whether  it   is prejudicial  to the public interest.  Unless the finding  is recorded  in  respect of the agreement in question  on  both counts, no order under Section 37 of the Act can be  passed. In  other words, first it has to be examined as  to  whether the agreement relates to any of the restrictive trade  prac- tices and if the Commission is satisfied that it relates  to one  or more restrictive trade practices within the  meaning of  Section  2(o)  of the Act, then the  Commission  has  to examine  as to whether such agreement is prejudicial to  the public  interest.  The Commission can direct that the  prac- tice  be  discontinued  or should not  be  repeated  or  the agreement  or  part thereof shall be void,  only  after  the Commission  is  satisfied  that any of the  clauses  of  the agreement relates to any restrictive trade practice,  within the meaning of Section 2(o) of the Act and such  restrictive trade  practice is prejudicial to public interest.  In  this connection,  reliance  was placed on the  judgment  of  this Court, in the case of Tata Engg. and Locomotive Co. v.  Reg- istrar,  (1977) 2 SCC 55.  From the facts of that  case,  it will appear that Tata Engg. and Locomotive Co.  (hereinafter referred to as the ’TELCO’) used to sell vehicles and had of its   own  initiative  introduced  certain  procedures   for distribution  of  its  vehicles.  It  had  notified  to  its dealers  the maximum price for each model of  vehicle  which they can charge from consumers.  When the vehicles were sold it was the responsibility of TELCO to provide facilities for servicing and repairing of the vehicles marketed by it.  For that, after sale services had been provided for in different parts of the country It had a net work of 269 dealers  service centres and zonal offices.  An  application was  filed by the Registrar’, Restrictive Trade  Agreements, under  Section 10(a)(iii) of the Act before the  Commission, for  inquiry  under Section 37 of the Act  into  restrictive trade  practices alleged therein.  Special grievance in  re- spect  of territorial restriction and allocation of area  or market  for exclusive’ dealership was made.  It was  pointed

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out  to the Commission by the Registrar,  Restrictive  Trade Agreements,  who had then the power to file  an  application before the Commission under Section 10(a)(iii) that some  of the clauses of the dealership agreement, imposed restriction on the dealers in respect of territories, the maximum  price at which goods could be resold, and in respect of dealing in products  of other manufacturers which amounted to  restric- tive trade practice.  The Commission held that the  practice of  allocation  of territories to Telco’s  dealers  was  not justified.  But this Court said--               "The   decision  whether  trade  practice   is               restrictive  or  not has to be arrived  at  by               applying  the  rule of reason and not  on  the               doctrine  that any restriction as to  area  or               price  will  per  se be  a  restrictive  trade               practice.  Every trade agreement restrains  or               binds   person  or  places  or  prices.    The               question is whether the restraint is, such  as               regulates and thereby promotes competition  or               whether  it  is such as  may  suppressor  even               destroy   competition.   TO   determine   this               question  three matters are to be  considered.               First, what facts are peculiar to the business               to  which the restraint is  applied.   Second,               what  was the condition before and  after  the               restraint  is  imposed.  Third,  what  is  the               nature of the restraint and what is its actual               and probable effect." It  was further said in respect of sub-section 1 of  Section 33  as  it  stood then that it deals  with  registration  of certain types of restrictive trade practices, which had been prescribed in categories mentioned in clauses (a) to (1)  of sub-section 1 of Section 33 of the Act.  It was then said:-               "An  agreement will be Registerable,  when  it               will  have  both  the  effect  of  restricting               competition within the meaning of Section 2(o)               of  the  Act and also deal  with  the  subject               matter described in Clauses (a) to (1) of sub-               section (1) of Section 33 of the Act.  Clauses               (a) to (1) aforesaid describe some species  of               agreement  which require registration if  they               are  within  the genus  of  restrictive  trade               practice  defined in Section 2(o) of the  Act.               A practice which is not restrictive under Sec-               tion  2(o)  of the Act cannot  be  restrictive               trade practice only because of Clauses (a)  to               (1)  of sub-section (1) of Section 33  of  the               Act.   Section 33 does not  provide  statutory               illustrations  to Section 2(o) of the Act  but               only enumerates some types of trade  practices               which, if they are restrictive within  Section               2(o) of the Act require registration." Court in the aforesaid judgment on basis of sub-section 1 of Section 33 as it was then held that a practice which is  not restrictive  trade practice under Section 2(o) of  the  Act, cannot  be  held  to be restrictive   trade  practice,  only because  of clauses (a)  to (1) of sub-section 1 of  Section 33  of the Act.  Again in the case of Mahindra and  Mahindra Ltd.  v  Union  of India, (1979) 2  SCC  529,  after  making reference to the aforesaid case of Tata Engg. and Locomotive Co. (supra) it was said:-               "It  is  now settled law as a  result  of  the               decision of this Court in the Telco case  that               every trade practice which is in restraint  of               trade  is not necessarily a restrictive  trade

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             practice.  The definition of               270               restrictive  trade practice given  in  Section               2(o)   is  a  pragmatic  and   result-oriented               definition.   It  defines  ’restrictive  trade               practice’  to mean a trade practice which  has               or   may  have  the  effect   of   preventing,               distorting  or restricting competition in  any               manner   and   in  clauses   (i)   and   (ii),               particularises two specific instances of trade               practices  which fall within the  category  of               restrictive trade practice.  It is clear  from               the  definition that it is only where a  trade               practice  has the effect, actual or  probable,               of   restricting,  lessening   or   destroying               competition  that it is liable to be  regarded               as  a restrictive trade practice.  If a  trade               practice merely regulates and thereby promotes               competition,  it  would not  fall  within  the               definition  of.  restrictive  trade  practice,               even  though  it may be, to  some  extent,  in               restraint  of trade.  Whenever,  therefore,  a               question  arises before the Commission or  the               Court  as to whether a certain trade  practice               is  restrictive or not, it has to  be  decided               not on any theoretical or a priori  reasoning,               but  by inquiring whether the  trade  practice               has  or  may have the  effect  of  preventing,               distorting  or restricting competition.   This               inquiry  obviously cannot be in vacuo  but  it               must  depend on the existing constellation  of               economic  facts and circumstances relating  to               the particular trade.  The peculiar facts  and               features  of  the  trade would  be  very  much               relevant  in determining whether a  particular               trade  practice  has the  actual  or  probable               effect    of   diminishing    or    preventing               competition and in the absence of any material               showing   these  facts  or  features,  it   is               difficult to see how a decision can be reached               by  the Commission that the  particular  trade               practice is a restrictive trade practice." 9.   But now with the amendment of man part of sub-section 1 of  Section  33 with a statutory fiction the  situation  has changed.  It can be said that clauses (a) to (1)  of    Sub- Section  1 of Section 33 provide statutory illustrations  of restrictive  trade practices.  The framers of the  Act  have now in clear and unambiguous words said that every agreement falling  within one or more of the categories  specified  in clauses (a) to (1) of sub-section 1 of Section 33, shall  be deemed for the purposes of the said Act, to be an  agreement relating to restrictive trade practices and shall be subject to registration in accordance with the provisions of Chapter V. Now it is no more open to the Commission or to this Court to test and examine any of the trade practices mentioned  in clauses  (a)  to (1) of sub-section 1 of Section 33  in  the light  of  Section  2(o)  of the Act,  for  the  purpose  of recording  a  finding  as to whether those  types  of  trade practices  shall be restrictive trade practices  within  the meaning  of Section 2(o) of the Act.  This exercise  has  to be  done only in respect of such trade practices which  have not  been enumerated in any of the clauses from (a) to  (1). Only  such trade practices have to be examined in the  light of  Section 2(o) of the Act, as to whether they amounted  to restrictive   trade  practices. It need not be  pointed  out

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that both judgments aforesaid of this Court interpreted  the scope  of sub-section 1 of Section 33, as it stood prior  to the  amendment by Act 30 of 1984.  But  after the  amendment of sub-section 1 of  Section 33 if an agreement falls within one   of the clauses of the said sub-section,  specifying  a restrictive  trade practice, then it is no more open to  the Commission  or to the Court to say that it shall not  amount to  restrictive trade practice.  Trade practices  enumerated in clauses (a) to (1) of sub-section (1) of Section 33 shall be  deemed  to  have now  been  statutorily  determined  and specified  as  restrictive  trade  Practices.   Neither  the Commission  nor  the  Court can question the wisdom  of  the Par- 271 liament  for  having statutorily  determined  certain  trade practices  as  restrictive trade practices  unless  in  this process  there is contravention of any of the provisions  of the  Constitution.   In this background,  if  any  agreement contains a trade practice which falls in any of the  clauses of  sub-section  1 of Section 33 then  such  trade  practice shall  be deemed to be restrictive trade practice  and  such agreement has to be registered. 10.Now the question which still remains to be answered is as to  whether after the amendment in sub-section 1 of  Section 33  and  after registration of an agreement,  the  scope  of inquiry by the Commission under Section 37 in respect of the agreement, has been curtailed and the Commission has now  to examine  only  one question as to whether such  practice  is prejudicial to the public interest. ll.  On  behalf of the appellant, it was  pointed  out  that Section 37 contemplates and conceives inquiry in respect  of any  restrictive  trade practice relating  to  an  agreement which  has  been registered under Section 35 as well  as  an agreement  which has not been so registered.  As  such  per- sons  who have got their agreements registered on their  own in order to escape prosecution, although in such  agreements there  may not be any clause relating to  restrictive  trade practices,  cannot urge before the Commission, after  having got the agreements registered, that they do not contain  any clause  relating to any restrictive trade practice.  On  the other hand, persons who for one reason or other have not got their agreements registered under Section 35, will be in  an advantageous  position  inasmuch  as  in  respect  of  their agreements, Commission will have to examine both aspects (i) whether  the  agreement  relates to  any  restrictive  trade practice  (ii)  even  if it  relates  to  restrictive  trade practice,  whether the said practice is prejudicial  to  the public  interest.   It is true that under  Section  37,  the Commission  has  been vested with the power  to  inquire  in respect  of  agreements  which have  been  registered  under Section 35 as well as those which have not been  registered. But  the fact remains that once the Commission is  satisfied that  a particular agreement which has not  been  registered under  Section 35, falls within any of the clauses from  (a) to  (1)  of  subsection 1 of Section  33,  then  no  further inquiry is to be done, as to whether such agreement  relates to  restrictive  trade  practices  or  not.   The  statutory fiction  incorporated in sub-section 1 of Section  33  shall also be applicable in respect of such agreements apart  from the  penalty provided under Section 48 of the Act.  As  such there  is not much scope for discrimination between  persons who have got their agreements registered and those who  have not got their agreements registered. 12.It  was also urged that while amending sub-section  1  of Section 33, Section 2(o) was not deleted or substituted  and

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that has left an apparent conflict between Section 2(o)  and Section  33(1)  of the Act.  According to us,  there  is  no conflict  between Sections 2(o) and 33(1).  Clauses  (a)  to (1)  of  sub-section  1 of Section  33  specify  such  trade practices   which  have  been  statutorily   recognised   as restrictive  trade practices.  But there may be other  trade practices, not covered by clauses (a) to (1) of  sub-section 1 of Section 33, which can be examined by the Commission  in the light of Section 2(o). 13.It was pointed out on behalf of the appellant that  after the amendment of sub- 272 section  1 of Section 33, there is no forum where  a  person can  show that although at a first look, it may appear  that any  of  the  clauses of the agreement,  relates  to  a  re- strictive trade practice specified in clauses (a) to (1)  of sub-section 1 of Section 33, but such clauses cannot be held to  be covered by any of the clauses.  According to  us,  in this respect a decision has to be taken by the person who is a party to the said agreement whether to get such  agreement registered under Section 35.  But once he gets the agreement registered,  then  he is debarred from  questioning  whether contains   any  clause  relating  to  a  restrictive   trade practice.    Sub-section  1  of  Section  33  specifies   in different  clauses various types of trade  practices,  which have  now  been recognised as restrictive  trade  practices. Any  person who is a party to any agreement has  to  examine the  agreement in light of those clauses.  If  according  to such person, the agreement in question does not contain  any clause  relating to any of the restrictive  trade  practices specified  in clauses (a) to (1), such person need  not  get the  agreement registered under Section 35.  He will  be  at liberty  to  satisfy the Commission on that  question.   But once the agreement is registered, then such agreement cannot be  inquired into by the Commission, for the purpose  as  to whether  it  relates to any restrictive trade  practice;  of course inspite of registration of the agreement, the  person concerned  can satisfy the Commission that such practice  is not prejudicial to the public interest. 14.  At this stage it shall be proper to refer    to Section 38 of the Act.  Sub-section 1 of Section 38 also contains  a statutory  fiction because it says that for purposes of  any proceedings   before  the  Commission  under  Section   37,a restrictive trade practice shall be deemed to be prejudicial to  the public interest’ unless the Commission is  satisfied of any or more of the circumstances specified in clauses  (a to  (k) of sub-section 1 of Section 38.  The scheme  of  the Act  appears  to  be  that first  it  specifies  some  trade practices, under sub-section 1 of Section 33, as restrictive trade  practices.   Then  it has prescribed  a  forum  under Section 37, to inquire as to whether any such trade practice is prejudicial to the public interest.  This question has to be  examined  in  the  light of Section  38  which  in  many judgments  have  been  described as  ’gateways’.   In  other words,  inspite  of a finding that  a  particular  agreement contains  a clause which is related to a  restrictive  trade practice,  if the Commission is satisfied in respect of  the existence  of any of the circumstances specified in  clauses (a)  to (k) of sub-section 1 of Section 38, no  order  under Section  37  is to be passed to desist or  discontinue  such practice  or to declare any part of the agreement  as  void. One  of  the circumstances specified in clause (h)  of  sub- section 1 of Section 38 is:-               "38.(1)(h)  that  the  restriction  does   not               directly or indirectly restrict or  discourage

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             competition  to  any material  degree  in  any               relevant  trade or industry and is not  likely               to do so; If  the Commission is satisfied that any practice which  has been held to be restrictive trade practice does not directly or  indirectly  restrict or discourage  competition  to  any material  degree in any relevant trade or industry  then  it can resist passing any order under Section 37 directing  the per son concerned to desist or to discontinue the  practice. It may be mentioned that in connection with old  sub-section 1 of Section 33 in the case of Tata Engg. and Lo- 273 comotive  Co.  (supra)  this  Court  pointed  out  that  the exclusive dealings do not impede competition but promote it. It was said:-               "The   exclusive   dealings   do   no   impede               competition  but  promote it.   Such  dealings               lead  to  specialisation  and  improvement  in               after-sales service.  The exclusive dealership               agreements do not restrict distribution in any               area or prevent competition.  The customer has               the  choice of buying any make he likes.   The               advantage  of exclusive dealership is  that  a               dealer specialises in his own type of vehicles               with  all the attending advantages of  trained               personnel. special service stations, workshops               and spare parts." It  was  also  said that by specialising  in  each  make  of vehicle  and  providing the best possible service  that  the competition between the various makes is enhanced.  In  that connection it was also said:-               "By  making  its dealers exclusive  to  Telco,               there  cannot  be said to be  any  prevention,               distortion  or restriction of  competition               in  the territory in which a dealer  operates,               either between manufacturers of the same  type               of  vehicles  or  between  dealers  in   these               vehicles.   Any manufacturer of vehicles  such               as those of Telco may manufacture and sell its               vehicles  in  a  territory  in  which  Telco’s               dealers  operate.  Any other  manufacturer  of               vehicles  similar  to those of Telco  is  also               free  to appoint dealers of its choice in  the               same  territory covered by  Telco’-,  dealers.               The channels for outlet for vehicles have  not               been  blocked  by the fact  that  the  dealers               appointed by Telco arc exclusive to Telco  nor               it can be said that Telco has by its exclusive               arrangement with its dealers affected the flow               of supplies of vehicles into the market." Again in the case of Mahindra and Mahindra Ltd. v. Union  of India  (supra),  it was said that after  the  Commission  is satisfied in respect of restrictive trade practices then  it has  to  proceed to consider whether any of  the  ’gateways’ provided in Section 38(1) exist so that the trade  practice, though found restrictive, is deemed not to be prejudicial to the public interest. 15.In the light of what has been said above, if the order of the  Commission is examined, it shall appear that  the  Com- mission has set out briefly the facts of 15  cases. Then the Commission  has  pointed out that the  Director  General  in support  of  his case has tendered the  various  agreements. Thereafter reference has been made to the affidavits file on behalf of the appellant and other documents.  The real  dis- cussion  is only in para 40 of the Order under appeal  which

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is as follows:               "We  have gone through voluminous records  and               pleadings   pertaining  to  these   enquiries,               evidence   produced  by  the   parties,   oral               arguments,  written  submissions   and   cases               referred to by the parties and are of the view               that no case for gateways under Section 38(1),               as  pleaded, has been  made out by the  Voltas               in    these   proceedings.     Likewise    the               manufacturer  Simtools Limited in RTP  Enquiry               No.483 of 1987 has also failed to make out any               case  for  the gateways.  Therefore,  we  hold               that  the respondents have indulged  into  the               restrictive trade practices, as alleged in the               Notice  of  Enquiry, and those  practices  arc               prejudicial to the public interest in each  of               the 15 enquiries." 16.  According to us, the Commission was     required to  go deeper into the matter and    to record findings in  respect of different   agreements whether the objectionable  clauses of the registered agreements were 774 prejudicial  to  the  public  interest.   It  need  not   be impressed that any finding recorded by the Commission  under Section  37 and direction given in terms of clauses (a)  and (b)  of  sub-section  1 of Section 37  has  a  far  reaching effect.   As such every aspect of the matter is required  to be  examined in the light of the provisions of  Sections  37 and  38 of the Act before an order to ’cease and desist’  is passed by the Commission. 17.  Accordingly,  the  appeals are allowed.   The  impugned order  passed in the 15 enquiries by the Commission  is  set aside  and  the  Commission  is  directed  to  examine   the questions  involved  afresh  on the basis  of  the  material produced  on behalf of the parties.  It will be open to  the Commission  to require any of the parties to adduce  further evidence, oral or documentary, in order to enable it to come to  the conclusion one way or the other.  In the  facts  and circumstances  of the cases, there shall be no orders as  to cost. 276