1. This is an application filed by the Registrar of Restrictive Trade Agreements (hereinafter for the sake of brevity referred to as " the Registrar ") against the respondent under Section 10(a)(iii) of the Monopolies and Restrictive Trade Practices Act, 1969 (hereinafter for the sake of brevity referred to as "the Act"). The respondent manufactures and markets steel furniture and equipment. The respondent has appointed several parties as dealers on principal to principal basis at various places in the country for marketing its aforesaid products on terms and conditions contained in a standard form of agreement copy of which has been annexed to the application of the Registrar.
2. The Registrar contends that Clauses 1, 4, 1, 8, 15, 19 and 20 of the said agreement which are set out in the application constitute restrictive trade practices. The Registrar prays that necessary orders be passed against the respondent under Section 37(1) of the Act.
3. The respondent filed its reply on 16th March, 1975. The Registrar filed rejoinder thereto on 6th May, 1975. Thereafter, at the instance of the Registrar, certain directions were given, which included interrogatories delivered by the Registrar to the respondent. These directions have been carried out.
4. The respondent has now made an application purporting to be under Section 37(2) proposing certain amendments to the dealership agreement with regard to the clauses complained of by the Registrar. At the hearing, however, Mr. Hathi for the respondent submits that his clients are prepared to submit to an order under Section 37(1) of the Act on the assumption that restrictive trade practices exist. In view of this we find it unnecessary to go into the amendments suggested by the respondent or to express any opinion on them.
5. We have carefully gone through the clauses of the agreement complained of by the Registrar and find that in fact tbey constitute several restrictive trade practices as under :
Clause 1 allocates area or market to the dealers for disposal of goods. This falls within the category of area allocation under Section 33(1)(g). Clause 1 also prevents the dealer from dealing in any goods other than those of the respondent and falls in the category set out in Section 33(1)(c) of the Act.
Clause 4 restricts the number of sub-dealers to whom goods may be sold by the dealer and also provides for the prices and conditions to be charged on resale. This falls under Section 33(1)(g), (a) and (f).
Clauses 7 and 8 provide that in the initial order the dealer will place an order for at least one wagon-load of assorted furniture. It is not stated who shall choose the assortment. In view of this, this clause is likely to be misused for the purpose of requiring the purchaser as a condition of such purchase to purchase other goods or to indulge in what is known as full line forcing.
Clause 15 again fixes prices to be charged on resale without stating that these are maximum prices or that prices lower than those may be charged.
6. Under Clauses 19 and 20 we find that in answers to interrogatories the respondent has admitted that differential discounts and commissions have in fact been paid by the respondent to some of the dealers. This falls under Section 31(1)(e). We also find that these trade practices may have the effect of preventing, distorting or restricting competition and would satisfy the definition of restrictive trade practices in Section 2(o) of the Act.
For the reasons hereinabove set out, we make the following order :
That Clauses 1, 4 and 15 of the agreement annexed to the Registrar's application shall be void in respect of the restrictive trade practices set out hereinabove.
2. In Clause 7 the word "assorted " shall be deleted and Clauses 7 and 8 shall stand modified accordingly.
3. Under Clauses 19 and 20 the practice of allowing differential discounts and commissions based on quantities of sale shall be discontinued and shall hot be repeated.
4. The respondent is directed by a mandatory injunction to mention in all price lists to be issued hereinafter and in any agreement made in the future that the prices mentioned therein are maximum prices and that the dealer shall be at liberty to charge prices lower than those,
5. This order shall come into effect on the expiry of four weeks from today. The respondent shall within 6 weeks from today file an affidavit and furnish the same to the Secretary of the Commission with a copy to the Registrar setting out the manner in which these orders have been complied with.
6. The respondent shall pay to the Registrar costs of these proceedings fixed at Rs. 300.