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It is evident that in the Telco case this Court was considering the territorial restrictions placed upon the stockists of Telco in the Light of the special facts and circumstances of that particular case. Ratio |
Each type of busi ness has, undoubtedly, its peculiarities, its own mode of operation, the special features relating to the market for it, and the requirements of distribution of particular goods which may be the subject matter of an agreement so as to secure a just and equitable distribution consistently with maintena... |
In the Telco case, the subject matter of the agreement was sale of trucks of a type in which the Telco had a monopoly inasmuch as no other firm produced trucks which were of such special quality and specifications. Ratio |
Hence, there was great demand for these trucks, which were in short supply. Ratio |
Again, for the mainte nance and running of those especially designed trucks the manufacturer had to provide especially trained and skilled personnel and special equipment and tools so as to enable stockists to service and repair trucks distributed. Ratio |
Unless the manufacturers were able to impose restrictions upon sales outside the areas in which they had (1) ; 463 established their stockist cum servicing suppliers, they could not at all render the kind of service they were giving in addition to selling. Ratio |
In other words, it was a mixed practice for purchase of trucks and provision of specialised service to the consumers, through the stockists. Ratio |
On the peculiar facts and circumstances of that case, it was found that the agreements did not, on the whole, result in re stricting trade or curtailing competition. Ratio |
The facts of the case before us are entirely different. Ratio |
We are concerned here with a manufacturer of mixed consumer goods of different varieties. Ratio |
The appellant company pro duces dehydrogenated oil (known in the market as "Vanas pati"), toilet preparations of various kinds such as soaps, shaving creams, toothpastes, and baby milk powder, and animal feeds. Ratio |
The soaps manufactured by it are undoubtedly the main type of goods supplied. Ratio |
But, it manufactures other type of goods too. Ratio |
It can, therefore, compel stockists to by them, whether stockists want these other goods or not, if the terms of the agreement are to be held to be binding and enforceable. Ratio |
The manufacturer is under no obligation to render any service in relation to maintenance of the goods supplied. Ratio |
The whole trade is completely unlike that of manufacture and sale of motor trucks for which the stock ists, selling to the actual consumers, had to, as already pointed out, also have the services of the manufacturer 's trained personnel for the purposes of maintenance and repair of the vehicles supplied. Ratio |
It would mount to an application of the law in a thoroughly doctrinaire fashion if we were to deduce some general principles, from the very different facts of the Telco case and attempt to apply them to those of the case now before us. Ratio |
Thus, the contention advanced on behalf of the appellant, against a doctrinaire approach in such cases, really weighs against the appellant company. Ratio |
In the Telco case, the agreement could not be understood without reference to the actual facts to which they were sought to be applied. Ratio |
Those facts explained the nature of the special agreements for restriction or distribution of areas. Ratio |
In the case before us, the problem entirely different. Ratio |
This is not a case in which certain terms of the agreement require to be explained by the facts to which they were meant to be applied. Ratio |
It is a Clear case in which the meanings of the clauses are decisive. Ratio |
If these clauses are capable of being so used, on the meanings which appear unambiguously from them, as to undoubtedly restrict trade, the intention to so use them to restrict trade could reason ably be inferred without any difficulty. Ratio |
Otherwise, why have them ? No oral evidence could be led to deduce their meaning or to vary it in view of the provisions of sections 91 and 92 of the Evidence Act. PRE |
the principles of which were we think rightly applied by the Commission. Ratio |
The Telco case, on the other hand, was one in which extraneous evi dence could be led under section 92 proviso (6)of the Evidence Act which may be set out here with Section 92: "92.When the terms of any such contract, grant or other disposition of property or any matter required by law to be reduced to the form of a do... |
The principle embodied in section 92(6) of the Evidence Act, which was applicable in Telco case (supra), is not, for the reasons given above, applicable in the case now before us. Ratio |
Indeed, no attempt has been made by reference to any case law apart from the Telco case '(supra), which we have dis tinguished above, to show that extraneous evidence could have been led herein order to apply section 92 proviso (6) of the Evidence Act. Ratio |
In the Telco case this provision was not directly referred to, but, we think, that it could have been applied there. Ratio |
Thus, we think that the basic difficulty, placed before us by learned counsel for the appellant, in the way of examining the plain meaning and effect of clauses 5 and 9 of the Distribution Stockists agreement, does not exist at all in the case now under consideration. Ratio |
We must, therefore, proceed to examine the meanings of these clauses from the point of view of what could be done by the Company under them. Ratio |
If what may be done under these clauses could be a restrictive practice as defined by the Act, it was enough to vitiate them. Ratio |
A clause having been introduced in an agreement entered into, as a part of the settled practice of the company, could be struck by the provisions of section 2(0) of the Act, set out above, quite apart from what is actually done under it. Ratio |
We do not think that any other question is really relevant or need be considered by us at all in such a case. Ratio |
It is not a case in which we could be taken through the oral evidence, as has been attempted to be done, because that is shut out by an application of provisions of sections 91 and 92 of the Evidence Act if all we need do is to interpret the agreement. Ratio |
We are unable to see why these provisions do not apply here. Ratio |
Not much argument appears to us to be needed to demon strate that the last sentence in paragraph 5 of the above mentioned clause places the redistribution stockist at the mercy of the company which can dictate to him what amounts of various commodities he "shall purchase and accept from the company" in the form of a to... |
The company need only send to the redistribution stockists what it "shah at its discretion send to the Redistribution Stockists for fulfilling its obligations under this Agree ment". Ratio |
The meaning and effect are obvious here. Ratio |
The intro duction of the word "shall" does not bind down the exercise of the discretion by reference to any requirements of the consumers in a particular area which the stockists may convey to the company. Ratio |
Hence, if the stockists want to remain on the list of the redistribution stockists of the company. Ratio |
the stockist is bound to accept and carry out the decision of the company. Ratio |
Even if in view of some other practice adopted by the company 465 a power given in such wide terms was not meant to be exer cised unreasonably, its presence in the agreement would be a needless surplusage which could, whenever the company wanted it, be used to impede freedom of competition and trade. Ratio |
This result was enough to make it quite objectionable. Ratio |
We, therefore, think that the Commission was quite right in reframing clause 5 in the way it did. Ratio |
We are unable to find any flaw in the detailed reasons given by the Commission for doing that. Ratio |
The Commission rightly points out that, among agreements the registration of which is compulsory according to the provisions of Chapter V of the Act is, under section 33(1)(b) is "any agreement requiring a purchaser of goods, as a condition of such purchase, to purchase some other goods". Ratio |
The last part of clause 5, as we have observed, clearly makes it necessary ,for the stockist to purchase such goods and in such combination as the company may de cide. Ratio |
Hence, it would be struck by section 33(1)(b) of the Act. Ratio |
It has not been shown to have been registered under the Act. Ratio |
It is also submitted on behalf of the respondent that clause 5 of the agreement infringes section 33(1)(f) of the Act which requires registration of . Ratio |
"any agreement to sell goods on condi tion that the prices to be charged on resale by the purchaser shall be the prices stipulat ed by the seller unless it is clearly stated that prices lower than those prices may be charged". 0 The Commission held that clause 5 of the agreement meant provision for "prices stipulated" ... |
If that was clear, there was no reason why the company should have attempted to clarify by means of its circulars what, according to it, the stockist is free to do under the agreement. Ratio |
Even if the practice of the company by issuing circulars is established, it does not justify the retention of clause 5 in a form which can be used to compel stockists to act on the company 's behests whether reasonable or not. Ratio |
On the other hand, it justifies its clarification by an alteration of it in the manner directed by the Commission so as to make the clause covering price regulation also very clear. Ratio |
The order of the Commis sion modifying clause 5 only makes the position crystal clear. Ratio |
Inasmuch as clause 5, even before deletion of the last sentence of it by the Commission, expressly gives the stockist the discretion to sell at lower than maximum resale prices stipulated, the agreement was not struck by section 33(1)(b) of the Act. Ratio |
But, the deletion of the last sentence was essential to prevent possible misuse of the company 's powers, by resort to it, so as to even regulate prices contrary to express provisions found earlier in the clause. Ratio |
Turning now to clause 9 of the agreement, we think that the Commission was right in rejecting the argument that evidence led on behalf of the company was enough to estab lish that clause 9 fell within one 466 of the "gateways" provided by section 38 of the Act. Ratio |
A power to impose restrictions falling under this provision had to be justified by the company by actual proof of a public interest which could not be better served without it. Ratio |
The submission that section 38 could be applied here amounts at least to a concession that a clause conferring such wide power upon the manufacturer may be so used as to amount to a restrictive practice. Ratio |
It is the practice of putting in such a clause which has to be justified. Ratio |
The power given to the company under clause 9 is very wide. Ratio |
The manufacturer can compel the redistribution stock ists to make available to the company any stocks purchased by the stockist. Ratio |
It also compels the stockist to take the permission of the company for conveying, transporting, or despatching parts of stocks of the products received by him outside a specified town except when he is so expressly directed in writing by the company. Ratio |
It directly prevents him from doing so without the company 's permission. Ratio |
If the stockist violates this condition the whole agreement can be revoked by the company so that the stockist loses his right to carry on business under the agreement. Ratio |
If what had to be justified is not how this power is actually used, but the practice of conferring such powers upon the company by placing the stockist at the mercy of the company, the evi dence of facts showing how the power is exercised could be relevant only very indirectly. Ratio |
However, if it could be shown that some facts did exist which make it imperative to confer such a power on the company for the benefit of ' the public, that may be relevant to establish the existence of a "gateway" under section 38. Ratio |
But, it could certainly not be used to determine the meaning of a clause for which it is not necessary here to go beyond the language of the clause involved. Ratio |
We are primarily concerned in this case, as we have repeatedly emphasized, with the clear meanings of the two clauses. Ratio |
As the Commission pointed out, it is immaterial that a purchaser from outside may be able to get round clause 9 by purchasing across the counter from the stockist inside a town. Ratio |
The clause itself, however, gives to the company an unreasonably wide power of deciding what is actually fair and equitable distribution. Ratio |
The Commission very rightly points out that this is more properly a part of the duty of governmental authorities which may be entrusted with powers of rationing such consumers ' goods if this is found to be necessary in public interest. Ratio |
However, before any question of reasonableness of a power to ration any goods is entrusted by any method to any person or authority those goods must be shown to be scarce or in Short supply. Ratio |
That was the position in the Telco case (supra). Ratio |
Evidence establishing such a need has not been shown to exist. Ratio |
And, in any case, it has to be a very exceptional set of facts indeed which could justify lodging of such a power in the manufacturer. Ratio |
The Commission has dealt with a good deal of evidence to justify its conclusion that the need to justify the lodging of such a power in the company has not been established. Ratio |
We see no reason to disturb it. Ratio |
Under the provisions of section 55 of the Act, an appeal lies to this Court only on one of the grounds mentioned in section 100 of the 467 Code of Civil Procedure. Ratio |
It is, therefore, necessary in all such cases for counsel to clearly formulate and direct our attention to only questions of law which arise so that these may be decided. Ratio |
It is not permissible to go over the whole range of evidence led as was attempted before us. Ratio |
Learned counsel for the appellant when asked by us to formulate the questions of law which arise mentioned the following questions: Firstly, whether the Commission was right in applying what he described as the "per se" rule as opposed to "the rule of reason". ARG |
It was submitted that the correct rule which should have been applied is stated in Board of Trade of the City of Chicago vs United States of America, as follows (at p. 237): "Every agreement concerning trade, every regulation of trade, restrains. ARG |
To bind to restrain, is of their very essence. Ratio |
The true test of legality is whether the restraint imposed is such as merely regulates and per haps thereby promotes competition, or whether it is such as may suppress or even destroy competition. Ratio |
To determine that question the Court must ordinarily consider the facts peculiar to the business to which the re straint is applied; its condition before and after the restraint was imposed; the nature of the restraint, and its effect, actual or probable. Ratio |
The history of the restraint, the evil believed to exist, the reason for adopt ing the particular remedy, the purpose or end sought to be attained, are all relevant facts. Ratio |
This is not because a good intention will save an otherwise objectionable regulation, or the reverse; but because knowledge of intent may help the court to interpret facts and to predict consequences". Ratio |
We find no objection whatsoever in adopting the rule indi cated above in cases to which it applies. Ratio |
That was a case in which a rule adopted by the Board of Trade of the City of Chicago (supra) prohibiting offers to purchase during the period between the close of the call and the opening of the session on the next business day for sales of wheat, corn, oats, or rye at a price other than at the closing bid, was challen... |
Hence, questions relating to effects of the rule arose so as to determine its reasonableness. Ratio |
Such questions could not be determined without examining evidence of facts to which the rule was meant to apply and findings as to how it operated. Ratio |
The issue was whether the rule, having regard to the facts to which it was to be applied, offended against the Anti trust laws. Ratio |
The Government 's case was thus stated by Mr. Justice Brandeis (at p. 237) : "The Government proved the existence of the rule and described its application and the change in business practice involved. Ratio |
It made no attempt to show that the rule was designed to or that it had the effect of limiting the amount of (1) 62 Law.p. 231.468 grain shipped to Chicago; or of retarding or accelerating shipment; or of raising or depressing prices; or of discriminating against any part of the public; or that it resulted in hardship ... |
The case was rested upon the bald proposition that a rule or agreement by which men occupying positions of strength in any branch of trade fixed prices at which they could buy or sell during an important part of the business day is an illegal restraint of trade under the Anti trust Law. Ratio |
But the legality of an agree ment or regulation cannot be determined by so simple a test as whether it restrains competi tion". Ratio |
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