Mrtpc Rift Spills Over

It has been apparent for some time that the director general (investigation & registration) of the Monopolies and Restrictive Trade Practices Commission and the commission have been working at odds with each other.

The first reports began to appear two years ago when the commission asked the DG to weed out anomalies in the functioning of the directorate general. Later, the commission approached the department of company affairs to withdraw powers of the DG under the MRTP Act to undertake investigations on its own.

Last week, the DG moved two appeals in the Supreme Court challenging the orders of the commission but it lost in both cases. The appeals raised substantial questions on the powers of the commission vis a vis the DG.

In the first case, the DG had filed a complaint before the additional sessions judge, New Delhi, against TELCO and its 17 directors including Ratan Tata and N A Palkhivala for not supplying him with information in a case against the company alleging restrictive and unfair trade practices. TELCO then moved the commission against the filing of criminal complaint.

The commission passed an order directing the DG not to pursue the criminal complaint. Therefore the DG appealed to the Supreme Court. The question involved was whether the commission was entitled to direct its DG not to prosecute the company. That was a substantial question pending before the commission for its decision. Therefore, the Supreme Court declined to interfere in the matter.

The DGs second appeal was against the commissions order asking it to take up the preliminary investigation against Phonographic Performance Ltd in a complaint filed by Bennett Coleman Ltd. When the commission asked the DG to file a preliminary investigation report on the complaint, the DG filed a review petition before the commission.

It argued that the work assigned to it was actually the function of director general (investigation & enforcement). This argument was rejected by the commission. Therefore, the DG appealed to the Supreme Court.

According to the DG, preliminary investigation should be done by DG (I& E) under Regulation 29 and the DG is an authority with different functions. The commissions order was bad in law and against its own earlier orders.

It was further contended that since the commission had already issued notice to the Phonographic, the DG could not be asked to conduct preliminary enquiry thereafter. It would be against public interest and illegal, the DG argued. Again, the Supreme Court declined to interfere in the matter.

The adverse position taken by the DG in these issues will affect the functioning of the commission. For years, the DG has been conducting investigations into complaints and it is too late in the day for it to argue that investigation was the duty of another authority. Whether a DG (I & E) is functioning at all or not is another matter.

With the Supreme Court disinterested in resolving the conflicts between the commission and its DG, it is for the department of company affairs to intervene and clarify the powers of the contending parties. It would be in public interest to iron out the differences within the commission itself instead of rushing to the Supreme Court every now and then. The commission has already lost its teeth over the years by way of amendments to the MRTP Act and Supreme Court judgments; it should not lose face too.

Crude products

Crude petroleum derivatives ethylene, butylene and propylene are entitled to excise exemption, according to a recent Supreme Court judgment (National Organic Chemical Industries Ltd vs Collector of Central Excise).

At the same time the court also interpreted that the phrase derived from in the excise tariff did not mean that the products should be directly derived from another to obtain the excise benefit.

The revenue authorities and CEGAT had maintained that these products from the refinery were derived from raw naphtha and only distantly related to crude petroleum. The Supreme Court held that their view was wrong. It is not necessary that the products should be directly derived from crude.

The refining of crude produces various products at different stages. Raw naphtha is one such stage. On further refining of naphtha, the three products are obtained. Therefore, the source of these products is crude, and they are entitled to excise exemption.

Tax on video

The Supreme Court has reversed the finding of the Gujarat high court and held that the levy of entertainment tax on video cassette recorder and player on TV or videoscope in any place of entertainment or bus is valid (State of Gujarat vs Hotel Ratrani). The Gujarat high court was following the Bombay high court which had earlier held that entertainment tax on VCR projections was arbitrary. Now both the judgments stand overruled.

The Supreme Court stated that on charging the admission rates or while showing pictures during bus journeys, the video is used for entertaining people. Therefore the tax was applicable in such cases.

Tailpiece

1996 was just one of those years for the Sikkim high court. While the law journals reported scores of judgments from the other high courts, only two were reported from Sikkim. In contrast, the most litigative were the Delhiites, who moved the high court on every conceivable issue, from scams to overspeeding buses.