Sc Returns Nirma Inds Lottery Case To Mrtpc

The Supreme Court yesterday quashed the order of the Monopolies and Restrictive Trade Practices Commission, which had restrained Nirma Industries Ltd from floating a lottery to promote its soaps.

The court asked the commission to give the company an opportunity to produce evidence to rebut the complaint that its lottery was against the interests of the consumers. It remitted the case back to the commission.

The original complaint was filed in 1991 by a consumer alleging that the company had raised the price of the detergent along with the prize scheme.

It also distorted competition in the market and restricted competition.

The director general of the commission made an enquiry into the matter. The company denied all the charges. The company maintained that it was compelled to increase prices due to rise in the costs of raw materials.

The commission, however, concluded that the company was indulging in unfair trade practices, which is prohibited under Section 36A of the MRTP Act.

It asked the company not to repeat the practice in future, though the scheme in dispute was over and the prizes had been distributed.

Nirma appealed to the Supreme Court against the prohibition, arguing that the order was not correct in law. The bench consisting of chief justice J S Verma and Justice S P Kurdukar stated that the commission's finding was not based on any cogent material supporting the allegations.

The apex court explained that the only material before the commission to support its finding was the complaint that the company had raised the price of the detergent a few days before the scheme was floated.

If the company was given an opportunity to disprove the charge, it would have done so with documentary evidence.

The court noted the submission of the company that it had within its possession the audited balance sheets and other evidence which would indicate that the increase in the price was necessitated by the increase in the prices of the raw materials.

We are of the opinion that the company needs to be given an opportunity to prove its case that they have not committed any unfair practice, the judges said.

Such a finding is necessary to determine whether such an unfair trade practice had caused loss or injury to the consumer of such goods by eliminating or restricting competition or otherwise.