HINDUSTAN LEVER LIMITED versus DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION), NEW DELHI AND ANR.

Citation: [2001] 1 S.C.R. 318 · Decided: 10-01-2001 · Supreme Court of India · Bench: B.N. KIRPAL · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
HINDUSTAN LEVER LIMITED 
-
y 
v. 
DIRECTOR GENERAL (INVESTIGATION AND 
REGISTRATION), NEW DELHI AND ANR. 
B 
JANUARY JO, 2001 
[B.N. KIRPAL, RUMA PAL AND BRIJESH KUMAR, JJ.] 
Monopolies and Restrictive Trade Practices Act, 1969: Sections 2(0), 
c 
JO(a)(iv) and 37. 
Restrictive Trade Practice-Determination of-Cease and desist order-
Principle of natural j11Stice-Applicability-Commission received complaints.from 
-.J 
.;:--
the erstwhile stockists of the manufacturer-After preliminary enquiry 
Commission suo moto issued notice under S.JO(a)(iv) and S.37-No 
D 
information and material which formed the basis of the notice had been 
furnished to the manufacturer-Commission found manufacturer indulged in 
restrictive trade practice and wrongly terminated its agreement with a 
stockist-Correctness of-Held: Termination of agreement with the stockist 
A 
not mentioned in the show cause notice-Therefore, manufacturer not called 
upon to meet any allegation in connection therewith-Principles of natural 
E justice require that manufacturer is entitled to know the case it has to meet-
Where civil consequences are likely to result, principles of natural justice 
have to be followed-The manufacturer should have been put to notice 
thereof-Hence, the order of the Commission is contrary to law and set aside . 
Wordv and Phrases: 
...... 
F 
"Restrictive Trade Practice"-Meaning of-Jn the context of S.2(o) of 
the Monopolies and Restrictive Trade Practices Act, 1969. 
The Monopolies and Restrictive Trade Practices Commission received 
G certain complaints from the erstwhile stockist of the appellant. After 
preliminary enquiry the Commission issued suo moto notice under Section 
10(a)(iv) and Section 37 of the Monopolies and Restrictive Trade Practices 
Act, 1969 read with Regulation 58 of the Monopolies and Restrictive Trade 
Practices Commission Regulations, 1974. The appellant contended before 
the Commission that the information and material, which formed the basis 
H 
318 
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11.L.LTDv. DIR.GEN. INVESTIGATION AND REGISTRATION 
319 
of the notice, had not been furnished to the appellant. The commission found A 
that the appellant had been indulging in restrictive trade practice with its 
re-distribution stockists and that it wrongly terminated its agreement with 
one J. Hence, this appeal. 
Allowing the appeal, the Court 
B 
HELD: I. As the plain readinQ of the definition of"restrictive trade 
'Y 
practice" occurring in Section 2(o) of the Monopolies and Restrictive Trade 
Practices Act, I 969 itself discloses, and also as rightly understood by the 
Commission in issuing the notice, there are two parts to the definition-one 
which relates to carrying on of such trade practice which has or may have 
the effect of preventing, distorting or restricting competition in any manner C 
and secondly the carrying on of such trade practice which inter alia has the 
e'rfect of imposing unjustified costs or restrictions on the consumers. 
(323-E-FI 
2. Neither in the show cause notice nor in the additional particulars, D 
which were supplied to the appellant, was there any mention of termination 
by the appellant of its stockist's agreement with J. The appellant was not, 
therefore, called upon to meet any allegation in connection therewith. The 
)!., 
particulars, which were supplied to the appellant, did inter alia relate to the 
termination of other stockists' agreements. It is with respect to them that 
in the reply filed by the appellant it gave reasons for the termination of the E 
agreements and the Commission came to the conclusion that the termination 
of agreement with those stockists was justified. (324-B-C( 
3. Principles of natural justice would require that the appellant against 
~ whom an order of cease and desist could be passed under the provisions of 
the M.R.T.P. Act is entitled to know the case which it has to meet. Passing F 
of an order like the present one results in civil consequences and it is now 
well settled that in such an event principles of natural justice have to be 
followed, It is for this reason that the Act and the Regulations required a 
notice to show cause to be issued. The notice, which is issued, either itself 
must provide, or an accompanying or subsequent document must indicate, to G 
the person to whom notice is served, the case, which is required to be met. 
It does appear that there was a complaint by J, which had been filed, with the 
Commission and ifthe Commission wanted to take that allegati

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