M/S. PEICO ELECTRONICS AND ELECTRICALS AND ANR. versus UNION OF INDIA AND ANR.

Citation: [2004] 2 S.C.R. 883 · Decided: 09-03-2004 · Supreme Court of India · Bench: P. VENKATARAMA REDDI · Disposal: Disposed off

Judgment (excerpt)

MIS. PEICO ELECTRONICS AND ELECTRICALS AND ANR. 
A 
v. 
UNION OF INDIA AND ANR. 
MARCH 9, 2004 
[P. VENKATARAMA REDDI AND S.H. KAPADIA, JJ.] 
Monopolies and Restrictive Trade Practices Act, 1969; Ss. 2(0)(ii), 10, 
33, 37 & 38: 
B 
Dealership agreement-Notice-Termination on ground of non- C 
performance as per terms of the agreement-Complaint-Commission holding 
that the Company indulged in certain restrictive trade practices prejudicial to 
public interest-Directed the Company to continue supply of the goods and 
take measures to amend the offending clause from dealership agreement-On 
appeal, Held: Allocation of an area/market for disposal of the goods amounting D 
to restrictive trade practice-Restricting one dealer to sell the products in 
certain area while allowing the other dealer, amounts to discriminat01y 
treatment-The Company could not impose such restrictions-However, in the 
absence of any finding on the issue of discriminatory treatment, charges of 
favourable treatment against other dealer not proved. Restrictive trade E 
practice-Scope of s.2(0)(ii) and Section 33(1)-Discussed. 
Dealership Agreement-Clause 7-Validity of-Held: since manufacturer 
could intentionally or arbitrarily withhold supply of goods and yet disown 
liability, it is per se restrictive trade practice. 
Jurisdiction of the Commission-Held: Commission vested with power 
to enquire into any restrictive/monopolistic trade practice upon information 
or suo motu-omission to record proceedings framing an issue does not 
vitiate the findings, however, adequate opportunity ought to have been given 
F 
to the affected party-Court, while testing validity of actions taken by the 
Commission on the procedural aspects, should avoid a narrow approach, and G 
adopt the approach which conforms to objective of the Act-However, 
Commission cannot assume the role of a Civil Court-In absence of findings 
as to how termination of the agreement would per se give rise to restrictive 
trade practice/circumvent any trade practice, the Commission should not have 
gone beyond its powers by reviving the Contract, and resuming supply of H 
883 
884 
SUPREME COURT REPORTS 
[2004] 2 S.C.R. 
A goods-To that extent, direction of the Commission unsustainable. 
Appellant-Company manufacturing audio products, had a dealer 
since long and subsequently appointed another dealer, Respondent No.2, 
on certain terms and conditions. Later, the Company after serving a notice, 
terminated the dealership of Respondent No.2 in terms of Clause 29 of 
B the agreement. Respondent-dealer filed a complaint before the Commission 
alleging certain restrictive trade practices being followed by the Company. 
The Commission held an enquiry, framed five charges of restrictive trade 
pritctices against the Company and came to a finding that the appellant 
had indulged in certain restrictive trade practices prejudicial to public 
C interest; that Clause 7 of the agreement per se amounted to restrictive 
trade· practice and directed to amend the clause from the dealership 
agreement and not to terminate the dealership of Respondent No.2. Hence 
the present appeal. 
It was contended for the appellant-Company that the Commission 
D arrived at its findings arbitrarily without regard to evidence on record 
and so its findings are perverse; that the Commission exceeded its 
jurisdiction by directing restoration of dealership and for deletion of 
Clause 7 of the agreement; and that it failed to give a finding to the effect 
that the alleged trade practice was prejudicial to public interest while 
E passing the cease and desist order against the Company. 
Disposing of the appeal, the Court 
HELD: 1.1. By virtue of Section 33, read with Clause (g) of the 
Monopolies and Restrictive Trade Practices Act, an agreement to allocate 
F any area or market for the disposal of the goods is deemed to be an 
agreement relating to restrictive trade practice as the allocation of a 
particular area or market for the disposal of the goods likely to hamper 
or restrict the competition. The Company could not impose such restriction 
in the course of dealings with its dealers. [891-D-F] 
G 
1.l. The charge of discrimination against the ·company was held 
established by the Commission o!11Y on the ground that the other dealer 
was given freedom to sell the Company's products from a market, but 
the complainant, other dealer, was not allowed to sell the products from 
the same market. This has resulted in discriminatory

Excerpt shown. Read the full judgment & AI analysis in Lexace.