M-S. HARIDAS EXPORTS v. ALL INDIA FLOAT GLASS MFRS. ASSOCIATION AND ORS

Citation: [2002] SUPP. 1 S.C.R. 229

Court: Supreme Court of India

Bench: B.N. KIRPAL, Y.K. SABHARWAL, K.G. BALAKRISHNAN

Judgment text

M/S. HARIDAS EXPORTS v. ALL INDIA FLOAT GLASS MFRS. ASSOCIATION AND ORS. JULY 22, 2002 ,, ' ' " [B. N. KIRPAL, CJ. Y. K:·SABHARWAL'AND 't '' , ,. ,. . ; . ,. · K. G. BALAKRISHNAN, JJ. ] ... ·1 "I ,; ,, ·'"''''' , " I• 11 ', I' l11.. , 1' : I• l. ' " " j . , iK· L, }I Monopolies and Restrictive Trade Practices. Act, 1969-Sections fl2),, r 2(c), 2(o), 2(u), 33(1)(1) and (ja), 36-A and. 37-Foreign Manufactwers ''C exporting goods into India and selling at predatory pric~omplaint. under. ,; the Act . restrictive trade practice-Jurisdiction of MRTP. Commission--Plea , that Commission has no jurisdiction since sections 33(J)(j)and (fa) impliedly_, repealed by anti-dumping provisions-Held, anti-dumping provisions do not, per se oust the jurisdiction of Commission--/!

can take action in respect of , imported goods or otherwise-However it cannot stop import and cannot decide validity ofthe action ofGovernment in permitting import ofgoods at predatory price---Customs TariffAct, 1975-Sections 9-A. to 9-C- Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on ' Dumped Articles and/or Determination of Injury) Rules, 1995. · · .. ,, · Ju 1 • I• rl ,I I; I -r I •. •1 ,. I Sec::on 12-A(l)-Temporary injunction--Grant of-Jurisdiction of. , E . Commission-Held, could be granted on the basis of proof that restrictive trade practices likely to affect prejudicially the public interest, or interest of any trader, class oftraders or traders generally or bfcustomers, and i:ot on : me;e allegation--Merely because an industry willfind itselfunable to compeie with imports from outside India can be no ground for exercising jurisdiction under the Section. · ,. - ' • '. ' ... '~ II.

Section 12-A Explanation II-Temporary Injunction-Grant a/- Procedure for-Commission should normally give notice and hear the respondents before passing an order ofinjunction---Code o/Civil. Procedure,1 · 1908-0rder XXXIX Rule 211. • '' ,, , • . ,. a ·11. " Section 37. ,-Cartel formation outside India-Export by the cartel _into India-Jurisdiction ofMRTP Commission to interfere. wjt~ . cartelformatio~ Held, is outside the territorial jurisdiction of Commission--But if the cartel carries out restrictive trade practice in -India then Commission will get jurisdiction. ' ' 229 ,,. ,. • · Docthne-"Effect Doctrine"-Applicability of Words and Phrases- "goods "-Meaning of in the context of Section 2(e) of Monopolies and Restrictive Trade Practices Act, 1969. The facts in Civil Appeal Nos. 2330 and 3572 of 2000; 76 of 2002 and SLP (c) No. 22549 of 2001 are that Respondent No.

I, an association of domestic float glass manufacturers filed a complaint under Section 33(1)(j), Ga) and Section 36-A read with Section 2(o) of Monopolies and Restrictive Trade Practices Act, 1969 before of Monopolies and Restrictive Trade· Practices Commission (MRTP Commission) against Indonesian companies alleging that they were selling float glass at prices much lower than their cost of production and thereby were indulging in selling at predatory prices with an intent to eliminate competition and causing material injury to the interest of domestic float glass industry; and that the MRTP Commission passed injunction against the Indonesian companies restraining them from exporting float glass to India at allegedly predatory prices. C. A. No.

, 3562 of 2000 is against th'e MRTP Commission's interim injunction which was subsequently confirmed, directing the appellant, an export cartel which used to produce natu~al soda and export it in India, not to indulge in the practice of cartelization by exporting soda ash to India in the form of cartel directly or indirectly. The questions for considerations before this Court were whether MRTP Act has extra territorial jurisdictions; whether the principle of "effect doctrine" has any application in India i. e.

where action takes place and agreements are entered into outside India but the resultant adverse effect is experienced in India then can the MRTP Commission have any jurisdiction; whether anti-dumping provisions as provided in Customs Tariff Act, 1975 and Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995 would oust the jurisdiction of MRTP Commission; and whether import by Indian party from foreign country at predatory prices required the agreement for import to be registered as per Section 33(1)(. j) of the MRTP Act; and whether under the facts and circumstances of the case passing of injunction order was called for. In Civil Appeal No. 3562 of 2000, additional question for consideration was whether the Commission had jurisdiction to interfere HARIDAS EXPORTS 1'. ALL INDIA FLOAT GLASS MFRS. ASSOCIATION 231 with cartel formation; and whether the Commissi.

on had jurisdiction to grant injunction. Disposing of the appeals, the Court HELD: I. I. On the facts of the instant case, impugned order passed by the MRTP Commission against the Indonesian exporters cannot be sustained and is set aside. Anti-dumping provisions do not per se oust the jurisdiction of the MRTP Commission. MRTP Commission can, inter a/ia take action·whenever a restrictive trade practice is carried out in India in respect of imported goods or otherwise. It is only in respect of the Indian leg of the restrictive trade practice, can an order under Section 12A and/ or Section 37 be passed. Under Section 33 of the Act what can be registered is only an agreement in regard to which any party to an agreement carries on business in India [Section 35 Explanation l J. But this does not mean that if an agreement is entered into outside India and which results in Restrictive Trade Practice in India, the MRTP Commission has no jurisdiction.

The "effect doctrine" apply and Section 2(u) and Section 37 gives jurisdiction to the MRTP Commission to pass appropriate orders qua the Restrictive Trade Practice in India. The MRTP Commission, in such a case, may not be able to stop import but there can be order imposing post import restrictions such as, for example, not to sell imported goods in India in such a manner which will be regarded as a restrictive trade pracrice under Section 37. [261-F, G, H; 262-A, BJ 1. 2. In Explanation I to Section 35 the use of the words "shall be deemed to be an agreement within the meaning of this section...........

"and the time-frame for registration clearly indicates that Section 33 and Section 35 apply only to the Indian agreements or agreements in India and, therefore, it became necessary to imcorporate Explanation I so as to enlarge the ambit and give extra territorial jurisdiction in relation to those agreements which relate to performance of services in India and any party to that agreement carries on business in India. [262-C, DJ 1. 3. Reading Sections 1(2), 2(c), 14 and Explanation I to Section 35 of Monopolies and Restrictive Trade Practices Act, 1969 together can leave no manner of doubt that the Act has no extra territorial operation. The present case is concerned with float glass, which was sought to be imported into India. For the purpose of the Act, it is only the goods imported into India which will fall within the definition of the word "goods" in Section 2(e). As such for the Commission to exercise any jurisdiction goods must ,,. ,, • " 1, • COURT, {2002] I S. C. R. 11 1 1 ~UP.

RE~. E. REPORTS. SUPP. A'\ bM~R~. ':·~. IJl~hi~i:~J. '! 'P. Pr,t~. ~. }~tq ~n~! ~··. ~~ . l~~g as. the import has not_ taken, place and the goods are merely intended for export to Indi_a the same . will not fall within the definition of the word "goods" in Section 2(e). •, · ":1,,. ;)•···: ·(249-H; 250-B, CJ 1 . h'Jtttf4/Jfhe lrestficti~e~tfade 'practi~e 'may - e'. 'tlie ies·u1t of any ·agreement between the parties in'· 1 1 India! 'A'. fiy·act wiiicli falls Uffder the 'Category ot restrictive trade practice can'·be irivestigatea into 'and'orders passed under Section 27(1). Sections'. 2(o}'and i(u)'ao riot speCificiillfiridicate thatttie·practice should be carried 1 1 on•o'nly bya pefscirf (){'person's in India. if the ttade practice is such that C'J itbe~o~~~-~r~~~~! ~ted t~~~e. :~~a,ct! c,e ~n In~~a. a_s c~n~~mplated by Section ' 2(o);' then-i acbon· f·g86ai~it~/. thei~ illl'po·rfint t~Jl~d~f. S~SMo! 1 ~3.

,_ an outside India agreement 1 1 peing nevertheless, ,ifany, restrictive trade practice, as a consequence of any such UiJU)~t:... Hl euu........ :4 US\JTf'iiHIUl"f Jl .. ll. ,. , an outside agreement, is carried out in India then the Commission shall j { Jt:i. ttn 1"';1J\Jti"'4 u\HJ ''U'·~ tL"~ -i~n. a · •. ,, · : , HARIDAS EXPORTS 1•. ALL INDIA FLOAT GLASS MFRS. ASSOCIATION 233 have jurisdiction under Section 37(1) in respect of that restrictive trade practice if it comes to the conclusion that the same is prejudicial to the public interest. (254-C, D, E, F] I. 7. ,It is possible that persons outside India indulge in such trade practices, not necessarily restricted to the effectuation of prices within India, which have the effect of preventing distorting or restricting competition in India or gives rise to a restrictive trade practice within India then in respect of that restrictive trade practice, MRTP Commission will · have jurisdiction.

If the effect of restrictive trade practices came to be felt in India because of a part of the trade practice being implemented here the MRTP Commission would have jurisdiction. This "effects doctrine" will clothe the MRTP Commission with jurisdiction to pass an appropriate order even though a transaction, for example, which results in exporting goods to India at predatory price, which was in effect a restrictive trade practice, had been carried out outside the territory of India if the effect of that had resulted in a restrictive trade practice in India. If power is not given to the MRTP Commission to have jurisdiction with regard to that part of trade practice in India which is restri~tive in nature then it will mean that persons outside India can continu~ to indulge in such practices whose adverse effect is felt in India with impugnity. A competition law like the MRTP Act is a mechanism to counter cross border economic terrorism. Therefore, even though such an a~reement may enter .

E, into outside the territorial jurisdiction of the Commission but if it results in a restrictive trade practice in India then the Commission will have jurisdiction under Section 37 to pass appropriate orders in respect of such restrictive trade practice. (254-G, H; 255-A-C] · 1. 8. In the instant case no challenge to the import policy allowing import of float glass and even if such a challenge was to be there it would hardly succeed. The grievance of the respondents is that import is being made at predatory prices. The challenge is to the actual import. But allowing such a challenge will amount 'fo giving the MRTP Commission jurisdiction to adjudicate upon the legal validity of the provisions relating to import, which jurisdiction the Co'! lmission does not have. It is not a court with power of judicial review over legislative action. Therefore, it would have no jurisdiction to decide whether the action of the G?

vern~ent in permitting import of float glass even at predatory prices is valid or not. The Commission cannot prohibit import, its jurisdiction commences after I . ,. I import is completed and any restrictive trade practice takes place. The rate of import duty which is imposed is a legislative act and is thus not amenable to the jurisdiction of the MRTP Commission. (255-F, G, H; 256-BJ 2. 1. The jurisdiction of the MRTP Commission, is not outsted by the Anti-dumping provisions in the Customs Act. The two operate in different fields and have different purpose. (255-D) · 2. 2. The levy or non-levy of anti-dumping or other duty being a legislative act pursuant to the exercise of powers under the Customs Tariff • Act can also not be a subject-matter of judicial review by the MRTP "\u·; m1nl ''"'1'Jq H ~·1i1! U «.. :mu '"'' ,!. luim. ;il"'J1 nulJ'lnu[m nL-,1>CJi-"1l luing 11J n. roq tlifl n• '""' ·r 11111 ) ·;W,ITrH. ;. f . ni1-~nq ·,! Hnt 'Hihhtl'-•;1 tr~ no rwif'. l'I~ t1l II r10h11rrn.

h•1 l 'i11 ". ,• 1 ni lud . noihnuini n1noc1m ..! '! T''t>n· •. '. I 0 3 21 23 'Jtsr~·~:! lj J-: , 3~ ~. ~l91q'; ~P,, }. :. ~(t9. 0?. ,aRR,1~?. ~f,l°. f,J,09R:. ~ ,,J ;: J~-r. t 1 BJ' . . 1 1 ·, {llll i>. chiHah1~a¥arti~1:ii'.. NaH~an',1 ibs~1Pii. VeiiabJiiy;'bip~~k1r:~: a~~! ~:; 1 1 1 1 1 Aili1·13_tbivah,iGol:iafslioramani~ili: Vfkas rvi:'bhta; :r\. td~l~cih M~1hoti-a, oiije~t1~ "'n" ·. \ ·.. 1r1 ..... 1i.. ,1. ,1·"il n, ..... ,1. >-1··v ~-11 '. f"•':"rrl •! ··~..... , . J'. •· HoJa ·dJJiaih;·'M~. M~iliAar·s'ifv~~t1xit' M's~: ·M:~~'ik' t 1 1 1 C) Kai-aliJ~~ia,·~s~ ~s:1s! lio'fr, stiMinJ~rk, 't~ siirii~1is ·M:aft6y? 1a'Y~rit'Melit~:'. d 1 Klishnan"Veilugopa1:and Ni5: P. 's: s1lrofi toV ih~ iP'Pe~iirig'p~? Heg~·" ·~ ·:"i! : !. ) ,'i . ~ . t. -l· 1bnl ni n·Jfll•Uti 11•1 Leave granted. I(; . / -•M' 1 . lt.. ni . t•,,·1~ " lill~n!! f~~Wr_~~~)n. ,11 1 India. During March-April, 1998, complaints were made by the said respondent . to ,the -.

Customs ,Departmenti)alleging that-thetlndonesiammanufactufors of 1 flo_a~ . gl(ls_s. ,,jn1ass! :>ciation;with· ~ndian1importers. were. allegedly. lindulging• in·,:i hel! YYi:l! nder:-invoicing. 0lhe respondentsJwere, rhowever~l inforified1 by, then l 1 Customs Department in Calcutta that: iftheY. had·. ahy genuine grievance;1the1? same could be made before the Designated Authority, Ministry of Commerce dealingiwith -anti! dun'ipingJcomplainis: OnJ26thI May;'"1998/llie'resp'on~ent 111 i _No~ l presenteg'a 'complaint before. the Designated Authority~ This coriipl~fof appears toihave' been fiied before 'the... ,Ariti~D-tiriipirig AutlioritY aiid tli~ safi:ie~i" 11 was possibly{noe. pursuea by the complainant: j•i '" • ''llll n ;n ri •ud f'I/.. " :1 j. \-:~. )! : :H--,;:. [ . 1·1-' . 1011. "f. 11;. i;,·,~1" f. r;,· 110in,~ ,. ,b:at 1-JL~" zn1; On l0th September, 1998, the respondent No. l filed a complaint before the MRTP Commission under Section 33(l)G), ·Qa) and .

Seetion 36A' read ~with Section 2(o) of the Monopolies and Restrictive Trade Practices Ac{ri'. : HARIPAS EXPORTS '" ALL INDIA FLOATGLASS MFRS. ASSOCIATION [B. N. KIRPAL CJ. ] 237 1969 (hereinafter referred to as the. 'MRTP Act') against three Indonesian, companies alleging that they were manufacturing float glass and were. selling the same at predatory prices in. · India, and were hence resorting·to restrictive and unfair trade practices. In the complaint, it was stated that the float glass of Indonesian origin was being exported into India at the CIF price of US$ 155. to 180 PMT. At this price, some float glass had be~n . shipped into India ! B during the penod December, 1997, to June, 1998. It was alleged that these sale prices were predatory prices as they were ·1ess than not only the·cost of production for the product in Indonesia but also the variable cost of production of the product.

The complainant gave figure indicating the estimated cost of float glass internationally as well as the cost of production· of float glass in India with a view to demonstrate that the Indian manufacturers of float glass would not be able to compete with the price at which the' Indonesian manufacturers were presently selling or intending to seil to Indian consumers. On this basis, it was contended that the sale of float glass by the Indonesian manufacturers at the said price of US$ ·l 55 to I80 PMT will restrict, distort and prevent competition by pricing out Indian producers from the market. · This would result in lowering the production of the Indian industry and the · consequent idle capacity and losses would force the industry to become sick which would lead to its closure whkh would have a direct impact on ihe employment in the industry. · " In response to the notice issued to the Indonesian companies, Mis. P. T. Mulia Industries (respondent No.

2 in this appeal) wrote a letter to the MRTP Commission stating that it had never in the past exported float glass to India. The other two respondents did not send any reply to the Commission. The appellant, however, which is the Indian importer of the float glass from Indonesia had filed a caveat before the Commission. It also filed a reply refuting the allegations of the respondent and it was the contention of the appellant that respondent No. I was a cartel of Indian manufacturers of float 0 glass which was, in fact, exporting out of India at prices ·far lower than their own cost of production in India. It was also contended by the appellant herein that the cost of production of float glass was lower in Indonesia than in India and float glass was not being exported to India at predatory prices. The application under Section 12-A for interim injunction was heard by the Chairman ofthe Commission and a second Member. There was a difference of opinion amongst them.

While the Chairman vide order dated 18th January, 1999, allowed the application and restrained the Indonesian companies from exporting to India their float glass production at 'predatory prices, Dr. S. 'A. Chakravarthy, the second Member dismissed the application, inter alia, holding that there was no evidence to substantiate the plea of predatory pricing at this stage. By order dated 9th February, 2000, the third Member who heard the case concurred with the view taken by the Chairman and passed an order of injunction against the Indonesian companies. While Civil Appeal No. 2330 of 2000 is filed by the Indian importer who was the caveator before the Commission, Civil Appeal No. 3572 of 2000 has been filed by P. T. Muliaglass which is the subsidiary of P. T. Mulia · Industrindo. It is the case of P. T.

Muliaglass that the holding company does not carry out any manufacturing operations and that is why it had informed the MRTP Commission that it was not engaged in the export of float glass to India and, therefore, it did not appear before the MRTP Commission. P. T. Mulia Glass which, in fact, manufacturers the float glass being aggrieved by the order ofthe MRTP Commission has filed the appeal, inter alia, contending that it is not exporting float glass to India at predatory prices. On behalf of the appellant, it was submitted that the MRTP Commission had no jurisdiction to entertain and adjudicate upon the complaint which was made by the respondents. It was submitted that the essence of the complaint ofthe respondents before the MRTP Commission was of injury to the domestic industry on account of low prices by the Indonesian manufacturers which is a dispute under Anti-Dumping law and does not fall within the jurisdiction of MRTP Commission.

It was submitted that the complaint which was made against the Indonesian exporters was one essentially of dumping as it had been contended that the Indonesian exporters were exporting float glass at very low prices which were predatory in nature and the intention was to cause injury to the domestic industry. It was submitted that Article 18. 1 of the WTO Agreement on Implementation of Article VI of GATT, 1994, provides that "no specific action against dumping ofexports from another Member can be taken except in accordance with the provisions of GATT, 1994 as interpreted by this Agreement". The remedy against the practice of"dumping"/export of goods at "predatory prices" has been expressly agreed upon internationally under the General Agreement on Tariffs and Trade (Gatt) to which India is a signatory. The Agreement deals with anti-dumping duties and provides mechanism to implement it.

In pursuance of the GATT, 1994, the Parliament for the first time inserted provisions 9A to 9C in the Customs Tariff Act vide the Customs HARIDAS EXPORTS i•. ALL INDIA FLOAT GLASS MFRS. ASSOCIATION {B. N. KIRPALCJ. J 239 Tariff (Amendment) Act, 1995, No. 6 of 1995 which replaced the provisions of sections 9, 9A and 9B earlier inserted in the Customs Tariff Act under Act No. 52 of 1982. The Statement of Objects and Reasons to the Bill clearly states that the Bill seeks to amend the Custom Tariff Act to bring the provisions of the Custom Tariff Act in conformity with the provisions of Article VI of the Gatt 1994, and the agreements on subsidies and countervailing measures. Even the preamble of the Customs Tariff (Amendment) Act, 1995, No.

6 of 1995 also provides that the provisions of sections 9, 9A and 9B of the Customs Tariff Act, I975, have been replaced by the new sections 9, 9A and 9B to reflect the changes in the domestic law, consequent upon coming into effect the Agreement on Anti-dumping (i. e. an Agreement on implementation of Article VI ofthe GATT 1994)..... under the Uruguay Round on 1st January, 1995. Se::ti:n 9A, inter alia, provides that where any article is exported from any country or territory to India at less that its normal value, then, upon the importation of such article into India, the Central Government may, by notification in the Official Gazette, impose an anti-dumping duty not exceeding the margin of dumping in relation to such article. The said section indicates how the normal value and the margin of dumping is to be ascertained.

Section 9B contains provisions which provide for exemption from levy under Section 9 or Section 9A in certain cases while Section 9C gives the right of appeal against the order of determination or review thereof regarding the existence, degree and effect of any subsidy or dumping in relation to import of any article. The Act contemplates the Designated Authority, which is appointed under it's provisions, to conduct a detailed investigation into the allegation of dumping of articles before it determines the normal value, export price and the margin ofdumping. It is important to note that in undertaking this exercise, the Government or the foreign country exporting the article is required to be informed. By notification dated lst January, 1995, Anti-Dumping Duty Rules were framed. Rule 14 sets out circumstances under which the designated authority may terminate an investigation.

In Rule 14(d), there is a de-minimus requirement that is to say the volume of the dumped imports, actual or potential, should account for not less than 3% of the imports of the like product. If the imports are below this level, the authority shall terminate the investigation immediately. It is the case of the appellant that the float glass which was imported from Indonesia was much less than 3%. The learned counsel for the appellants contended that the respondents have in the complaint filed by them with the MRTP Commission under the l'240 ::·"' . I 'l· SUPREME'COURT'REPORTS [2002] SUPP. rs:c. R. 'A ... MRTP'Act'soughnedressal·oftheir alleged grievance tliat'cerfain Indonesian I companies a~e selling· float glass at-~prices ". ffiuch lower tnan'',theif• cost' of . productio'n and are thereby allegedly' indulging in predator/p'ricing with/an , alleged ·intent to ·eliminate competition· arid causinglmaterial· iitjufy to' the I·interest. ofdomestic float·glass industrY.

For redressaf ofthe 'alleged grievance . of the respondents; a specific remedy has'been providecl'linder seetioris 9A ;B Jto ·9erof the Customs :fariff Act 'and the'1Anti-duinping 'Ducy- Rules·. · The . provisions ofsectioris 9Ato 9C introduced•undei"the'Customs TariffA~t'artd I. the Anti-dumping Duty Rules providefor a complete anCl exhaustive niadiiiiety •. to1prevcntdumping. of goods into Iridia'including export:of goods1into India 'at 'predatory' price: causing "injury'. ' toTdomestic industry' 'caU'sing ~threat; of · injuryAo domestic industry by-waylofjimpositiori 'of anti-dumping duty 'on import of such goods. The expression "injury" has been defined under Article 3 of the Agreement on Anti-Dumping as under: _ 11. o·n 1~... ,nnr; ' .... - ·... d,,. ·. N J• . '! J. ILJ •. -'·~~I"'" •• , . • - .. . . - - ~?.? ~~cUnvestigat! op,ul? ~n,. ~e. ceipt, of a cqp]pl~int from ~he d the total float glass which is manufactured and sold in India.

The reduction in prices of the Indian importer is to the benefit of the Indian customer. It is only if there is an agreement between the Indian importer and the foreign seller which has such an effect that the production in Ii:idia of float glass by efficient Indian industry would have to stop and such stoppage is considered prejudicial to the public interest, can an order under Section 12-A or Section HARIDAS EXPORTS 1·. ALL ! NOIA FLOAT GLASS MFRS. ASSOCIATION [B. N. KIRPAL CJ. ] 259 37 be passed. It is the case of the petitioners that the Indian manufacturers have formed a cartel of their own and are charging high prices because of lack of competition. It is alleged that the Indian manufacturers are making much profits and despite import of float glass having taken place for the last 5-10 years the Indian industry has not suffered. On the other hand, the volume of sales has increased and the profit of the Indian producers not decreased.

Under these circumstances, it was contended, the passing of the injunction was wholly uncalled for. Import of material at prices lower than prevailing in India cannot per se be regarded as being prejudicial to the public interest. If the normal or export price of any goods outside India is lower than the selling price of an indigenously produced item to say that the import is prejudicial to the public interest would not be correct. The availability of goods outside India at prices lower than those which are indigenously produced would encourage competition amongst the Indian industry •nd would not per se in result in eliminating the competitor, as was sought to be submitted by the respondents. It is while dealing with a complaint relating to restrictive trade practice that the MRTP Commission has the jurisdiction to grant temporary injunction under Section 12-A(l).

It is only on the basis of proof, and not mere allegation, and on the basis of an inquiry before the Commission that any trader or class of traders is carrying on a restrictive trade practice which is likely to affect prejudicially the public interest or the interest of any trader, class of traders or traders generally or of consumers that the Co1nmission would have jurisdiction to grant temporary injunction restraining any undertaking or person from carrying on any restrictive trade practice. While the Commission has power to grant ex-parte temporary injunction, but in view of Explanation II to Section 12-A, whereby the provisions of Rule 2-A of Order XXXIX of the Code of Civil Procedure, 1908 are made applicable, for the grant of temporary injunction the Commission normally ought to give notice and hear the respondents before passing an order of injunction.

What is, however, important is that the condition stipulated in Section 12-A(I) have to be satisfied before an order for injunction can be passed. In other words, it has to be proved that the respondents before the Commission is carrying on or about to carry on a restrictive trade practice which will be prejudicial to ihe public interest or to the interest of traders etc. before an order for injunction can be C;sued. Merely because an industry will find itself unable to be able to compete with imports from outside can be of no ground for exercising jurisdiction under Section 12-A(I). It is only if the trade practice which is being impugned is such that would fall within the four comers of Section 2(o), which define restrictive trade practice, can the Commission grant an injunction. The facts on record do not indicate any justification for any interim order being passed in the present case.

Furthermore, the impugned order passed against the foreign manufacturers of float glass, who do not carry on business in India is clearly contrary to the provisions of Section 14 of the Act and, as such, cannot be sustained. In our opinion, the MRTP Commission has no extra territorial jurisdiction. The action of an exporter to India when perfonned outside India would not be amenable to jurisdiction of the MRTP Commission. The MRTP Commission cannot pass an order detennining the export price of an exporter to India or prohibiting him to export to India at a low or predatory price. The matter may be examined from another angle. In this case, there i's a sale of float glass by the exporter in Indonesia. If the float glass was ready and available, then being ascertained goods the sale would be regarded as having taken place where the goods existed at the time of sale, i. e. , in Indonesia.

If the glass had to be manufactured and not readily identifiable, then the sale would take place outside India when the goods are appropriated to the contract by the foreign exporter. Here the appropriation would take place in Indonesia when the glass is eannarked and exported to India. In either case the MRTP Commission would have no jurisdiction to stop that sale. If the said sale cannot be stopped and the import policy pennits the Indian importer to import on payment of duty then we fail to see what jurisdiction the MRTP Commission can possibly have till a restrictive trade practice takes place after float glass is imported into India. It is not as if the Indian industry has no remedy against goods being exported to India predatory prices. It is because of the need for such a provision that the Customs Act was amended and anti-dumping provisions were incorporated. Recourse to this was taken by the respondents but then that remedy was not pursued.

At this stage, it is relevant to refer to the provisions of Section 11 of the Customs Act. The said Section gives the Central Government a power to prohibit importation or exportation of goods, if it is satisfied that it is necessary to do so for any of the purposes specified in sub-section (2). Under sub-section (2), such prohibition can be for the purpose of establishment of any industry (sub-clause (i); preventing serious injury to domestic production ofgoods ofany description (sub-clause G); the compliance of imported goods with any laws which are applicable to similar HARIDAS EXPORTS 1•. ALL INDIA FLOATGLASS MFRS. ASSOCIATION [B. N. KlRPALC J. J 261 goods produced or manufactured in India (sub-clause (s); the prevention of the contravention of any law for the time being in force (sub-clause (u)) and any other purpose conducive to the interest of general public (sub-clause (v)).

In as much as, the import into the country is, inter alia, governed by the Customs Act and the power to prohibit or not to prohibit the importation of any goods is with the Government, then unless and until, a law prohibiting import is infringed, it is difficult to perceive as to how the MRTP Commission can prevent the importation of the goods. In this connection, it is also useful to refer to Section 33(3)of the Act which reads as under : "No agreement falling within this section shall be subject to registration in accordance with the provisions of this Chapter if it is expressly authorized by or under any law for the time being in force or has the approval of the Central Government or if the Government is a party to such agreement. " Inasmuch as the importation of float gla. s is permitted by law, under the provisions of the Customs Act' and the Import Control Act, then an agreement in relation to such an import may not be liable to be registered under the provisions of the Act.

It is only in respect of float glass, which is imported and thereafter if in respect to that a restrictive trade practice is indulged can the MRTP Commission have jurisdiction qua post import Indian end of tlic transaction. Conclusions From the aforesaid discussion and reasons, we arrive at the following conclusions: I. Anti-dumping provisions do not per se oust the jurisdiction of the MRTP Commission. 2. The MRTP Commission can, inter alia, take action whenever a Restrictive Trade Practice is carried out in India in respect of imported goods or otherwise. 3. It is only in respect ofthe Indian leg ofthe restrictive trade practice, can an order under Section 12 A and/or Section 37 be passed. 4. Under Section 33 of the Act what can be registered is only an agreement in regard to which any party to an agreement carries on business in India [Section 35 Explanation I].

But this does not mean that if an agreement is entered into outside India and which results in a Restrictive Trade Practice in India, the MRTP Commission has no jurisdiction. The "effects doctrine" will apply and Section 2(o) read with Section 2(u) and Section 37 gives jurisdiction to the MRTP Commission to pass appropriate orders qua the Restrictive Trade Practice in India. The MRTP Commission, in such a case, may not be able to stop import but • there can be order imposing post import restrictions such as, for example, not to sell imported goods in India in such a manner which will be regarded as a restrictive trade practice under Section 37. 5. In Explanation I to Section 35 the use of the words "shall be deemed to be an agreement within the meaning of this section.........

" and the time-frame for registration clearly indicates that Section 33 and Section 35 apply only to Indian agreements or agreements in India and, therefore, it became necessary to incorporate Explanation I so as to enlarge the ambit and give extra territorial jurisdiction in relation to those agreements which relate to performance of services in India and any party to that agreement carries on business in India. 6. On the facts of this case, the impugned order passed by the MRTP Commission against the Indonesian exporters cannot be sustained and is set aside. Appeals are disposed of in the aforesaid terms. Parties to bear their own costs. Civil Appeal No. 3562 of 2000 : Interim order of the MRTP Commission restraining the appellant from dispatching, directly or indirectly, soda ash to India is the subject matter of challenge in this appeal.

The complainant-Mis Alkali Manufacturers Association of India (AMAI for chart) had filed a complaint before the MRTP Commission under Section 33(I)(d), Section 36-A and Section 40 read with Section 2(i) & (o) of the MRTP Act. The Complainant Association had 34 members carrying on the business of Soda Ash in India. In the complaint, it was stated that the HARIDAS EXPORTS 1·. ALL INDIA FLOATGLASS MFRS. ASSOCIATION [B. N. KIRPALCJ. J 263 Soda Ash was being manufactured by six companies in India and was being sold to the Indian consumers at a net price of Rs 8190 to Rs 8320 PMT net of excise. It was alleged that the appellant Mis American Natural Soda Ash Corporation (hereinafter referred to as ANSAC) consisted of six producers of natural Soda Ash who have joined together to form an Export Cartel by virtue of a Membership Agreement amongst them entered into in America on 8th December, 1983.

By this agreement, the six produces had agreed that all export sales by them or by any of their subsidiaries will be made through ANSAC which was set up as Corporation in accordance with the provisions of the United States Export Trade Act, 1918. It was further alleged in the complaint that ANSAC in an attempt to invade the Indian market and undercut the Indian producers, it sold American Soda Ash to Indian consumers at an unrealistically low price of US$ 132 PMT-CIF. With a view to circumvent the prohibition in Indian law against monopolistic, restrictive and unfair trade practices, a strategy had been adopted by ANSAC by selling American Soda Ash to Indian consumers through the front ofone Mis G. Premjee ofSingapore in whose favour the Indian producers had opened letters of credit. According to this complaint, there was a bulk sale of soda ash by ANSAC to the Indian Consumers through the conduit of Mis. G. Premjee of Singapore.

On the basis of these averments, namely, that ANSAC was a Cartel of American Soda Ash Producers and was likely to affect maintenance of prices at reasonable and realistic levels in India and with a view to adversely affect the local production and availability of Soda Ash, the MRTP Commission should enquire against this restrictive and unfair trade practice and grant an ex-parte injunction restraining ANSAC from despatching the goods. On the basis of these allegations, the MRTP Commission on 9th September, 1996 passed an ad-interim injunction, which was subsequently confirmed by it, directing ANSAC not to indulge in the practice of cartelisation by exporting soda ash to India in the form of cartel directly or indirectly. The order further stated that it was without prejudice to the final outcome of the said enquiry as well as to the rights of the importers or exporters in the individual capacity to export soda ash to India.

This order has been affirmed by the Commission by it's order of 9th March, 2000. While denying that ANSAC was a cartel or that export of Soda Ash to India was violative of any of the provisions of the MRTP Act, ANSAC has submitted in this appeal that the MRTP had no extra territorial jurisdiction and furthermore in view of the provisions of the anti-dumping law, the MRTP Commission had no jurisdiction to decide the case. This appeal was heard along with Civil Appeal No. 2330 of 2000 Mis Haridas Exports v. All India Float Glass Manufacturers Association . In Haridas Exports case common contentions raised in this appeal regarding jurisdiction of the MRTP Commission and the scope and ambit of the MRTP Act vis- a-vis Anti dumping Duty have been· dealt with. We now propose to deal with the allegation of export by the appellant, which is alleged to be a cartel, and whether there was justification for granting the injunction. ,.

Some more undisputed facts, which are relevant may first be mentioned. ' ANSAC was set up under the Webb Powerence Act of U. S. A. as an export agency, the six producers of soda ash in U. S. A. being its members. Like a canalising agency exports of natural soda ash by these producers cannot be made by the members individually, Exports of soda ash from U. S. A. are made by the canalising agency, namely, the appellant. ~ile the India companies manufacture synthetic soda ash, the American companies export natural soda ash which is cheaper to produce than the India and soda ash. Since its inception in 1983, the appellant had sold for export to India only one consignment equal to 1. 44 per cent ofthe annual production of India, and it is in respect of this consignment that the MRTP Commission issued injunction restraining its import. Till today, therefore, no soda ash has been exported by the appellant to India.

It was submitted by the respondent that the agreement of 1983 formed a cartel and was registrable under Section 33 (l)(d) of the MRTP Act. In so far as Section 33 {l){d) is concerned scheme appears to be that every agreement falling under Section 33 (I) (a) to (I) is presumed to be one relation to restrictive trade practice and is subject to registration. An agreement falling under Section 33 need not necessarily be one in writing inasmuch as Section 2 (a) defines an agreement as including any arrangement or understanding as well. Therefore, if apart from written agreement there is an arrangement or understanding amongst the sellers or the purchasers with regard to the purchase or sale of goods to be only at the prices or on terms or conditions agreed upon amongst them then such an agreement would require registration.

Section 33 (l)(d) regards an agreement to be one relating to restrictive trade practice if such agreement relates to purchase or sale of goods or to tender for sale or purchase of goods only at prices or on terms or conditions agreed upon amongst the sellers or amongst the purchasers. Such an agreement amongst the sellers or amongst the purchasers relating to HARIDAS EXPORTS 1·. ALL ! NOIA FLOAT GLASS MFRS. ASSOCIATION [B. N. KIRPAL CJ. ] 265 purchase or sale or to the prices in respect thereof may be regarded as the formation of a cartel. Section 35 specifies the period within which every agreement falling under Section 33 become registrable. As we have already noticed, Explanation I would make such an agreement registrable only when at least one party to the agreement carries on business in India. On an agreement being filed under Section 35 particulars are furnished to the Director General who is required to maintain a register under Section 36.

Section 37 then gives the jurisdiction to the Commission to make an inquiry, whether an agreement is registered or not, in order to find out if a restrictive trade practice is prejudicial to the public interest. The effect ofthis is that by not registering an agreement failing under Section 33 and 35 the Commission is not divested of its jurisdiction of exercising its powers under Section 37. The opening words of Section 37 make it quite clear that an inquiry into any restrictive trade practice can be made by the Commission even in relation to an agreement which is not registered. Therefore, once an agreement comes to the notice of the Commission which is to be regarded as containing a restrictive trade practice then the Commission is under an obligation to find out and determine whether in its opinion the practice is prejudicial to the public interest.

It is only if the Commission is satisfied that there is prejudice to the public interest then the Commission has the jurisdiction to direct either that the practice shall be discontinued or shall not be repeated or to hold that any such agreement which is prejudicial to the public interest shall be void in respect of such restrictive trade practice or that the said agreement shall be modified in such a manner as may be specified. If remedial steps have been taken then, as contemplated by Section 37 (2), no order need be passed by the Commission. One further restriction on the power of the Commission to pass order is also contained in Section 37 (3)(b) which provides that if a trade practice is expressly authorised to be carried on by any law for the time being in force then no order shall be passed under Section 37.

This Explanation is in addition to the provision ofSection 38 which deals with cases relating to presumption as to the agreement ofthe types mentioned therein being in the public interest. The impact of reading of the provisions together is that what is sought to be targeted in relation to restrictive trade practice is not the nature or the factum· ofJhe restriction but such restriction should not be prejudicial to the public interest. For example, an agreement may be entered into amongst the purchasers in order to ensure constant supply of goods at a reasonable rate. Such an agreement even though it may fall under Section 33 (1) (d) would not be regarded as being prejudicial to the public interest.

It is in this context that when we examine the provisions of Section 12-A we find that the power of the Commission to grant temporary injunction arises only after it is satisfied that a restrictive trade practice or unfair trade practice is being carried on which is likely to affect prejudicially the public interest or the interest of trader or class of traders etc. It is only with a view to prevent the causing of a prejudicial effect that an interim order can be passed by the Commission under Section 12-A. As we have already seen the Act does not have any extra territorial operation. An agreement which is referred to under Section 33 (I) (d) must, therefore, be of a kind in which a person in India is a party. This is clear from the bare reading of Explanation I to Section 35.

This means that for an agreement to fall within the ambit of Section 33(1) (d) and in respect of which the Commission can exercise its powers under Section 37 a person in India must be regarded as one of the sellers who is a person to such an agreement. This is clear from the use ofthe words" any party to the agreement carries on business in India" occurring in Explanation I to Section 35. A Careful reading of Section 33 (l)(d) indicates that it refers to two classes of agreements. One class is an agreement to purchase goods or to tender for the purchase of goods. only at prices or on terms or conditions agreed upon between the purchasers. The other class is an agreement to sell goods or to tender for the sale of goods only at prices or on terms or conditions agreed upon between the sellers. In other words, Section 33 (I) (d) refers to the agreements which have the effect of forming either a buyers cartel or a sellers cartel.

This sub-section does not refer to or deal with agreements of sale and purchase between sellers and purchasers. Jn the case of import of soda ash, the contention is that the appellant is a cartel in America which was proposing to sell soda ash to India at very low prices with a view to eliminate competition and to adversely affect the Indian industry. Any agreement of sale by the appellant to an Indian purchaser would not attract the provisions of Section 33 (l)(d), which refers only to cartelising agreements and not to agreements of sale and purchase. But th~ MRTP Commission will have jurisdiction under Section 37 to pass orders if such a sale was to amount to being a restrictive trade practice. For the Commission to have jurisdiction to pass such an order, whether interim or final, it must come to the conclusion that it is in public interest to do so. It is to be borne in mind that public interest does not necessarily mean interest HARIDAS EXPORTS 1·. ALL INDIA FLOAT GLASS MFRS.

ASSOCIATION [B. N. KIRPAL CJ. ] 267 only of the industry. Unless and until it can be demonstrated that an efficient Indian industry would be forced to shut down or suffer serious loss resulting in closure or une1nployment, the Com1nission ought not to pass an injunction restraining an Indian party from importing goods from a cartel at predatory prices. Importing goods at a price lower than what is available in India is not per se illegal. We have provisions under the Customs Act which enables the Government to impose anti dumping duties with a view to protect the Indian industry. Nevertheless, the era of protectionism is now coming to an end. The Indian industry has to gear up so as to meet the challenges from abroad. If the cartel is selling goods to India and still making profit then it will not be in the interest of the general body of the consumers in Jndia to prevent the import of such goods.

The remedy of the Indian industry, in such an event, is to take recourse to the provisions under the Customs Act in relation to the levy of anti-dumping duties. A cartel is formed, inter alia, with a view that members of the cartel do not wage a price war and they sell at an agreed or uniform price. There may perhaps also be a cartel where members divide the territories to which each of them can export. There is little doubt that the object of an export cartel is to capture a market even if at first, it may result in a loss to the exporter. The competition law in the form of MRTP as it stands today does not contain any provision, which can give it jurisdiction to interfere merely with cartel formation. Formation ofcartel which takes place outside India is outside the territorial jurisdiction of the MRTP. The Indian importer obtaining goods at a low price does not contravene any law. He has obtained a good bargairj.

We need not go into the question whether anti-dumping provisions in the Customs Act can be an effective remedy against such cartelisation. But if the cartel carries out Restrictive Trade Practice in India or it's actions have the effect of a Restrictive Trade Practice being carried out in India, then the MRTP Commission will get jurisdiction to act under Section 37 (1) of the MRTP Act. We make it clear that we are expressing no opinion as to whether the appellant is a cartel or on the question of predatory prices for the reason that we are satisfied that here no case had been made out by the respondents for the grant of injunction against the appellant. The injunction issued against the appellant was not only against the provisions of Section 14 of the Act but even on facts as alleged no case had really been made out for any order under A Section 12-A or Section 37 of the Act more so when no import of soda ash into India from the appellant had, in fact, taken place.

On the other hand, prima facie the allegation of the appellant that it is the respondents which have formed a cartel and do not welcome any competition does merit consideration, perhaps in another case. B For the aforesaid reasons, this appeal is allowed with costs. K. K. T. Appeals disposed of.