DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs CENTRAL CIRCUIT CINE ASSOCIATION

A complaint was filed by Anand Theatre, Hanumangarh, Rajasthan stating therein that the respondent, Central Circuit Cine Association had issued a Circular dated the 11th March, 1994 under Rule 67(b) asking its members not to supply pictures to it for screening and exhibiting in its theatre. Alongwith the complaint, an application for interim relief under Section 12A of the MRTP Act, 1969 (the Act for brief) for grant of temporary injunction and for restraining the respondent from giving effect to the aforesaid Circular was also filed. On 7th August, 1995, the Commission after considering the complaint and the injunction application and after hearing the applicant/ complainant directed that a notice in respect of both, the complaint and the injunction application be issued making it returnable on 16th October, 1995. On that date the Advocate for the respondent gave an undertaking that the impugned Circular dated the 11th March, 1994 would not be given effect to or implemented.

IN the reply filed on behalf of the respondent, it has been stated that the respondent is a non-trading apex body of the film distributors and exhibitors and has been formed for promoting and advancing the cause of film trade, in general and distribution and exhibition of films, in particular. It has been further pointed out that the respondent is a non-profit making body registered under Section 25 of the Companies Act. As regards the impugned Circular, it has been clarified that the applicant/complainant is a defaulter and has not paid its dues amounting to Rs. 2.50 lakhs to other members and distributors and that a competent Civil Court has held the applicant/complainant to be a judgment-debtor and that the respondent was well within its rights to issue the impugned Circular. It has also been stated that to facilitate the payment of Rs. 2.50 lakhs due from the applicant/complainant, its recovery was directed to be made in monthly instalments. However, in order to determine whether the respondent Association was indulging in monopolistic or restrictive trade practices within the meaning of the relevant provisions of the Act, the Commission directed the Director General (Investigation and Registration) (the DG) to investigate into the complaint and submit his Preliminary Investigation Report (PIR) within 60 days.

The DG in pursuance of the aforesaid order of the Commission dated 25.7.1997, made the investigation and submitted the PIR dated 11.12.1997. In the PIR, the DG has concluded that the respondent''s impugned Circular directing the members not to deal with the applicant/ complainant was a restrictive trade practice within the meaning of Section 33(1)(a) of the Act and an enquiry may be instituted against it. Accordingly, a Notice of Enquiry dated the 28th/29th January, 1998 was issued to the respondent.

ON completion of pleadings, the following issues were framed : (1) Whether the complaint is maintainable in view of preliminary objections taken by the respondent in its reply to the NOE ? (2) Whether the respondent has been or is indulging in the restrictive trade practices as alleged in the NOE ? (3) If so, whether such restrictive trade practices are not prejudicial to public interest ?

During the pendency of the present proceeding, it was stated by the learned Advocate for the respondent on 4th August, 1999 that the complainant/informant has sworn an affidavit to the effect that it would like to pay up all the dues in instalments as claimed by the respondent and has also applied for membership afresh. Subsequently, on 30th September, 1999 it was stated on behalf of the parties that they would not insist on a decision on the issue of maintainability of the present proceeding and that issue maybe decided at the stage of the final hearing. It is in this background that final arguments addressed by the Advocate for the DG as well as the Advocate for the respondent were heard.

IT was argued by the learned Advocate for the respondent that the complainant/ informant on whose complaint the present enquiry was instituted, has affirmed in his affidavit that he would apply for membership of the respondent Association afresh and will also clear the dues claimed from him and in view of the aforesaid statement of the complainant/ informant, the enquiry should be closed. The contention of the learned Advocate for the DG is that the enquiry against the respondent pertains to adoption of and indulgence in restrictive trade practices within the meaning of Section 33(l)(a) of the Act and the alleged boycott or asking the members of the respondent Association not to deal with the complainant/informant is deemed to be a restrictive trade practice and it is not open to the Commission to say that it does not amount to a restrictive trade practice and close the enquiry. Our attention has been drawn to the Commission''s order dated the 15th October, 1981 passed in RTPE 22/1979 wherein it was held that the role of the respondent according to its Memorandum and Articles of Association was to settle disputes between the members and also to ensure good behaviour by the members as well as to discipline errant members. It was further observed in the order that the respondent''s attempt at self regulation would not be tantamount to a restrictive trade practice and even if it was, it would be entitled to the gateway under Section 38(1)(b) of the Act. The aforesaid order was passed much before the amendment of the Act in 1984 and the words "shall be deemed" in the opening part of the Sub-section (1) of Section 33 indicate that the trade practices enumerated in Clauses (a) to (1) are, per se restrictive trade practices. In that view of the matter, the impugned Circular of 11th March, 1994 issued by the respondent directing its members not to supply pictures to the complainant/informant for screening and exibiting in its theatre is a restrictive trade practice and falls foul of the provisions of Section 33(1)(a) of the Act. Movies and films are a popular source of entertainment for the public and closure of a theatre or movie hall due to non-supply of films to the owner of the movie hall is per se prejudicial to public interest as the public would be deprived of seeing movies in that cinema hall which they were used to prior to its closure and resultant non-exibition of films. It thus follows that by issuing the impugned Circular of 11th March, 1994, the respondent has adopted and indulged in restrictive trade practices within the meaning of Section 33(1)(a) of the Act, and the restrictive trade practice has also proved to be prejudicial to public interest. Accordingly, our findings on all the three issues are in the affirmative.

IN view of our aforesaid discussion, we conclude that the respondent is guilty of adoption of and indulgence in restrictive trade practices within the meaning of Section 33(1)(a) of the Act and accordingly, direct the respondent to cease the same and also give an undertaking that same or similar trade practice will not be repeated in future. The respondent is further directed to file an affidavit of compliance within six weeks from the date of its pronouncement. Complaint disposed of.