DIRECTOR GENERAL (INVESTIGATION AND REGISTRATION) vs malayala manorama

DR. Xavier Paul, Editor, "Noothanam", a monthly in Malayalam made a complaint charging "Malayala Manorama", "Mathrubhoomi" and "Kerala Kaumudi" with adoption of and indulgence in unfair trade practices within the meaning of Section 36A of the MRTP Act, 1969 (the Act, for brief) stating that in order to boost their sale and circulation, an Insurance Scheme under which an amount of Rs. 1 lakh is proposed to be paid to a subscriber, if he dies due to an accident during the period the Scheme is in force, has been launched. The only condition for entitlement to insurance cover is that a beneficiary should be a subscriber and should fill up an application form which is published in the newspapers, in question and on the basis of which he is registered under the Scheme. While for the subscribers to the "MaIayala Manorama" and the "Mathrubhoomi" a sum of Rs. 1 lakh, is payable under the Scheme, an amount of Rs. 2 lakhs, as the insurance amount, has been offered to the subscribers of "Kerala Kaumudi".

THE Director General (Investigation and Registration) (the DG), was asked to conduct an investigation into the complaint. He submitted a Preliminary Investigation Report (PIR) after investigation. It transpires from the PIR that with a view to boosting the circulation of these newspapers, the respondents entered into an agreement with the New India Assurance Company for providing insurance cover to the subscribers under the Group Janta Personal Accident Scheme. It has also been mentioned in the PIR that the duration of the Scheme is one year, in the first instance, and may be renewed from year to year. It also transpires that the respondents have paid the entire premium amount @ Rs. 3/- per subscriber. What is noteworthy is that the respondents are not collecting even a single paise additionally from the subscribers who are registered under the Scheme. A salient feature of the Scheme is not for entitlement to the benefit under the Scheme, application forms which are accepted for registration under the Insurance Scheme are published in these newspapers only and a person has to be a subscriber for using the application form. THE scheme is open to all the existing readers and subscribers as well as newly enrolled subscribers. The scheme in respect of "Malayala Manorama" was announced with effect from 14.2.1997 while that of "Kerala Kaumudi" and "Mathrubhoomi" with effect from 15.3.1997 and 18.3.1997 respectively. It has been concluded by the DG in his PIR that although the subscribers are not required to pay any extra amount to participate in the Scheme, they have necessarily, to subscribe to the newspapers and have to fill an application form which is printed therein for registration and have to remain subscribers during the period the Scheme is in force so that they remain entitled to the benefits under the Scheme. It has also been mentioned that after the launching of the Scheme, the sale and circulation of the newspapers has increased considerably, and the Scheme is in the nature of an allurement of additional benefits and, therefore, is an unfair trade practice which has been adopted by the respondents for promotion of sale of the newspapers, in question.

Based on the DG''s findings in the PIR, a Notice of Enquiry was issued to the respondents on 21.11.1997. The respondents, in reply, have denied the allegations of unfair trade practices. On completion of pleadings, issues including the issue of maintainability of the proceeding, were framed.

WE are deciding this issue of maintainability by this order. WE have heard the learned Advocates appearing on behalf of the DG as well as the respondents on the issue of maintainability of the present proceeding. It has been submitted by the learned Advocates for the respondents that no case of adoption of or indulgence in the unfair trade practices by the respondents has been made out as the price of the newspapers, in question, has not been increased and the additional benefit of insurance cover is being provided absolutely free to the subscribers who have been, in any case, subscribing to these newspapers. It has also been argued that not only the price of the newspapers has not been increased, the premium which is required to be paid to the Insurance Company @ Rs. 3/- per subscriber, is also not being recovered wholly or partly from the subscribers and therefore, the impugned Scheme does not attract the provisions of Section 36A(1) of the Act. According to Section 36A of the Act, an "''unfair trade practice" means a trade practice which, for the purpose of promoting the sale, use or supply of any goods or for the provision of any services, adopts an unfair method or unfair or deceptive practice...''. The nature and description of unfair trade practices hit by the section include misleading advertisements and false representation; bargain, sale, bait and switch selling; offering of gifts or prizes with the intention of not providing them and conducting promotional contents; non-compliance of product safety standards; and hoarding or destruction of goods. An essential ingredient of an unfair trade practice is that it must be prejudicial to public interest or the interest of any consumer or consumers generally. Although Section 36A was amended and loss or injury as a result of the alleged unfair trade practice is no longer its integral part, and loss or injury to the consumers is not required to be proved, yet for holding a trade practice to be an unfair trade practice it must be found to have caused loss or injury. Going by the definition and applying the yardstick of an unfair trade practice, no loss or injury seems to have been caused to the subscribers to the newspapers, in question. On the contrary, the subscribers to these newspapers stand to gain by reading the newspapers as they will become more enlightened and well-informed about the news and views on various subjects including the political, social, cultural and economic developments in addition to the benefit of an insurance cover. Likewise, no prejudice is shown to have been caused to the subscribers by the introduction of the impugned Insurance Scheme and insurance cover being provided to them under the Scheme. They are also not required to pay any extra amount either by way of subscription or even premium for the insurance cover under the Scheme. The Scheme covers not only the new subscribers who may be lured by the Scheme and start subscribing to one or all of these newspapers but also the existing subscribers and, therefore, the impugned Scheme cannot be said to fall within the ambit of Section 36 as it is not prejudicial to the public interest or the interest of the subscribers generally.

WHILE it is true that the scheme has resulted in increasing the circulation of the newspapers, in question, but mere offer of an insurance cover to the subscribers free of charge cannot be held to be an unfair trade practice and unless, the impugned scheme or the trade practice in pursuance of which the impugned scheme has been launched falls foul of Section 36A(1) of the Act, it cannot be construed to be an unfair trade practice and, therefore, cannot be prescribed by a cease and desist order. The essential ingredient of its being prejudicial to public interest or to the interest of the subscribers generally is missing in the present case and, therefore, there is no escape from the conclusion that it does not attract the provisions of Section 36A(1) of the Act. We are fortified in our above conclusion by the binding ruling contained in the case of HMM Ltd. v. Director General, Monopolies and Restrictive Trade Practices Commission, VI (1998) SLT 621=(1998) 6 Supreme Court Cases 485. In the present case, the impugned Scheme gives additional benefit of Rs. 1 lakh or Rs. 2 lakhs (depending on the newspaper and the Scheme) to the subscriber who dies in an accident. In the event of death due to an accident, an amount of Rs. 1 lakh is payable in the case of subscribers to the "Malayala Manorama" and the "Mathrubhoomi" and Rs. 2 lakhs if the victim happens to be a subscriber to the "Kerala Kaumudi". Therefore, the impugned Scheme cannot be said to fall within the purview of Section 36A(1) of the Act and as there is no case of an unfair trade practice by and on behalf of the respondents, the present proceeding is not maintainable. The Notice of Enquiry issued to the respondent deserves to be and is herey discharged and the enquiry is closed with no order as to costs on the facts and in the circumstances of the case. NOE discharged.