DIRECTOR GENERAL OF INVESTIGATION And REGISTRATION vs Tata Finance Limited

A Notice of Enquiry (NOE) was issued to Tata Finance Limited, Bombay under Section 36B(c) of the Monopolies and Restrictive Trade Practices Act, 1969 (for brief the Act) on the basis of the application filed by the Director General of Investigation and Registration (DG).

IN the application filed with the Commission the DG has stated that the respondent issued an advertisement in the Times of INdia'' dated 7.2.1996 making false and misleading claims of "100% peace of mind" for the investors who made deposits in the fixed deposit plan. According to the DG fixed deposits are unsecured loans and hence the investors cannot have "100% peace of mind" as claimed by the respondent. Further the respondent''s claim that its representation is based on the rating given by CRISIL (Credit Rating INformation Services of INdia Limited) did not entitle it to make the investors believe that the deposits made by them are secured. The DG has alleged that the respondent has indulged in unfair trade practice falling with the meaning of Clauses (ii), (iv) and (vi) of Section 36A(1) of the Act. The respondent filed the reply to the NOE in which it has pointed out that the DG has not construed the caption "100% peace of mind" objectively and as per the trade practice followed throughout India and abroad, an investor investing in the fixed deposit is always an unsecured creditor. "100% peace of mind" should not be interpreted to mean "100% security". "100% peace of mind" is in relation largely to simplification of the procedural formalities involved in fixed deposit schemes which are usually very cumbersome and elaborate. The facts that fixed deposits were unsecured was made known to the public in the advertisement itself and there was no attempt to mislead the public. CRISIL has given the rating of FAA + to the respondent which signified high safety and timely payment of both interest and principal. This rating is given on the basis of the entire strength of the Company which is considered before awarding a rating to any particular scheme. No investors have hitherto been misled by the advertisement and the track record of the respondent has always been the best amongst industry. After the pleadings were complete, the following issues were framed : (1) Whether the enquiry is not maintainable for the reasons stated in the reply of the respondent ? (2) If the issue No. 1 is decided in the negative, whether the respondent has indulged in the unfair trade practices listed in the NOE ? (3) Whether the alleged unfair trade practices are prejudicial to consumer, consumers generally and public ?

Both the parties agreed that the case can be adjudicated on the basis of the affidavit and counter-affidavit of evidence, which were duly filed. I gave a hearing to Mr. Shams Khwaja, Advocate for the DG and Mr. A.N. Haksar, Sr. Advocate for the respondent. I have carefully gone through the records of the case and took into consideration the arguments advanced at the time of final hearing.

DURING the final hearing the respondent did not press consideration of Issue No. 1. My answers to Issue Nos. 2 and 3 are as below : Issue No. 2 : In the negative Issue No. 3 : Does not arise. 6.The reasons for coming to the above findings are discussed below in this order. 7. The main argument of the DG in support of the allegation is that since fixed deposits are unsecured loans it is wrong on the part of the respondent to claim "100% peace of mind" for the investors. The Advocate for the DG also argued that the rating given by the CRISIL did not entitle the respondent to make this claim. According to him the rating was the result of series of personal interaction with the senior management staff by the credit rating agency and was therefore, not totally objective. 8. The Senior Advocate for the respondent pointed out that it was universally known that fixed deposits are unsecured loans. The statutory details regarding the schemes were published and were available in the application form to be filled in by the investors prior to making their deposits. The high rating of FAA + given by the well known rating agency, CRISIL, denotes high safety and timely payment both interest and principal. The claim of "100% peace of mind" was neither baseless nor exaggerated and in any case cannot be construed as misleading. At best it could be considered, as puffing in advertisement which is permissible. The Senior Advocate also pointed out that no investor has been misled by the advertisement of the respondent. 9. We are inclined to accept the arguments advanced by the Senior Advocate for the respondent as they have considerable force. The advertisement appearing in ''Times of India'' dated 7.2.1996 itself made a reference to the statutory details of the schemes which were published in newspapers earlier and the entire text was available in the application form for the fixed deposits to be filled up by the investors, which clearly indicated that "the deposits accepted by the Company are unsecured and ranking pari passu with other unsecured liabilities". On the basis of the strength and financial status of the respondent and its track of record if the respondent had claimed "100% peace of mind" in its advertisement it is to be interpreted in the correct sense and not taken literally. The emphasis is on the soundness and the high safety of the investment. The Hon''ble Supreme Court of India while delivering the judgments in the case of Lakhan Pal National Limited v. MRTP Commission, (1993) 1 CTJ 345 SC (MRTP), has pointed out that "the issue cannot be resolved by merely examining whether the representation is correct or incorrect in the literal sense. A representation containing a statement apparently correct in the technical sense may have the effect of misleading the buyer by using tricky language. Similarly, a statement, which may be inaccurate in the technical, literal sense can convey truth and sometimes more effectively than a literally correct statement. It is, therefore, necessary to examine whether the representation, complained of, contains the element of misleading the buyer". Viewed in this light, it is clear that the claim of the respondent cannot be construed as misleading or false even if it is considered "exaggerated". We also take note of the fact that the respondent has stated it has discontinued impugned advertisement and according to it any enquiry in this case now is infructuous. Under Section 36D(1) of the Act, an order can be passed only if any unfair trade practice is prejudicial to public interest. In this case though we have not held that the respondent has indulged in unfair trade practice the DG has not led any evidence to show that the action of the respondent has been prejudicial to public interest. In view of the foregoing analysis, we are of the view that the respondent has not indulged in any unfair trade practice and we direct the NOE issued against it be discharged. There is no order as to costs. NOE discharged.