MRTP Commission Can Grant Compensation Only When Loss Or Damage Is Due To Monopolistic, Restrictive Or Unfair Trade Practice: Supreme Court

The Supreme Court observed that Section 12-B of the Monopolies And Restrictive Trade Practices Act, 1969 Act empowers the MRTP Commission to grant compensation only when any loss or damage is caused to a consumer as a result of a monopolistic, restrictive or unfair trade practice

The bench comprising Justices L. Nageswara Rao, BR Gavai and BV Nagarathna noted that there are five ingredients to constitute an offence of unfair trade under the MRTP Act. They are:

1. There must be a trade practice (within the meaning of section 2(u) of the Monopolies and Restrictive Trade Practices Act);

2. The trade practice must be employed for the purpose of promoting the sale, use or supply of any goods or the provision of any services;

3. The trade practice should fall within the ambit of one or more of the categories enumerated in clauses (1) to (5) of Section 36A;

4. The trade practice should cause loss or injury to the consumers of goods or services;

5. The trade practice under clause (1) should involve making a "statement" orally or in writing or by visible representation."

In this case, the MRTP commission dismissed a complaint filed by some home buyers (appellants) under Sections 36-A, 36-B(a) and (d), 36-D and 36-E read with Sections 2(i) and 2(o) of the MRTP Act. The buyers were aggrieved with the demand of extra charges by the builder. According to them, demand of extra charges after the commencement of construction amounted to manipulation of prices which resulted in increase in the cost to the detriment of the buyers.

Examining the materials on record and the agreement between builder and the buyers, the Apex Court bench observed that there is no misrepresentation by the builder. "The demand of extra cost was permissible according to the terms of the ABA. As there was no misrepresentation on the part of the respondent, unfair trade practice as complained by the appellants has not been made out.", the bench observed.

The court also rejected the contention that hat ABA is an unconscionable contract opposed to public policy as a consumer has no bargaining power and is an easy victim of unfair trade practice.

"There is no reference to any clause of the ABA, in particular, to substantiate the allegation. On the other hand, the appellants repeatedly refer to the allegation of delay in handing over possession and imposition of extra charges apart from non-refund of interest on the amounts paid by them. The appellants are not entitled to any relief on this count as we have already approved the order of MRTP by holding that there is no unfair trade practice on the part of the respondent. The compensation sought by the appellants cannot be granted as Section 12-B of MRTP Act empowers the Commission to grant compensation only when any loss or damage is caused to a consumer as a result of a monopolistic, restrictive or unfair trade practice. As the appellants have failed to prove unfair trade practice on the part of the respondent, they are not entitled to any compensation.", the bench observed.

Though it upheld the order of MRTP Commission, the court directed that the builder shall hand over possession of the flats to the appellants on payment of Rs.25,00,000/- for each flat by the appellants.

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