Judgment:
1. On behalf of the Director-General an application under section 36B(e) of the Monopolies and Restrictive Trade Practices Act, 1969, has been filed praying that a cease and desist order be passed against M/s.
Asian Townsville Farms Ltd. (hereinafter referred to as " the respondent") restraining them from indulging in the unfair trade practice of making misleading representation in the conduct of their business of seeking investment from the public. Along with the application under Section 36B(c), the Director-General also moved an application under Section 12A of the MRTP Act, praying for the grant of an ad interim injunction. On the application under Section 36B(c), we have already passed an order for issuance of a notice of enquiry as contemplated by regulation 58/84A of the Monopolies and Restrictive Trade Practices Regulations, 1974. The application under Section 12A is supported by an affidavit of Shri N. P. Bhat, Director-General.
According to the Director-General, the representations made by the respondent to tempt the public to invest in the scheme constitute an unfair trade practice under Clauses (i), (ii), (v), fvi), (vii), (viii) and (x) of Sub-section (1) of Section 36A.2. Reference is made to the advertisements, viz., dated June 24, 1986, in the Hindustan Times, dated June 27, 1986, in the Indian Express and September 24, 1986, in the Hindustan Times. The first two advertisements are identical under the heading " When you are getting more why settle for less Rs. 30,000 gets Rs. 95,000 ". The advertisement dated September 24, 1986, is under the heading "Rs. 30,000 becomes Rs. 55,000:- 1 acre land in 6 years". It also carries a citation : We have been informed that on October 1, 1986 also a similar advertisement appeared In the Indian Express.
3. The Director General addressed a letter dated September 15, 1986, to the respondent to make certain queries. A photostat copy of the brochure was sent to the Director-General. A perusal of this brochure shows that the respondent has launched three schemes described as follows :Y. Own your farm scheme Rs. 55,000+1 acre land.Z. Lucky Dip Scheme 1 acre land + 700 trees.
To create an impression on the investor the scheme has been metaph orically described as "miracle tree" in bold letters with pictures of eucalyptus groves. A comparative table has also been drawn showing that a sum of Rs. 30,000 during the period of six years if in the bank will be Rs. 56,100, if in fixed deposits with reputed companies it will become Rs. 71,400, if deposited in similar venture it would grow to Rs. 82,500 or Rs. 90,000, but if invested in the ATFL, i.e., the respondent, it will grow to Rs. 95,000.
4. The claims or representations made by the respondent to invite investment in the schemes are : (iii) Guaranteed return stating that additionally the company will share 10% of its net profits with the members of ATFL.
(iv) The investor is totally covered of all plantation risks at all stages.
(v) Complete crop would be insured with the General Insurance Corporation against fire, malicious damage, storms, flood and allied calamities.
(vi) ATFL's project is provided expertise and technical assistance by Bhartiya Agro-Industries Foundation.
The above said advertisements dated June 24, 1986, and June 27, 1986, also make these high claims or representations.
5. It has been submitted by Shri B. B. Ahuja, learned counsel for the Director-General, that the letter dated July 30,1986, received from the res-respondent company in the office of the Director-General shows that the paid-up capital of the respondent company is just only Rs. 35,000.
The business has been commenced only on June 27, 1986, and till July 5, 1986, no application for investment had been received. It is not Rs. 30,000 only which would be spent by an applicant-investor in this scheme. An applicant-investor will be required to deposit a sum of Rs. 1,000 towards processing fee which is non-refundable and Rs. 3,000 for registration charges. The advertisement is silent with respect to this extra expenditure of Rs. 4,000. It is further submitted that in accordance with the terms and conditions as inserted in the application form and the agreement which is required to be executed by in applicant-investor, he would be liable to pay interest at 18% from the due date in case of any default in the payment; and if the default continues after three months, the respondent company can terminate the agreement and forfeit the amount. Even after the land is registered in the name of an applicant investor, physical possession of the land will remain with the respondent company and the investor applicant cannot sell or mortgage the land during the period of six years. Further, in case of acquisition of the land by the Government or damages or breaches occurring by reason of unforeseen circumstances, the respondent company will be exempt from all liabilities. In case of any dispute connected with the scheme, the same will be adjudicated by the chairman of the respondent company, whose decision will be final. It is also submitted by Shri B. B. Ahuja, advocate, that the respondent company has failed to give any indication as to how much land it has already acquired. According to learned counsel, there is no guarantee or security that an investor will certainly get Rs. 95,000 after six years or the alternative returns under schemes " Y " and " Z ".
6. After considering the entire scheme from all angles, we do feel that misleading and deceptive representation has been made about guaranteed returns against the investment. Considering the level of illiteracy in the country and the general run of persons expected to respond to the scheme, it would not be for all or anybody to subject the language of the advertisements and the brochure to a minute analysis or scholastic dissection. As a matter of fact, in order to protect the people against deceptive and unfair trade practices, Parliament had better also include " otherwise deceptive representation or practice " in the definition of unfair trade practice under Section 36A; we feel that even in the present state of the law on unfair trade practices, some of these representations prima facie fall within the ambit of Clauses (i), (ii), (v) and (viii) inasmuch as it is misleading to say that the trees grown on the land would be of a standard that will fetch as much as more than three times of every rupee invested therein or that the services rendered by the respondent company would be of a character as claimed to be from the standpoint of its standard. There is no indication that any agreement has actually been executed between the respondent company and the Bhartiya Agro Industries Foundation for technical know-how nor is there any certainty with respect to the productive quality of the land and the means of irrigation. The guarantee of return and the alleged insurance cover are all bare promises. Even the crop insurance will be for a particular amount and we do not know what that amount would be as and when any plantation takes place. We are firmly of the view that in the absence of any security made with the Government to ensure due return to an applicant investor, such categorial representations are nothing but misleading and deceptive. The claim that the returned income would be income-tax free is also doubtful.
7. Section 12A of the Monopolies and Restrictive Trade Practices Act comes to the aid of the public which empowers the Commission to pass an interim order restraining the pursuit of unfair trade practice where public interest outweighs the individual interest; rather, a trade practice which is likely to affect prejudicially even the interest of any consumer or consumers generally can be restrained. Since the advertisements are appearing with an ambience of frequency, it is likely to tempt the people in ignorance of the true facts and the scope of return to make investments in haste. We are convinced that it is necessary that an ex parte injunction be granted as the delay consequent upon directing a notice of the application to the respondent will defeat the very object of the injunction. So, we direct the issuance of an interim injunction restraining the respondent from circulating the brochure and publishing advertisements in future making representations such as : (iv) Investor is totally covered of all plantation risks at all stages, (v) Bhartiya Agro-Industries Foundation is providing expertise and technical assistance, 8. It is further directed that in all future advertisements including the brochure, an indication be given of the area of land acquired with location thereof and the area of land for which agreements have been made with the land owners, the sum in which insurance may be effected with the items covered thereby and also the financial position of the respondent company that the paid-up capital is Rs. 35,000.
9. As regards the prayer of the learned counsel that the advertisement and the brochure should also contain a statement about the non-liability of the company in case of damage or breach due to unforeseen circumstances and that in the case of disputes connected with the scheme, the decision of the chairman would be final, we feel that in the course of the ex parte injunction, these two facts need not be referred to, for the terms and conditions printed on the application form give sufficient indication thereabout.
10. We order accordingly and direct that in compliance of the provisions of Rule 3 of Order XXXIX of the Civil Procedure Code, a copy of the application under Section 12A with a copy of the application under Section 36B(c), a copy of the affidavit in support of the application and copies of the documents herewith relied upon shall be sent to the respondent immediately and an affidavit to this effect shall be filed before the Commission. A copy of this order shall also be sent to the respondent immediately by registered post and in the circumstances of the case, It is necessary that the operative part of this order in brief is released to the press for the information of all concerned.
11. The respondent is called upon to show cause within 15 days' time, if so advised, as to why the ex parte injunction order be not made absolute for the duration of the enquiry. For this purpose, the matter shall come up before this Commission on October 24, 1986.