Holding

The Court held that the MRTP Commission’s interim injunction was a discretionary order pending a final determination and could not be set aside, leading to dismissal of the appeal.

Summary

Hindustan Lever Ltd. advertised its New Pepsodent toothpaste as 102% superior in antibacterial action to the "leading toothpaste", which the MRTP Commission identified as Colgate Dental Cream. Colgate Palmolive (India) Ltd. and a consumer filed a complaint under Sections 10, 36A(viii), 36A(x) and 36B of the Monopolies and Restrictive Trade Practices Act, 1969, and sought an interim injunction under Section 12A. The Commission, noting the technical nature of the claim, ordered a temporary injunction restraining Hindustan Lever from making the superiority claim until a panel of experts could examine the evidence, and appointed such a panel. Hindustan Lever appealed under Section 55, arguing that the Commission’s order was discretionary, that the complainant must prove falsity before an injunction, and that the order should be set aside. The Supreme Court held that the Commission’s order was a purely discretionary interim measure pending a final decision, and therefore not liable to interference. The appeal was dismissed.

Issues considered

The propriety of interfering with a discretionary interim injunction order of the MRTP Commission under Section 55 of the Act.
Whether the complainant must prove falsity of the advertising claim at the interim stage for an unfair trade practice under Section 36A(viii)/(x).
The adequacy of the balance of convenience analysis and consumer protection considerations by the Commission.
The appropriateness of appointing an expert panel to resolve the technical claim.

Legislation cited

Monopolies and Restrictive Trade Practices Act, 1969s. 10, s. 100, s. 12-A, s. 36-A(viii), s. 36-A(x), s. 36-B, s. 55

Subjects

unfair trade practiceinterim injunctionadvertising claimconsumer protectionexpert paneldiscretionary orderSection 36ASection 12ASection 55

Judgment

A HINDUSTAN LEVER LTD.
v.
COLGATE PALMOLIVE (I) LTD. AND ANR.

DECEMBER 17, 1997

B [SUHAS C. SEN AND M. JAGANNADHA RAO, JJ.]

Monopolies and Restrictive Trade Practices Act, 1969 :

Sections 55, 12-A, 10, 36-A(l)(viii) & (x) and 36-B-Appeal under
C Sectio11 55-lnteiference with interim order-Scope of-Appellant claiming
102% anti-bacterial superiOJity over the leading toothpaste by way of issuing
adve1tisement via media particularly TV-Respondent fili11g complai11t under
Sections 10, 36-A(l)(viii) & (x) a11d 36-B along with an application under
sectio11 12-A for interim relief-Commission found the word "leading tooth-
paste" to be a reference to the respondent's toothpaste-As to the veracity of
D the appellant's claim of 102% superiority both the parties relied on the
conflicting opinions of experts-commission in order to find the veracity of
claim of the ·appellant, directing the panel of expe1ts to re-examine the
claim--011e expert to be nomi11ated by each party and the third being the
nomi11ee of the Commission to f onn the panel of experts--l'arties agreeing
E after the heari11g--Commissio11 by way of an interim order directi11g the
appellant to refrain from claimi11g in its advertisement directly or indirectly
a11y bacterial superiority till the claim was fully established-Held, order-
cannot be inteifered with i11 an appeal under Section 55 as the relief was
totally discretionary.

F Appellant issued adv1!rtisement through media and TV that the
toothpaste manufactured by the appellant was anti- bacterial superior by
102% over the leading toothpaste. The action of the appellant was chal-
lenged by the respondent by way of filing a Complaint under Section 10,
36-A(l)(viii) & (x) and 36-B of the MRTP Act. An application under
Section 12-A was also filed by the respondent for interim relief. As to
G veracity or otherwise of the appellanfs claim, both the parties relied upon
conflicting opinions of expert. After hearing the matter, the Commission
noticed that the appellant's claim of 102% anti-bacterial superiority re-
quired a highly scientific approach and that the same should be decided
by a panel of experts comprising one nominee of each party and a third
H nominee of the Commission. An order was passed with the consent of the
572
HINDUSTAN LEVER LTD. v. COLGATE PALMOLIVE (I) LTD. 573

parties. The Commission also examined the question of balance of con- A
venience and on facts found that the appellant's advertisement was likely
to influence the consumer as the data submitted by respondent showed a
continuous reduction in its sale of toothpaste, the Commission by an
interim injunction restrained the appellant from claiming in its advertise-
ment directly or indirectly any bacterial superiority till the claim was fully
established. It was also observed by the Commission that such an injunc-
B
tion order would protect the interest of the consumers. Hence this appeal.

Before this Court, the appellant relying on Section 36-A(l)(viii),
contendt'd that unless it was "proved" by the complainant that the appel-
lant had :give false or misleading facts disparaging the goods, services or C
trade" of the complainant, it could not be said, even prim a f acie, that the
appellant was guilty of any "unfair trade practice". The appellant further
contended that for grant of temporary injunction under Section 12-A
"proof' of an "unfair trade practice" was required and also that such
practice was likely to affect prejudicially public interest or the interests of D
traders or consumers generally.

Dismissing the appeal, this Court

HELD: 1. The Order passed by the Commission was a purely discre-
E
tionary order and was also an interim order pending the passing of a final
order of temporary injunction and is not liable to be interfered with in the
instant appeal. The Commission's order shows that it noticed that the
appellant was relying upon opinions of experts to substantiate its claims
of 102% superiority in anti-bacterial action while the respondent com-
plainant was also relying upon opinions of its experts to contradict the F
appellant's claim. The matter being technical in nature, if the Commission
felt, as suggested by the appellant in its reply, a panel of experts could go
into the correctness of rival claims and give its opinion. After the opinion
was given, parties could make their final submissions in the injunction
application and if the Commission felt that till then, an order of an interim G
nature should operate, it is not a fit case for interference with such a.
discretionary order. Further, any expression of opinion by this Court on
the merits of this preliminary stage cause prejudice to the claims an~ ·
contentions of one or other of the parties. Hence this Court does not
propose to go into the merits of the contentions. [580-F-HJ H
574 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A Lakahanpal National Ltd. v. M.R. T.P. Commission, [1989] 3 SCC 251,
referred to. ·

Colgate Palmolive (P) Ltd. v. Rexo11a Pty. Ltd., (1981) 37 Aust. LR 391
(Aust.), referred to.

B CIVIL APPELLATE JURISDICTION : Civil Appeal No. 7755 of
1997.

From the Judgment and Or<ler dated 5/6.11.97 of the Monopolies
and Restrictive Trade Practices Commission, New Delhi, in I.A. No. 336
of 1997 in Unfair Trade Practices Enquiry No. 405 of 1997.
c Harish N. Salve, Rajesh Malhotra, Dalip Kumar Malhotta for the
Appellant.

Soli J. Sorabjee, Iqbal Chaqla, Kirit Rawal, R. Karanjawala, S.
Ganesh Ms. Ruby Ahuja, Arunabh Chowdhury and Ms. Manik Karan-
D jawala for the Respondents.

The Judgment of the Court was delivered by

M. JAGANNADHA RAO, J. Hindustan Lever Ltd. has filed this Civil
Appeal under Section 55 of the Monopolies and Restrictive Trade Practies
E Act, 1969 (hereinafter called the Act) against the order of the Monopolies
& Restrictive Trade Practices Commission (hereinafter called the Commis-
sion). The order is dated 5/6 November, 1997 and is passed in Injunction
Application No. 336 of 1997 filed in the Main Case No. 405 of 1997.

The two respondents are Colgate Palmolive (India) Ltd. and Miss
F Pallavi S. Desai. The said respondents were the complainants 1 and 2
respectively in the main case No. 405 of 1997 which is pending before the
Commission. By virtue of the impugned order, certain directions in the
nature of temporary injunction have been granted in favour of the respon-
dent-complainants and against the appellant. It is to be noted further that
the Commission, which directed a panel of experts to give its opinion on
G the issue involved, made it clear that the order that was being passed was
a "temporary interim order" an<l a final order on the Injunction Application
would be passed later after receiving the opinion of the experts. The
Commission sai<l :

"If the parties arc agreeable, the order passed at present may be
H treated as a purely temporaiy i11terim order subject to modificatio11,
HINDUSTAN LEVER I.TD.'· COLGATE PALMOLIVE(!) LTD [M. JAGANNADHA RAO. l.J 575

van·ation or vacation after perusing the opinion of the aforesaid A
panel of experts".

We shall state the brief facts and the conclusions of the Commission
in so far as they are material for the purposes of this appeal.

The 1st respondent, Colgate-Palmolive (India) Ltd. manufactures
B
Colgate Dental Cream. The appellant too has various brands of tooth paste
but we are concerned here with the 'New Pepsodent' toothpaste introduced
by the appellant recently into the market. The appellant had given adver-
tisement in the print, visual and hoarding media, claiming that its tooth-
. paste "New Pepsodent was 102% better than the leading toothpaste". The c
advertisement contains a 'schematic' picture supposedly of samples of
'saliva/smear'. It depicts on one side of the advertisement a pictorial
representation of the germs in a sample taken from the mouth of a person
hours after brushing with "the leading toothpaste." And another pictorial
representation is of the germs from a similar sample taken from the mouth D
of another person using the "New Pepsodent". The former shows large
number of germs remaining in the sample of saliva where the 'leading
toothpaste' is used and the latter shows almost negligible quantity of germs
in the sample of saliva where 'New Pepsodent' is used. The advertisement
also speaks of tests conducted at the Hindustan Lever Dental Research
Centre and says that the appellant's product is based on a Germ check E
formula which is twice as effective on germs as the leading toothpaste and
that it was, in fact, 102% better in fighting germs. In the TV advertisement
of the appellant, two boys are asked the name of the toothpaste with which
they had brushed their teeth in the morning. The advertisement shows
Pepsodent 102% superior in killing germs which is being used by one of
F
the boys. So far as the other boy is concerned, who is using another
toothpaste which is inferior in killing germs, the lip movement, according
to the respondents, indicates that the boy was using 'Colgate'. though the
voice is muted. Additionally, when this muting is done there is a sound of
the same jingle a~ is used in the usual Colgate - advertisement, leaving,
according to the complainants, doubts in the minds of the viewers that G
'Pepsodent' was being compared with Colgate.

On these and other allegations, the complaint was filed by the
respondents before the Commission relying upon Sections 10, 36A and 36B
of the Act and in particular upon Section 36A (viii) and (x) of the Act. H
576 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A The respondents also filed an Injunction Application 336/1997 for grant of
temporary injunction under Section 12A of the Act. It was contended that
the appellant was guilty of 'unfair trade practice' under Section 36A in as
much as the appellant allegedly adopted, for the purpose of promoting
sales, use or supply of its goods, an unfair method or deceptive practice by
B making a representation as stated in Section 36A(viii) and giving false or
misleading facts 'disparaging' the goodl of the appellant as stated in
Section 36A(x).

The appellant, while defending itself, contended that there was no
'unfair trade practice' practiced by it under clause (viii) or (x) of Section
C 36A and that no case for grant of temporary injunction under Section 12A
was made out. The appellant contended that the complainants were bound
to prove that the facts depicted in the advertisement as to 102% superiority
of Pepsodent were false. Unless such falsity was proved in the I.A., no
temporary injunction could be granted.

D The Commission in its order dated 5th/6th November, 1997 after
referring to the facts and contentions, held that the objection based on
Sections 36B and 10 as to maintainability of the complaint was not tenable
because the Commission was empowered, even to act upon its own
knowledge or information for purpose of inquiry under the Act. Further,
E the 2nd complainant, who was a consumer, could rely upon Sections 10
and 36B. It found that inasmuch as the over-all market share of Colgate
was shown to be 59% in the second quarter of the year 1997 and the
appellant's share was 27%, the reference in the advertisement to a 'leading'
toothpaste must be taken to be a reference to 'Colgate dental cream' of
the 1st complainant and this was also obvious from the use of the word
F 'the' before the,wcird 'leading' in the TV and newspaper advertisements.
The TV advertisement with two boys shown alongwith the 'jingle' was
sufficient to identify the leading toothpaste as Colgate, according to the
Commission.

G As to the 'anti-bacterial' superiority, the Commission stated that the
inference was that the appe.!lant was not merely treating its toothpaste as
superior but was treating Colgate as 102% 'inferior'. It was not necessary
that there should be any direct reference about inferiority and it was
sufficient if there was an allusion, hint etc. to that effect and such a
reference prim a f acie amounted to 'disparagement' for purposes of Section
H 36A(x). Adverting to the contention of the appellant that there would be
....,

HINDUSTAN LEVER LTD.'" COLGATE PALMOLIVE (I) LTD [M. JAGANNADHA RAO, J.) 577

no 'disparagement' if the factual data relied upon by the appellant was true, A
the Commission observed that the appellant had produced opinions of
"certain experts to controvert the case of Colgate", that Colgate, have also
brought on record certain test-reports from certain institutions including
one from Haffkine Institute. According to the respondent, there was not
much difference between the Pepsodent (old version) and the 'New
Pepsodent' marketed by the appellant. As the old one was not superior to B
Colgate, the new one was also not superior. The appellants also contended
before the Commission that the protocols adopted for testing the germ-
content were not uniform and that the complainant's protocols were not
the correct ones. Adverting to these protocols, the Commission referred to
the objection of the appellant, as follows :
c
"At this sta!Je, it may be noted that the case of the applicant/com-
plainant is that Colgate offered to the respondent that the test of
-~ the concerned for toothpaste products of both Colgate and the
respondent should be carried out by certain experts who should
decide their own protocols for the purpose. It appears that the' D
respondent has not agreed to it".

Having stated as above in regard to the protocols, the Commission noticed
that so far as the claims of 102% bacterial superiority was concerned, it
was a matter which required a highly scientific approach and should be
decided by independent experts and it would be hazardous for the Com- E
mission to venture even a p1ima f acie opinion. It then referred to the
voluntary suggestion of the appellant for appointing a panel of experts, as
follows :

"In fact, the respondent has also volunteered in its reply that this
may be done by a team of experts. That may be done at the stage F
of final hearing. If the parties agree, it can be done at the interim
stages also, provided each side .furnishes the names of experts with
their consent to give opinion, if so desired by the Commission,
within the reasonably specified time limit... .."

Thus, by adverting to the suggestion of the appellant, and relying on
G
the same, the Commission felt that the claims of superiority of the appellant
and the respondent could be decided by an expert body, which ·could
submit its report in 4 or 5 months. For that purpose each side could suggest
the name of an expert and the Commission would nominate a third expert.
Parties were to give the names in a fortnight. The Commission then stated H
I I-•

578 SUPREME COURT REPORTS [1997] SUPP. 6 S.C.R.

A that this was a purely tempora1y inte1im order. It said that this was :
"a purely tempora1y inteiim order, subject to modification, varia-
tion or vacation after perusing the opinion of the panel of experts

B The Commission therefore held that piima facie the reference in the
appellant's advertisements were referable to Colgate and that because of
. the claim of anti-bacterial superiority, a p1ima facie case for purpose of
interim relief was made. It referred to Colgate Palmolive Pvt. Ltd. v. Rexona
Pty. Ltd., ·(1981) 37 ALR 391 (Australia) where temporary injunction was
C granted against making 'such tall claims' till the truthfulness of the claim·
was established at the trial. The Commission, then went into the question
of 'balance of covenience' and held that the representation through the
media, 'in particular through the TV was likely to make consumers take
the appellant's claim as a 'true statement' if not as the 'gospel truth' and
that there was evidence filed by Colgate showing that there was a reduction
D of 5% of its sales in August 1997 and 8% in September 1997. The Com-
mission observed that the appellant was not likely to suffer much if interim
relief was granted and in fact, appellant would be saving on its advertise-
ment expenses.

On the basis of the above reasoning, the Commission granted a
E temporaiy interim injunction against the appellant from making any refer-
ence 'directly or indirectly in the appellant's advertisement claiming anti-
bacterial superiority and also from making any 'specific quantum' of anti
bacterial superiority - "till its claim of such anti bacterial superiority is fully
established". This would also be for protecting the Consumer's interest. In
the last paragraph of the order, the Commission clarified that the injunc-
F tion would apply whether the reference to Colgate was by way of allusion
or hint.

It is against the above order of temporary interim injunction that this
appeal has been preferred. We have heard elaborate arguments by Sri
G Harish Salve for the appellant and of Sri Soli J. Sorabjee for the 1st
Complainant and of Shri Iqbal Chagla for the 2nd Complainant.

The point for consideration is : whether the discretionary order of
temporary interim injunction granted by the Commission pending the
pas.~ing of final orders in the Injunction application filed by the respon-
H dent-complainants, is liable to be set aside· or modified?
·-'
HINDUSTAN LEVER.LTD.'· COLGATE PALMOLIVE(!) LTD [M. JAGANNADHA RAO, J.] 579

From the facts set out above, it is clear that the Commission has A
granted a temporary injunction which is of an 'interim' nature and the
Commission is yet to pass further orders in the same injunction application,.
after receipt of the opinion of the panel of experts. It is also to be noted
that the Commission proposed the appointment of an expert panel for two
reasons. The first reason was that both sides were relying upon laboratory
tests or opinion of their own experts. These opinions were conflicting and
B
the Commission had no machinery of its own to verify the claims of the
parties unless a body of experts could give its opinion to the Commission.
The second reason according to the Commission was that the appellant
itser;·volunteered and suggested that such a panel of experts could be
appointed. c
There was some arguments before us by the learned counsel for the
- .. appellant that appellant had not agreed for the panel as stated in the order.
In this behalf, we are satisfied that what the Commission had stated in its
order is correct and is clearly borne out by what the appellant had stated D
in its reply before the Commission. In facts, after the Commission had
passed its orders on 5/6 November, 1997, the appellant gave an advertise-
ment on 6.. 11.1997 in the press to the effect that the Commission had
appointed as panel of experts at the suggestion of the appellant.

It was, however, vehemently argued by Sri Harish Salve for the E
appellant that 1st complainant put forward its case upon clause (x) of
Section 36A and under that clause, unless it was "proved" by the com-
plainant that the appellant had "given false or misleading facts disparaging
the goods, services or trade" of the 1st complainant, it could not be said,
even p1ima facie, that the appellant was guilty of any 'unfair trade practice' p
referred to in that sub-clause. Learned counsel relied upon Lakhanpal
National Ltd. v. MRTP Commission, (1989] 3 SCC 251 - which has also
been referred to by the Commission in the impugned order - and to
judgments of Courts in UK and USA and to the principles of law stated
in several books, for contending that unless it was established by the
complainant that the facts stated in the advertisement were 'false' or G
'untrue', it could not be said that there was unfair trade practice or
disparagement. Learned counsel also relied upon Section l.2A of the Act
which deals with grant of temporary injunction by the Commission and
contended that the said provisions required 'proof of an 'unfair trade
practice' and also that such practice was likely to effect prejudicially public H
580 SUPREME COURT REPORTS (1997] SUPP. 6 S.C.R.

A interest or the interests of traders or consumers generally.

On the other hand, it was contended by Sri Soli Sorabjee for the
respondent and by Sri Iqbal Chagla for the 2nd respondent that the above
contentions ;ire not correct and that this was an appeal under Section 55
of the Act and the grounds available in the appeal are the same grounds
B as specified in Section 100 C.P .C. (before the 1976 Amendment) and that
the discretion exercised by the Commission was proper in the circumstan-
ces of the case, that the claim of the 1st complainant was not only under
Section 36A(x}but also under Section 36A(viii) and under the latter clause,
it was sufficient for the purpose of proving an 'unfair trade practice' that
C the appellant had made a representation in a form which purported to be
a warranty or guarantee and which was materially misleading or that there
was 110 reasonable prospect that such warranty or guarantee would be
carried out. It was also argued that the conduct of the appellant in having
voluntarily proposed the appointment of a panel of experts has to be taken
D into account in deciding whether the Commission went wrong in directing
an expert body, which was to be nominated as stated in the order, to give
its opinion.

On a consideration of the above contentions and on a careful ap-
praisal of the reasons given by Commission we are of the view that the
E order passed by the Commission was a purely discretionary order and was
also an interim order pending the passing of a final order of temporary
injunction and is not liable to be interfered with in this appeal. As stated
earlier, a reading of the Commission's order shows that it noticed that the
appellant was relying upon opinions of experts to substantiate its claim of
F 102% superiority in anti-bacterial action while the respondent, 1st com-
plainant was also relying upon the opinion of its experts to contradict the
appellant's claim. The matter being technical in nature, if the Commission
felt, as suggested by the appellant in its reply, that a panel of experts could
go into the correctness of rival claims and give its opinion and if the
Commission further said that after the opinion was given, parties could
G make their final submissions in the Injunction application and if the Com-
·-
mission felt that till then, an order of an interim nature should operate, we
do not think that it is a fit case for interferences with such a discretionary
order. We do not therefore propose to go into the merits of the conten-
tions. Further, any expression of opinion by this Court on merits at this
H preliminary stage could cause prejudice to the claims and contentions of
HINDUSTAN LEVERLm. v. COLOAffiPALMOLIVE (I) LTD (M. JAOANNADHA RAO, J.) 581
one or other of the parties. A
For the aforesaid reasons, this appeal fails and is dismissed. We may
make it clear that we should not be understood as having stated anything
on the merits of contentions either of the complainants or of the appellant.
In the circumstances of the case, there till be no order as to costs.
B
R.K.S. Appeal dismissed;