Holding

An act constitutes an unfair trade practice under Section 36A only if it involves a false or misleading representation, which was not alleged or proved here, so the MRTP Commission's finding of unfair trade practice based solely on deficiency in service is untenable.

Summary

M/s. KLM Royal Dutch Airlines appealed against an order of the MRTP Commission that held it guilty of unfair trade practice for a deficiency in cargo service. The complainant alleged that two parcels were delayed, causing loss, and the Commission treated the delay as an unfair trade practice under Sections 36A(ii), (iv) and (vi) of the Monopolies and Restrictive Trade Practices Act, 1969. The Supreme Court examined the statutory definition of unfair trade practice and held that such a finding requires a false or misleading representation, which was neither alleged nor proved. The Court observed that mere deficiency in service does not satisfy the higher threshold of unfair trade practice. Consequently, the Commission’s order was set aside and the appeals were allowed.

Issues considered

Whether a deficiency in service amounts to an unfair trade practice under Section 36A of the MRTP Act.
Whether the MRTP Commission correctly applied Sections 36A(ii), (iv) and (vi) to the airline's conduct.
Whether a false or misleading representation is a necessary ingredient for a finding of unfair trade practice.
Whether the order of the MRTP Commission can be upheld in the absence of such representation.

Legislation cited

Carriage by Air Act, 1972
Consumer Protection Act, 1986
Monopolies and Restrictive Trade Practices Act, 1969s. 2(r), s. 36, s. 36A(1)(ii), s. 36A(1)(iv), s. 36A(1)(vi), s. 36B, s. 36D, s. 48C

Subjects

unfair trade practicedeficiency in servicefalse representationmisleading representationMRTP ActSection 36Aair cargo liabilityconsumer protectionpenalty

Judgment

[2008) 14 S.C.R. 245

- - -\ M/S. KLM ROYAL DUTCH AIRLINES A
v.
DIRECTOR GENERAL OF INVESTIGATION &
REGISTRATION
(Civil Appeal Nos. 815-816 of 2002)

OCTOBER 3, 2008 B

~,
[TARUN CHATTERJEE AND DR. MUKUNDAKAM
SHARMA, JJ.]

Monopolies and Restrictive Trade Practices Act, 1969 - c
s. 36A (1)(ii), (iv) and (vi) - Deficiency in service - Held by
MRTP Commission to be unfair trade practice - On appeal,
held: In order to term an act amounting to unfair trade practice
under the sub-clauses of the provision, it is necessary to prove
that the service provider makes false and misleading repre-
D
sentation regarding the service - Deficiency in service does
,_, not amount to unfair trade practice - Element of unfair trade
practice stands on higher and onerous platform than the defi-
cient service - In the facts of the case, the service provider
cannot be said to have committed unfair trade practice, as
false and misleading representation has not been alleged. E

A complaint was filed before the respondent-Author-
ity, against the appellant-Airlines alleging that the com-
plainant had booked a consignment which was required
to be delivered to the customer by a particular date, that F
>
-I appellant was not able to deliver the consignment to the
customer, before or on the required date as the consign-
ment was misplaced by the appellant; and the same
amounted to deficiency in service. Complainant also filed
separate petition before Consumer Forum claiming com-
G
pensation for the loss.
-~
., ' Respondent-Authority concluded that the trade prac-
tice by the appellant constituted unfair trade practice un-
der Clauses (ii), (iv) and (vi) of Section 36A(1) of Monopo-
245 H
246 SUPREME COURT REPORTS [2008] 14 S.C.R.

A lies and Restrictive Trade Practices Act, 1969. The respon-
dent filed a complaint/application for registration and in-
f '-
vestigation, before MRTP Commission. The Commission
found the appellant guilty of adoption and indulgence in
unfair trade practices to the extent that there was defi-
B ciency in service. Hence the appeals.
Allowing the appeals, the Court
HELD: 1.1 For making out a case of unfair trade prac-
f---
tice an element is involved to the extent of making false
c and misleading statement and representation and in or-
der to make a case of unfair trade practice such ingredi-
ents, which are part and parcel of the concept of unfair
trade practice have to be alleged and must be proved and
established. Before it can be said that an act amounts to
an unfair trade practice the complainant is required to
D
show that the trade practice was employed for the pur-
pose of promoting the sale, use or supply of any goods \ _..
}---'
or the provision of any services and also that the state-
mentor advertisement is a false representation of the kind
specified in Sub-clauses of clause. (1) of Section 36-A of
E Monopolies and Restrictive Trade Practices Act, 1969.
[Paras 14 and 16] [259,D-E; 257,C-D]
Man Roland Druckimachinen Ag v. Multicolour Offset Ltd.
2004 (7) sec 447 - referred to.
F 1.2 Whether a statement constitutes a false or mis- :, ~

.._
leading representation will depend upon the facts and cir-
cumstances of each case. It is not possible to provide an
exclusive list of the statements which may constitute false
or misleading representation, nor can there be any strait-
G jacket formula evolved thereof for the said purpose. How-
.ever the statements of the nature, which are willfully made
knowingly false, or made recklessly without honest be- 1--r-·~

lief in its truth, and made with the purpose to mislead or ·~

deceive, will definitely constitute a false or misleading rep-
H resentation. In addition, a failure to disclose a material fact
M/S. KLM ROYAL DUTCH AIRLINES v. DIR GEN. OF 247

- ' -, INVESTITN. & REGISTRATION

when a duty to disclose that fact has arisen will also con- A
stitute a false or misleading representation. [Para 14]
[257,H; 258,A-C]
1.3 There could be no finding by the MRTP Commis-
sion that the appellant is guilty of unfair trade practice.
What is sought to be done by the MRTP Commission is B.
~ -..j. to hold that the appellant is guilty of unfair trade practice
which is not equal to holding a person guilty of providing
deficient service. Element of unfair trade practice definitely
stands at a higher and onerous platform than the defi-
cient service. The deficiency in service, as in the present c
case, cannot be said to mount to an unfair trade practice
as envisaged u/s. 36 A(i), (ii), (iv) and (vi). [Para 11 and 16]
[259,C-D; 255,C]
Lakhanpa/ National Ltd. v. M. R. T P Commission 1989
(3) sec 251 ;,Rajasthan Housing Board v. Parvati Devi 2000 D
J (6) SCC 10; Colgate Palmolive (India) Ltd. v. MRTP Com-
mission 2003 (1) sec 129 - relied on.
1.4 In the instant case, neither in the complaint filed
by the complainant nor in the complaint filed by the Di- E
rector General filed before the MRTP Commission, is there
any allegation of any false or. misleading representation.
Unless any such allegation is made in the complaint, the
MRTP Commission could not have come to a conclusion
~,.

(
that the appellant has committed an unfair trade practice.
-t In the findings recorded by the MRTP Commission, there F
is not even a single finding that there is any such false
representation or mis-statement by the appellant Airlines
regarding their services. In view of Section 48C of the Act,
which is a stringent provision providing for punishment,
the Commission is required to examine the allegations G
'-.>· with due care and caution and also the essential ingredi-
ents as contained in the provisions of Section 36A and
while passing the order u/s. 36 D, it must be fully satisfied
that there is, in fact, contravention of any of the clauses
of Section 36A. [Paras 11 and 15] [258,D-H; 259,A] H
248 SUPREME COURT REPORTS [2008] 14 S.C.R.
I
~
i
-1,.__. ,~
A CASE LAW REFERENCE
1989 (3) sec 2s1 Relied on. Para 13
2000 (6) sec 1o Relied on. Para 13
2003 (1) sec 129 Relied on. ·Para 14
B
2004 (7) sec 447 Referred to. Para 14
CIVILAPPELLATE JURISDICTION: Civil Appeal No. 815- t--
816 of 2002
From the final Judgmentand Order dated 11.10.2001 and
c 12.11.2001 of the MRTP Commission, New Delhi in UTPE NO.
163 of 1996 and MA No. 20 of 2001 in UTPE No. 163 of 1996
respectively.
A.K. Ganguly, S.C. Ghosh and Atishi Dipankar for the Ap-
D pellant.
V. Shekhar, Shalini Kumar, B.K. Prasad and.Shreekant N.
Terdal for the Respondent. 'r---

The Judgment of the Court was delivered by
E DR. MUKUNDAKAM SHARMA, J. 1. Challenge is made
in the present appeals under Section 55 of the Monopolies and
Restrictive Trade Practices Act, 1969 (for short "MRTP Act"),
whereby the final judgment and orders dated 11.10.2001 and
12.11.2001 passed by the Monopolies and Restrictive Trade
F Practices Commission, New Delhi (for short 'MRTP Commis-
sion') are being questioned. The appellant is aggrieved by the t-

order and direction issued against them by the MRTP
Commission and also by dismissal of the miscellaneous
application filed by them holding that there is no apparent error
G on the face of the record.
2. The appellant is a worldwide airlines company with its
headquarters at Amsterdam, Netherlands. A complaint was filed
Y---·
by M/s. Maharajah & Co. (hereinafter also referred to as 'Com-
plainant') contending inter alia that they booked a consignment
H with the appellant airlines vide Airway Bill dated 21.09.1995.
M/S. KLM ROYAL DUTCH AIRLINES v. DIR. GEN. OF 249
lNVESTITN. & REGISTRATION [DR..MUKUNDAKAM SHARMA, J.]
- ,- The said consignment comprised three parcels containing A
Badges and Crests, which were to be used on very specific
tournaments/meetings/conference dates. The consignment was
booked for carriage from New Delhi to New Orleans, USA. It
was stated in the said complaint that on 26.09.1995 the com-
plainant received a message from the appellant airlines that B
two out of the three parcels were missing. This message of
~1 26.09.1995 was followed by another message of 03.10.1995
informing the complainant that in spite of efforts made by the
appellant, the baggage could not be found and therefore it was
suggested to the complainant that a claim could be filed with c
the underwriters if the aforesaid shipment was covered by in-
surance. The appellant airlines also asked the complainant to
furnish necessary documents to process the claim. Near about
the same time, the appellant airlines traced out the said two
missing parcels and informed the complainant through its letter
D
dated 24.10.1995, contending inter alia that the aforesaid two
~-)
-...._,, parcels have been traced out and the same have since been
forwarded to the destination on 20.10.1995.
A stand was, however, taken on behalf of the complainant
that the aforesaid delivery of the two parcels after the event was E
over was of no use to the customer in USA. The complainant
also took up a plea that it had already lost goodwill due to delay
in the delivery of goods to the buyer. The complainant, there-
fore, made a claim of Rs. 6 lakh from the appellant on account
"/ of its negligence and deficiency in service. It may be stated here F
-1 that the complainant has also filed a separate complaint before
the Delhi State Consumer Redressal Forum for payment of com-
pensation in terms of the Consumer Protection Act, 1986, which
is pending for disposal till date.
3. On receipt of the aforesaid complaint filed by Mis. Ma- G
-__);!
harajah & Co. the respondent issued a notice to the appellant
on 22.01.1996 calling for its comments on the complaint along
with other information and documents .•The appellant furnished
its reply contending inter alia that the rules relating to loss, dam-
age or delay to cargo and compensation for the same in inter- H
250 SUPREME COURT REPORTS [2008] 14 S.C.R.

A national air transportation is governed by the Carriage by Air
t-- '

Act, 1972 and the Schedule attached thereto and in terms of
the said Act the liability of the carrier is subject to the rules re lat-
ing to liability established by Warsaw Convention, 1929. After
receiving the aforesaid reply the respondent, which is a statu-
B tory authority, came to the prima facie conclusion that the ap- 1
pellant failed to render services which were expected from it
~---
and that the trade practice carried on by the appellant thus con-
stitutes an unfair trade practice falling under clauses (ii), (iv)
and (vi) of Section 36A (1) of the MRTP Act. Consequently, the }-
c respondent filed an application for registration and investiga-
tion before the MRTP Commission, New Delhi, in terms of the r
F
provisions of Section 36 (B) of the MRTP'Act. ~
t-
4. The Commission after receipt of the aforesaid applica- t
tion took up the same for consideration and issued notice and I
D thereafter heard the aforesaid application. By the impugned
\ ~ '-- \
judgment and orders the MRTP Commission found the appel-
'y ~
lant guilty of adoption of and indulgence in unfair trade prac-
tices to the extent that there was deficiency in service. Having
held thus, the Commission issued a direction to the appellant ~
E to cease the aforesaid trade practice and also file an affidavit
stating that the appellant would desist from the same in future.
Being aggrieved by the aforesaid order passed by the MRTP ._
r
Commission, the present appeals have been preferred as statu-
tory appeals in terms of the provisions of Section 55 of the MRTP
1,..... '
F Act.
.)_
""
5. Mr. A.K. Ganguly, learned senior counsel appearing for
the appellant brought to our notice various provisions of the
MRTP Act and drew our attention to the correspondence be-
tween the parties, which is a part of the record and on the basis
G thereof submitted that the order passed by the MRTP Comm is-
sion is illegal and without jurisdiction as there was no allegation ?:~
anywhere by the respondent before the MRTP Commission that
there was any fraudulent representation on the part of the ap-
pellant. He also submitted that none of the sub-clauses of Sec-
H tion 36 A is applicable in the present case, and therefore, the
M/S. KLM ROYAL DUTCH AIRLINES v. DIR. GEN. OF 251
INVESTITN. & REGISTRATION [DR. MUKUNDAKAM SHARMA, J.]
- -1-
impugned order holding the appellant to be guilty of the said A
provision is illegal and unjustified.
6. Mr. V. Shekhar, learned senior counsel appearing for
the Director General of Investigation and Registration, vehe-
mently supported the order passed by the MRTP Commission
on the basis of the complaint. He drew our attention to the con- B
tents of the complaint filed by the Director General before the
--i
MRTP Commission to bring home his point that the appellant is
guilty of unfair trade practices.
7. In the light of the aforesaid submissions we proceed to
deal with the contentions raised before us. The Director Gen- c
eral in his application filed before the MRTP Commission al-
leged violation of clauses (ii), (iv) and (vi) of Section 36A (1) of
the MRTP Act. In that view of the matter, we would like to extract
the said provisions along with other relevant provisions for bet-
ter appreciation of the issues arising for our consideration. The D
said provisions read as under:-
'--<'

Section 36A - Definition of unfair trade practice - In this
Part, unless the context otherwise requires, "unfair trade
practice" means a trade practice which, for the purpose of
promoting the sale, use or supply of any good or for the E
provision of any services, adopts any unfair method or
unfair or deceptive practice including any of the following
practices, namely:-
l
'· > . ( 1) the practice of making any statement, whether orally or
in writing or by visible representa~ion which,- F

(i) xxxxxxxxx

(ii) falsely represents that the services are of a particular
standard, qu~lity or grade;
G
__,_,,, (iii) xxxxxxx
(iv) represents that. the goods or services have
sponsorship, approval, p.erformance, characteristics,
accessories, uses or benipfits which such goods or
services do not have; H
252 SUPREME COURT REPORTS [2008) 14 S.C.R.

A· (v) xxxxxxxx f--
(vi) makes a false or misleading representation concerning
the need for, or the usefulness of, any goods or services;
368. Inquiry into unfair trade practices by Commission.-
B The Commission may inquire into any unfair trade practice,-
'
(a) xxxxxxxx
(b)xxxxxxx
r-
(c) upon an application to it by the Director General; or
c
(d) xxxxxxx
360. Powers which may be exercised by the Commission
inquiring into an unfair trade practice.-

D_' (1) The Commission may -inquire into any unfair trade
practice which may come before it for inquiry and, if, after
(
such inquiry, it is of opinion that the practice is prejudicial ~
to the public interest, or to the interest of any consumer or
cons_umers generally, it may, by order direct that-
.......
E (a) the practtce shall be discontinued or shall not be
repeated;
(b) any agreement reliant to such unfair trade practice
shall be void or shall stand modified in respect thereof in
such manner as may be specified in the order; ,_.
F
(c) any information, statement or advertisement relating to - '>- _
such unfair trade practice shall be disclosed, issued or
published, as the case may be, in such manner as may be_
specified in the order.
G (2) )()()()()(
(3) )()()()()(

48C. Penalty for contravention of order made by
Commission relating to unfair trade practices. -
H
I

M/S. KLM ROYAL DUTCH AIRLINES v. DIR GEN. OF 253
INVESTITN. & REGISTRATION [DR MUKUNDAKAM SHARMA, J.]

If any person contravenes any order made by the A
Commission under section 36D, he shall be punishable
with imprisonment for a term which shall. not be less than
six months but which may extend to three years and with
fine which may extend to ten lakh rupees;
Provided thatthe court may, for reasons to be recorded in B.
writing, impose a sentence .of imprisonment for a term
lesser than the minimum term spe.cified in this section."
8. There is no dispute with regard to the fact that the con-
. signn]ent of three pa~ce1$ were booked for carriage by the origi- c
.nal complainant, nam.ely, Mis. Maharajah & Co . ,. out of which
two parGels were missing and coi;tld not be delivered to the. ad-
dressee immediately. The said missing parcels were; however,
·traced o'ut and were forwarded. t6 destination on 20.10.1995.
Allegations have b~n:made.that due to.the missing of the afore· D
said two p·arcels in the cc;mrse qf trans.mission t,he complainant
·suffered a loss. In the aforesaid ~pplication,whic:;h was filed by
the Director-General before. the MRTP .qommission, complaint
is only about .the deficiency· of service and whether or not any
compensation is to. be ·paid for the afore~a·id loss suffered, is a
subjectmatter ";Vhich is being .enquired i_mp by the Delhi State E
Consumer Redre$sal Forum. In the aforesaid application, the
MRTP Commission directed the appellant to cease and. desist
from unfair trade practice in terms of the prayer made in the
application, wherein it was prayed that a direction be issued
) against the appellant airlines directing. it to cease and desist F
- -'
from indulgence in the unfair traae practice and not to repeat
the same in future. The aforesaid application was filed by the
i Director General giving the factual position. In paragraph 4 of
the said application, sum and substance of the allegation and
accusations has been made out by the Director General against G
the appellant in the fo.llowing manner:
"4. It would b~ observed from the aforesaid information
collected during the course of investigation that the
respondent has admitted its liability caused to the H
254 SUPREME COURT REPORTS [2008] 14 S.C.R.

A complainant due to loss, damage 'or delay in transportation
of the goods booked by the complainant. The-services of
the respondent have not been found to be of the standard
and
'
quality,bf
,,
an int.ernational
. -....::
transporter. Its services do .
)

not' hav~ Ufies or beneJits for the customers. There is an
B implied'rep~esentation that the services of the respondent
would be usefu1 to the 6ustomers and the respondent would
transport the good~ booked by the customers within a
reasonable time without causing any damage to the goods.
It is cle9r that the respondent has failed to render services
c which were expected of it. It has admitted its liability in
causing;l9ss to the complainant. The trade practice carried
on by the respondent thus constitutes an unfair trade
practice falling under clauses (ii), (iv) and (vi) of Section
36A (1).ofA,he MRTP Act, 1969."
,...
,,. .
'
,,,..,
'/ r •

D 9. In terms of the allegations and accusation in paragraph
· 4 of the applic~tion the Director General has submitted that the
unfafr tra-de practice carried on by the appellant is prej~dicial to
)
the public interest, and therefore, a direction should be issued
to the appellant airlines to cease and desist from indulging in
E the unfair trade practice and not to repeat the same in future.
10. We have already extracted the definition of "unfair trade
practice" and also other relevant provisions. There is no defini-
tion of "deficiency of service" or "deficiency" provided in the
MRTP Act but expression "service" has been defined in Sec-
114
F tion 2(r). In term of such definition, "service" means which is
~
made available to potential users and includes the provision of
facilities in connection with banki·ng, .financing, insurance, chit
fun, real estate, transport, prOf,es~ir,ig, ~upply of. electrical or
other energy, board or lodging qr~oth, entertainment, amuse-
G mentor the purveying'of news or other information, bl.it does not
include the rendering .of any service'free of charge or under a
contract of personal service. 'f-r'
11. 1The appellant herein .is engaged in the business of
H. transportation of goods by airlines, and therefore, there could
M/S. KLM ROYAL DUTCH AIRLINES v. DIR. GEN OF 255
INVESTITN. & REGISTRATION [DR MUKUNDAKAM SHARMA, J.]
'·
- t
I
be no dispute with regard to the fact that they were providing .A.
service when they accept baggages to bffd~r.rled by air. A repre-
sentation is also made that the cargo would be delivered at the
destination with all promptness; If there is a failure in carrying out
the said representation therf1 would be a case of deficiency in
their service. Negligence in providing prompt service or service B
as expected may also be presumed if they fail to deliver the said
-- goods within a reasonable time at the destination. But the issue
in the present case is as to whether any such deficiency in ser-
vice could be said to amount an unfair trade practice as envis-
aged under the provisions of the aforesaid MRTP Act. c
12. The Act, particularly, the provisions of Section 36A en-
visage that in order to be a case of unfair trade practice there
has to be unfair method or deceptive practice indulging in false
representation of the kinds mentioned in various clauses of
Section 36A of the MRTP Act. What is sought to be attracted in D
-.,
....._,.
.: the present case by the Director General are clauses (ii), (iv)
and (vi) of Section 36A ( 1) of the M RTP Act, clauses (ii) and (vi)
deal with cases of false representation and also a false and
misleading representation whereas clause (iv) envisages of
making a representation that the goods or services have spon- E
sorship, approval, performance, charactertics, accessories,
uses or benefits which such goods or services do not have. The
aforesaid provisions cannot be said to be attracted in the present
case for there is no allegation either by Mis Maharajah and Co.
or by the Director General that any such representation was
1 made by the appellant airlines regarding their performance, uses
F
or benefits which their services do not have. So far as other two
clauses are concerned and in order to make out a case for at-
tracting the said provision, there has to be a case of false state-
ment and a case of misleading representation made by the
G
service provider. We have carefully perused the entire contents
- __,, of the application filed by the Director General and on such pe-
rusal, we find that there is no allegation that there was any false
representation or misleading representation by the appellant
airlines regarding their services.
H
256 SUPREME COURT REPORTS [2008] 14 S.C.R.

·A · 13. In Lakhanpal National Ltd. v. M.R. "f.P Commission
reported in [(1989) 3 SCC 251 J, a Bench of try is Court held that
the obj~-ct of Section 36'.-A of.the MRTP Act is to bring honesty
and trutb in the relationship between the manufacturer and the
consumer and that when a problem arises as towhether a par-
s ticular act can be condemned .as an unfair trade practice or not,
the key to the solution w(?uld be to examin¢ whether it contains
a false· statem~nt and is misleading and further what is the et~
feet of such a representation made by the manufacturer on the
common man. Thjs Court.also stated that there could be an-
C other question posed as to whether an act leads a reasonable
person in the position of a buyer to a wrong conclusion. This
Court finally held that the issue cannot be resolved by merely
examining whether the representation is correct or incom~ct in
the literal sense. The same ratio came to be reiterated in a sub-
D sequent decision of this Court in Rajasthan Housing Board v.
Parvati Devi reported in [(2000) 6 sec 10] In the said case
this Court has held that to decide whether or not there is unfair
trade practice the Commission has to find out whether a par-
ticular act can be condemned as an unfair trade practice; .
whether representation contained a false statement and was
E misleading and also what was the effect of such a representa-
tion made to the common man.
14. In the case of Colgate Palmolive (India) Ltd. v. MRTP
Commission, reported in [(2003) 1 SCC 129] this Court laid
F down five ingredients which have to be established before a ,_, ...
trade practice can be said to be an unfair trade practice, the r---
Court laid the ingredients in following manner:
"16. A bare perusal of the aforementioned provision would
clearly indicate that the following five ingredients are
G necessary to constitute an unfair trade practice:
1. There must be a trade practice within the meaning of ;!--.,......
Section 2(u) of the Monopolies and Restrictive Trade
Practices Act.
H 2. The trade practice must be employed for the purpose
M/S. KLM ROYAL DUTCH AIRLINES v. DIR. GEN. OF 257
INVESTITN. & REGISTRATION [DR. MUKUNDAKAM SHARMA, J.]

of promoting the sale, use or supply of any goods or A
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- 36-A.
B
4. Tl:Je trade practice should cause loss.or injury to the
_____. consumers of goods or services. .
5. The trade practice under clause (t) should involve
making a "statement" whether ora'fiy or rn writing or
by visible representation." · , C

Before it can be said that the act amount to an unfair trade
practice the complainant is required to show that the trade prac-
tice was employed for the purpose of promoting the sale, use
or supply_ of any goods or the provision of any services and also
0
that which is the statement or advertisementwhich is the false
representation of the kind specified in Sub-clauses of clause
(1) of Section 36-A. In this regard reference may also be made
to the observations made by this Court in the case of Man
Roland Druckimachinen Ag v. Multicolour Offset Ltd., reported E
in [(2004) 7 sec 447]:
"12. In the case of an unfair trade practice as invoked by
Respondent 1 the object of inquiry is ,a statement which is.
a false representation of the kind specified in sub-clauses
(t), (it) or (Ht) of clause (1) of Section· 36-A or is an · F
advertisement of the kind specified in sub-clauses (vit) dr
(viit) thereof. The statement or advertisement is the trade.
practice. The further requirement under the section is that
the trade practice complained, 6f must be for the purpose
of promoting the sale, use or supply of goods or for G
promoting the provision of any service. The sale, use or
supply need not, for the purposes of the section, actually
have taken place although it may be relied upon by the
complainant to establish the falsity of the representation."

Whether a statement constitute a false or misleading rep- H
258 SUPREME COURT REPORTS [2008] 14 S.C.R.

A resentation will depend upon the facts and circumstances of +---
(

each case. It is not possible to provide an exclusive list of the
statements which may constitute false or misleading represen-
tation, nor: can there be any strait-jacket formula evolved thereof
for the said purpose. However the statements of the nature which
B are willfully_made knowingly false, or made recklessly without·
honest belief in its truth, and made with the purpose to mislead
or deceive will definitely constitute a false or misleading repre-
sentation. In addition a failure to disclose a material fact when a
duty to disclose that fact ·has arisen will also constitute a false
c or misleading representation.
15. In the backdrop of the aforesaid legal position pro-
pounded· by this Court, we may now examine the facts of the
present case. Neither in the complaint filed. by Mis Maharajah
and Co. before the Director General nor in the complaint filed
D by the. Director General filed before the MRTP Commission
there is any allegation of any false or misleading representa-
tion. None of the complaints aforesaid, in fact contains any of
the aforesaid ingredients as mentioned. Unless any such alle-
gation is made in such complaints, theMRTP Commission could
E not have come to a conclusion that the appellant has commit-
ted an unfair trade practice. We have carefully perused the im-
pugned order passed by the MRTP Commission. In the find-
ings recorded by the MRTP Commission there is not even a
· single finding that there is any such false representation or mis-
by
F statement the appellant airlines regarding their services. The
MRTP Act also contains provisions regarding penalties relat-
ing to unfair trade practices. Section 48C of the MRTP Act pro-
vides that if any person contravenes any order made by the
MRTP Commission under section 360, he shall be punishable
G with impris.onment for a term which shall not be less than six
months butwhich may extend to three years and with fine which
may extend to ten lakh rupees. The aforesaid provision is a
stringent provision which provides for punishment upto three
years and also fine up to ten lakh rupees. Therefore, the Com-
mission is required to examine the allegations with due care
H
MIS. KLM ROYAL DUTCH AIRLINES v. DIR. GEN. OF 259
INVESTITN. & REGISTRATION [DR. MUKUNDAKAM SHARMA, J.]
-- \ and caution and also the essential ingredients as contained in A
the provisions of Section 36A of the MRTP Act and while pass-
ing the order under Section 36 D it must be fully satisfied that
there is in fact contravention of any of the clauses of Section
36A. '
16. It was sought to be submitted by Mr. V. Shekhar, Se- 8
nior Counsel appearing 'tor the respondent that the order which
is passed by the MRTP Commission is in respect of deficiency
in service and not about the compensation and the said order
is passed directjng the air career that they will in future cease
and desist from the aforesaid practice of providing deficient C
service. The aforesaid contention, however, cannot be accepted
for what is sought to be done by the MRTP Commission is to
hold that the appellant is guilty of unfair trade practice which is
not equal to holding a person guilty of providing deficient ser-
vice. Element of unfair trade practice definitely stands at a higher D
and onerous platform than the deficient service. For making out
a case of unfair trade practice an element is involved to the
extent of making false and misleading statement and represen-
tation and in order to make a case of unfair trade practice such
ingredients, which are part and parcel of the concept of unfair E
trade practice has to be alleged and must be proved and es-
tablished. In the present case there is neither such allegation of
any such false and misleading representation nor is there any
proof provided by way of evidence, which also we have perused.
;.. Therefore there could be no finding by the MRTP Commission F
I
J that the appellant is guilty of unfair trade practice. That being
so, the order of the Commission cannot be upheld and the same
is set aside.
17. Accordingly, the appeals are allowed. There is no or-
der as to costs. G
K.K.T. Appeals allowed.