' In accordance with the provisions of section 21 of the Monopolies and Restrictive Trade Practices (Control and Prevention) Ordinance, 1970 (hereinafter referred to as the Ordinance) the Monopoly Control Authority directed Tahir M. Shaikh Ali (hereinafter referred to as the undertaking) to furnish information in respect of any agreement made with any other concern for the distribution, sale or purchase of any goods. The information supplied by the undertaking indicated that it had executed agreements with the following companies:-
(i) China National Machinery and Equipment Export Corporation;
(ii) China National Chemical Import & Export Corporation; and
(iii) Strojimport, Czechoslovakia.
2. Agreement between the undertaking and the company at S.No.(1) above, contains clause 7 which places an embargo on the undertaking from promoting sale of similar products of other suppliers. Agreement at S.No.(ii) above while granting sole distribution rights to the undertaking precludes them from representing, selling or in any way assisting in the sale of any products of other 'origins which bear same character as the specified commodities and agreement at S.No.(iii) above debars it from representing either directly or indirectly competing companies, or to sell competing articles.
3. The undertaking was, therefore, registrable with the Monopoly Control Authority under section 16(1)(f) of the Ordinance, while the agreements were registrable under section 16(1)(k) (ii) of the Ordinance. Vide Authority's letter dated 7-6-1981, the undertaking was advised to register itself and the agreements, but it did not do so. The undertaking was served with notices on 24-6-1982 to show cause as to why penal action may not be taken for not registering itself and the agreements.
In reply the undertaking stated as under:-
(i) The respondents neither import the goods in their own account nor sell or distribute the goods.
The respondents are neither distributors nor suppliers. The respondents are merely indenting agents and book orders from import licence holders.
(ii) For the purpose of importing the goods, the import licence holders are also at liberty to place their orders directly with the foreign manufacturers/suppliers in which event the orders are not booked by the respondents and the respondents do not act even as indenting agents.
(iii) The respondents on their own account neither buy the goods in question nor sell the same.
(iv) The respondents acting as indenting agents neither have nor acquire any title/right/interest in the goods imported by the import licence-holders.
(v) The respondents do not carry on business relating to the production, supply or distribution of goods.
4. It was stated that the agreements in question were not registrable under the provisions of section 16(1)(f) and section 16(1) (k)(ii) of the Ordinance, for the following reasons:-
(a) The respondents, being the indenting agents, are not the sole distributors or suppliers for more than one undertaking of any goods.
(b) The agreements in question neither prohibit nor restrict distribution or sale of other goods by the respondents.
5. For the definition of the word supplier reliance was placed by the undertaking on the definition of supplier in Resale Prices Act 1964 which states:- "Supplier" means a person carrying on a business of selling goods other than a business in which goods are sold only by retail: and for definition of the word "Distributor" reliance was placed on Words and Phrases Legally Defined Volume 2, 2nd Edition, which on page 94 reads as under: "....But I hold that 'distributor' can and should mean any person who buys milk, etc., and has it for resale in the 'Lethbridge Controlled Area, 'R.V. Friesen, (1942) 1 W.W.R. 641, per Jackson D.0 .J., at page 643."
6. The case was fixed for hearing on 24-10-1983 when Mr. Maqbool Baker Ali, Advocate of Haidermota & Co. Appeared and reiterated the arguments. The Authority after considering the matter informed the Advocate that the undertaking and agreements were registrable. The Advocate requested for time to seek instructions of his clients. Subsequently Letter dated 25-10- 1983 has been received from Haidermota and Co., stating that they had sought instructions from their clients and still maintain that the agreements are not registrable under the Ordinance.
' The matter has been considered by the Authority. In the first instance reference to the relevant section appears necessary. Sections 16(1)(f) and 16(1)(k)(ii) read as under:
16. Registration.--(1) In order that information relevant to the performance of its functions under this Ordinance is available to the Authority, the following undertakings, individuals and agreements shall be registered with the Authority in such manner as may be prescribed by rules, namely:
(f) An undertaking which, by itself or together with its associated undertaking, is the sole distributor or supplier for more than one undertaking of any goods or services.
(k) An agreement for the distribution or sale of any goods which directly or indirectly:
(i) Limits the areas in which, or the persons to whom, the product may be resold;
(ii) Prohibits or restricts the distribution or sale of other goods by the distributor;
(iii) Limits the persons through whom the distributor may distribute or sell such goods.
8. The issue involved is whether the undertaking is a "distributor" or not and whether the business carried on by it is "distribution". The authority after considering the matter feels that the word "distribution" has wider meanings than those stated by the undertaking. The meaning cannot be confined to persons or companies who purchase and then sell the products, but cover all intermediaries in the channel of distribution. It has been noted that Dictionary of Economics and Commerce by J.L. Henson, the word 'distribution' for commercial purposes has been defined as: "This refers to the channel by which goods are taken from their place of production to the people who want to make use of them."
In Aiyer's Manual of Law Terms and Phrases (7 Edition, 1972) 'distribution' has been defined as: "It is clear that the ordinary and general meaning of the word 'distribution' is sufficient to convey spreading of goods anywhere by whatever means that may be employed." (of Drugs Act (1940), Section 18(a) State v. National Damunal and others AIR 1962 Born. 21).
' These two definitions also indicate that the word 'distribution' has wider meanings than stated by the undertaking. The word "distributor" also covers all persons or companies in the channel of distribution. The undertaking is a vital link in this channel as without it the companies with whom it has entered into agreements would not be able to spread their goods in the market. The Authority is, therefore, of the view that the undertaking is a "distributor" and its business is "distribution".
9. In para 2 above, it has been noted that the three agreements debar the undertaking from dealing in similar goods of other origins and as such the agreements are covered by section 16(1)
(k)(ii) of the Ordinance.
10. Coming next to the registrability of the undertaking under section 16(1)(f) a perusal of the file shows that letter from Counsel of the Peoples Republic of China dated 16-6-1980 (a photo copy of which was submitted) states that M/s. China National Machinery Import & Export Corporation as well as China National Machinery and Equipment Export Corporation had agreed to appoint Tahir M. Shaikh Ali as sole agents. The text of the former agreement, in its preamble, also states that the undertaking had been appointed as sole distributor. The agreement with Strojimport mentions in section 1, that it is a sole agency. The undertaking is, therefore, a sole agent/distributor of more than one undertaking and is registrable under section 16(1)(f) of the Ordinance.
' The undertaking in not registering itself under section 16(1)(f) and the agreements under section 16(1)(k)(ii) has committed a default. The undertaking and agreements should be registered by 15- 1-1984 or the case will be considered for imposition of penalty.